What is in this article?:
- President Obama calls for minimum wage hike
- Making ends meet
President Obama urged business leaders and state and local lawmakers not to wait for Congress to act
President Barack Obama called Tuesday for an increase in the federal minimum wage, to $10.10 an hour, during his State of the Union speech, urging both businesses and lawmakers to “give America a raise.”
As expected, the president said he will lead by example by issuing an executive order within the next few weeks that will require federal contractors to pay their employees at least $10.10 per hour because, “If you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty,” Obama said.
The president also expressed support for a bill currently before Congress that would increase the federal minimum wage to $10.10, as well as indexing it to inflation.
“Today, the federal minimum wage is worth about 20 percent less than it was when Ronald Reagan first stood here,” he said.
This bill “will help families,” he continued. “It will give businesses customers with more money to spend. It doesn’t involve any new bureaucratic program. So join the rest of the country. Say yes. Give America a raise.”
The president also urged business leaders and state and local lawmakers not to wait for Congress to act.
In the year since Obama last pushed for a minimum wage increase during the State of the Union address, five states have passed laws to increase their minimum wage, he noted, and businesses have also pushed wages higher.
Obama highlighted Punch Pizza, an eight-unit fast-casual pizza chain based in St. Paul, Minn., which late last year said it would establish a starting wage of $10 an hour in all locations, along with higher wages for other positions. Previously, new hires started in the $7.50 to $8 per hour range.
Punch Pizza cooks now earn $12 to $15 per hour, with the most skilled cooks earning the equivalent of more than $30,000 annually, the company said.
New managers can earn a salary plus bonus that amounts to more than $50,000, and experienced general managers can earn $100,000 per year.
In Minnesota, where lawmakers have been debating a wage hike, the state minimum wage ranges from $5.25 to $6.15 per hour, depending on the company’s size, and is among the lowest in the country. The state rate is below the federal minimum wage of $7.25, though most workers in Minnesota earn the higher federal wage.
Punch Pizza expects the voluntary wage hike to increase the chain’s labor costs by about $3 million over the next decade, but it was the right thing to do for both the business and employees, co-owner John Puckett said in a statement before the speech.
“We believe our investment in our people and training will give us an advantage in quality food and superb service,” Puckett said.
Punch Pizza founder John Soranno and an employee, Nick Chute, were invited to attend the State of the Union address and sat directly behind the first lady.
Obama quipped that Chute, “helps make the dough. Only now he makes more of it.”
The president also mentioned companies like Costco, which has a starting hourly wage of $11.50.
“Profitable companies like Costco see higher wages as the smart way to boost productivity and reduce turnover,” Obama said. “We should too.”
After four years of economic growth, corporate profits and stock prices have rarely been higher and “those at the top have never done better,” he added. But “the cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by, let alone get ahead. And too many still aren’t working at all.”
In statements preceding the president’s speech, the National Restaurant Association urged lawmakers to focus on pro-growth policies that create jobs and “ladders of opportunity” to the middle class.
“There are no stronger ladders of opportunity in today’s economy than in the restaurant industry,” said NRA president and chief executive Dawn Sweeney.
However, a dramatic increase in the minimum wage would limit opportunities for teens, low-skilled and entry-level workers to get their start in restaurants, she noted.
Similarly, the National Retail Federation said the proposed minimum wage increase would only “place a new burden on employers at a time when national policy should be focused on removing barriers to job creation, not creating new regulations or mandates,” NRF president and chief executive Matthew Shay said. “It’s simple math: If the cost of hiring goes up, hiring goes down.”