What the Increase in Minimum Wage Means for Retail Workers

The push to increase minimum wage by the federal government has elicited a slew of commentary from both naysayers and supporters. The retail industry is no different. From multibillion-dollar corporations and small businesses to the employees who work there, everyone has an opinion on how raising minimum wage will affect less skilled workers in retail. President Obama asserts that an increase would “raise the incomes of millions of working families” without negatively affecting business owners or the unemployment rate. If the supporters are to be believed, as a retail worker, you’ll experience a jump in income that will ease the burden of paying for your basic needs.

First announced in his 2013 State of the Union address, President Obama’s proposal would bump the hourly minimum wage, which has remained at $7.25 since 2009, to nine dollars. If the new wage were to go into effect tomorrow, whether or not you’d see the amount reflected on your next paycheck would depend on where you’re employed. A number of states mandate minimum wages above the current federal level, but only one state, Washington, exceeds the new proposed wage. In the end, the higher wage takes precedence, and the vast majority of minimum-wage workers in retail would experience a boost in pay.

For those currently employed in retail, there seems to a question of whether their jobs can survive the change. The Nexxt article, “Effect of the Minimum Wage Increase on Retail and Small Business,” examines the idea that increasing the minimum wage could negatively affect small business owners, who would be forced to mitigate the financial burden by cutting hours, increasing prices, and laying off minimum-wage workers. An upside for employees, however, is that some businesses might be driven to offer more competitive pay for workers earning above the minimum wage. In the worst-case scenario, retail employees would lose their jobs only to find that other employers have enacted a hiring freeze.

Proponents paint a different picture, however. According to a recent article on Syracuse.com, some economists argue that increasing the minimum wage would put more spending money into the pockets of lower-paid workers, who would funnel it back into the economy and boost job creation. For retail worker Audrey Hall, who lives with her grandparents, a nine-dollar hourly pay represents an extra $1,300 a year to put toward an apartment.

The public-policy organization Demos compiled an in-depth 2012 report examining the effects of raising minimum wage by 27 percent for the lowest-paid retail employees. The study found a wage that amounts to $25,000 in annual income could benefit over five-million retail workers, 734,075 of whom would be lifted out of poverty. It also found that well-paid retail employees provided better service to customers, encouraging sales and more than making up for a company’s investment in its workforce.

Ultimately, a higher wage provides excess spending money and the ability to afford basic living expenses. Retail workers and their families stand to gain a better quality of life and workplace satisfaction from a minimum-wage hike, as long as businesses play along.

Image courtesy of MorgueFile.