One hundred years later, U.S. companies including Gap Inc. and Wal-Mart Stores Inc. are caught up in the debate over raising pay — this time an increase in the federal minimum wage. President Barack Obamaand Senate Democrats want to raise it to $10.10 an hour from $7.25, saying doing so will bolster the economy and reduce income inequality. House Republicans and industry groups oppose the plan, deeming it a job killer.
“When Henry Ford announced the 5-dollar-day, the response was that it would diminish the auto industry and bankrupt his company,” Harley Shaiken, a labor economist at the University of California, Berkeley, said in an interview. “Instead it jump-started purchasing power, reduced turnover and increased the profitability of Ford Motor Co. There’s a lesson we can still learn from that.”
A boost in the minimum wage to $10.10 would add $200 million — or less than 1 percent — to Wal-Mart’s annual labor bill, the University of California Berkeley Center for Labor Research and Education estimates.
If Wal-Mart passed along the estimated $200 million in extra labor cost to consumers, it would equal about a penny per $16 item, said Ken Jacobs, the Labor Center’s chairman. Meanwhile, the rise may boost purchases among the chain’s core shoppers, many of whom could see their earnings climb, he said.