TJX — the retail conglomerate including TJMaxx, Marshalls, HomeGoods and Sierra Trading Post — announced in its Q4/full-year earnings report that it will boost pay for its lowest-wage associates to $9 per hour in June. Minimum base pay for full- and part-time workers will rise to $10 per hour for employees with at least six months tenure sometime in 2016. The announcement comes on the heels of similar base-wage-hike plans announced in recent months by Walmart, Starbucks and The Gap.
Orthodox economic theory says this is what should be happening to wages in a tightening labor market. Strong, steady job growth and gradually falling unemployment should make employers compete harder to find and keep workers.
“I think the tightening labor market, combined with public pressure, combined with the bandwagon effect, is driving what we’re seeing,” says Linda Barrington, executive director of Cornell University’s Institute for Compensation Studies.
Barrington points out that if employers were experiencing a significantly tighter labor market though, wages would be rising across the board—at multiple income levels, and in multiple occupations and labor sectors. Instead, inflation-adjusted (real) wages have not risen in recent years. A recent study by the Economic Policy Institute found that real wages fell or were stagnant in 2014 in all income percentiles, except the bottom 10 percent of wage-earners. Wages for that income-decile rose 1.3 percent in 2014, because, EPI says, eighteen states raised their minimum wage above the federal minimum wage, which has been $7.25 per hour since 2009.
Arun Ivatury at the National Employment Law Project believes pressure by labor and consumer advocates is mostly what’s driving these wage increases. But they also make good business sense.
“Part of your business strategy is to have people who work for you who consumers like to interact with, and who represent your business well," says Ivatury. "And you’re going to have to pay a little better, especially as the labor market tightens.”
Disparity in minimum pay between retail and service employers could induce some employees to chase a slightly higher paycheck, which could in turn increase competition for workers, and drive wages higher across service industries. But workers we spoke with were not inclined to switch jobs for a small increment in pay.
“No, I won’t jump on the bandwagon at T.J. Maxx just because they make more,” says Roderick Livingston, a 27-year-old fast-food worker who is employed part-time at both Taco Bell and McDonald’s in St. Petersburg, Florida. He makes the state's minimum wage of $8.05 per hour. “Where I am now I like my job, as far as my manager and everything. I don’t feel like the grass would be greener on the other side. But how come we can’t make $9-an-hour at a fast-food restaurant?”
Livingston is active in the movement pushing for a $15/hour minimum wage for fast-food workers, which has included strikes and other labor actions. He pays child support for two young children, and says he tries to send money to his parents in Georgia when he can.
Lisa Pietro, 57, works 32 to 39 hours per week at a Walmart in Winterhaven, Florida. She earns $8.95 per hour stocking produce, and says the increased take-home pay from Walmart’s planned new minimum wage of $9 per hour will mostly go to pay her taxes. But the increase to $10 per hour in 2016 will make a material difference to her.
“That’s groceries,” she says. Pietro is active in the Our Walmart campaign by labor and consumer groups to push for higher pay and better schedules for Walmart workers.
Pietro says she has little choice about where to work and could not easily chase a higher wage at another retailer. She can’t afford a car or gasoline, she says, so she walks to work at Walmart, 1.5 miles from her home. She says there aren’t other potential employers she could work for, within walking distance of her home.