US wage rises: real progress for work­ers or a stunt?

The China Post - - BUSINESS - BY JEREMY TORD­J­MAN

Af­ter turn­ing a deaf ear to pres­sure for years, U.S. busi­nesses are dig­ging into their pock­ets to im­prove the lot of the low­est-paid work­ers, but also their own images.

Faced with a mount­ing cam­paign to ad­dress a grow­ing gap be­tween the rich and the poor, and com­plaints that low wages leave work­ers de­pen­dent on state hand­outs, some of the largest U.S. em­ploy­ers have an­nounced sweep­ing wage in­creases in re­cent weeks.

Af­ter depart­ment store Wal­mart and cloth­ing chain The Gap said they would raise worker pay, this week fast food gi­ant McDon­ald’s an­nounced a hike for 90,000 of its work­ers.

The wave of com­pa­nies show­ing a greater ap­pre­ci­a­tion for their work­force has even spread to the tech in­dus­try. Mi­crosoft an­nounced it would re­quire its con­trac­tors to ex­tend paid leave to thou­sands of peo­ple that reg­u­larly work for the com­pany but are not Mi­crosoft staff.

The com­pa­nies have made sure the public takes note. McDon­ald’s took a full-page ad­ver­tise­ment out in the New York Times herald­ing its gen­eros­ity.

“We’re an­nounc­ing a first step in re­ward­ing the team mem­bers who work so hard for our brand ev­ery day,” it said.

Wal-Mart Stores chief ex­ec­u­tive Doug McMil­lon told work­ers that the world’s largest re­tailer would “con­tinue to pro­vide that lad­der that any of you can climb.”

Po­lit­i­cal and Mar­ket Pres­sure

But the moves, which sought to raise hourly wages above the of­fi­cial min­i­mums — McDon­ald’s promised it would pay an av­er­age US$10 an hour by the end of 2016 — still fell short of a na­tional cam­paign call­ing for a US$15 an hour stan­dard.

That raised ques­tions about whether the moves are sim­ply a pub­lic­ity ef­fort for the firms.

The U.S. la­bor union fed­er­a­tion, the AFL-CIO, which has been fight­ing for higher wages for re­tail and food chain work­ers, dis­missed the ques­tion.

“It’s not es­sen­tial to fig­ure out whether or not they did it for good rea­sons. The key is­sue here is that it re­wards months of mo­bi­liza­tion,” deputy pol­icy direc­tor Kelly Ross said.

The com­pa­nies could also be re­spond­ing to fun­da­men­tal eco­nomics. The U.S. econ­omy has been grow­ing steadily and com­pa­nies have added some 3.4 mil­lion jobs in the past year alone, tight­en­ing the jobs mar­ket some­what.

“It is a public re­la­tions move by the com­pa­nies, but it comes in a macro-eco­nomic con­text that is push­ing up low wages,” Ioana Mari­nescu, a la­bor rights ex­pert at Uni­ver­sity of Chicago, told AFP.

Michael Strain of the Amer­i­can En­ter­prise In­sti­tute in Wash­ing­ton agreed.

“As the la­bor mar­ket be­comes more com­pet­i­tive, the firms have to in­crease wages to at­tract the work­ers they want,” he said.

At the same time, a de­bate has mounted over why only the wealth­i­est Amer­i­cans have seen in­come gains while wages and salaries for the low­est 80 per­cent have stag­nated or de­clined.

Worker groups want the gov­ern­ment to ad­dress it by forc­ing up the of­fi­cial min­i­mum wage.

But the po­lit­i­cal grid­lock in Wash­ing­ton leaves the fo­cus on com­pa­nies. For sev­eral years Pres­i­dent Barack Obama has pressed the U.S. Congress with­out suc­cess to in­crease the fed­eral min­i­mum wage, stuck at US$7.25 an hour since 2009.

Nor has he been able to get enough sup­port from Congress for other benefits com­mon else­where, like a min­i­mum paid ma­ter­nity leave.

“Congress is clearly bro­ken and won’t change any­thing with re­spect to the la­bor mar­ket,” said Ja­cob Kirkegaard, a re­searcher at the Peter­son In­sti­tute for In­ter­na­tional Eco­nomics.

He told AFP that com­pa­nies an­nounc­ing wage in­creases get more than a public re­la­tions boost.

“If you pay more than the av­er­age, you’ll have a higher re­ten­tion rate so you won’t have to con­stantly spend money on train­ing new hires.”

Some an­a­lysts ex­press worry of the risk that the large firms rais­ing wages will make busi­ness harder for small com­pa­nies with less fi­nan­cial power.

“There’s an un­even field,” Kirkegaard said.

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