Guns, Vaping and Minimum Wage: Big Gestures vs the Bottom Line

Oct 15, 2019

Minimum Wage

The debate around raising the minimum wage is underway across every state in America. With the federal minimum hovering just above $7, and unemployment rates remaining low, many retailers have been making bold moves which align them with providing a livable wage reflective of the cost of living in any given community, and ideally luring in more workers.

The most notable among these is Amazon (NYSE: AMZN), which raised its minimum wage to a jaw-dropping $15 per hour for the company’s 250,000 full and part-time employees, as well as for its nearly 100,000 seasonal employees. While the optics on this were positive, new reports are surfacing that the company has eliminated bonuses and stock options for employees, in addition to enforcing higher productivity demands – moves which would likely lessen the “livability” of these higher wages.

Other retailers have followed suit, albeit to a lesser degree or with a phased approach. For example, Costco (NYSE: COST), a wholesale retailer, announced in March that it had raised its minimum wages from $14 and $14.50 up to $15 and $15.50. Costco pays employees some of the highest wages among U.S. retailers, with an average hourly rate of $22.50. Target (NYSE:TGT) has also raised its minimum wage to $13 an hour, up from $12, with a goal of increasing its wages to $15 per hour by 2020. In this competitive labor market, this strategy likely gains Target and Costco two bites at the apple: higher effectiveness in attracting and retaining employees, plus an enhanced public image.

As hot-button topics and political sensitivities infuse the retail landscape, companies that were once decidedly neutral on issues of the day are finding it necessary to answer the call of consumers with big gestures. For retailers, it’s critical that they understand the strong opinions of their customers to ensure that if they choose to draw a line in the sand, their current and future customers are there to bridge the revenue gap through increased loyalty and sales.