TIME Economy

The Real Meaning of $9 an Hour

Walmart’s modest wage hike isn’t just good for business. It’s proof the economy is doing better

Walmart’s decision on Feb. 19 to raise its base wage to $9 an hour, $1.75 higher than the federal minimum, has been heralded as a major victory for American labor. Wall Street punished the world’s largest retailer for the pay hike–which will cost the firm $1 billion this fiscal year–by driving down its shares. But labor economists and liberals lauded the raise as a new wave of “Fordism,” referring to Henry Ford’s historic 1914 decision to double wages in his factories, which not only boosted productivity and reduced turnover but also created more customers for his company’s products.

Walmart’s move is seen by some as a sea change for the retail sector. “Walmart sets the standard, and the fact that they’ve kept wages so low has made it hard for others to raise them,” explains Isabel Sawhill, co-director of the Center on Children and Families at the Brookings Institution. Now it’s likely that pay for other low-income workers will rise, not just in retail but also in other sectors like home health care, child care and fast food, all of which compete for the same workers as Walmart.

The question is, how much will it matter? Labor’s share of the economic pie has been decreasing since the 1970s, thanks to globalization, which has outsourced low-wage jobs (and technology, which has destroyed them outright); the shrinking of unions; and pressure from Wall Street to reduce costs, which turbocharged all these trends. The corporate share, meanwhile, is at record highs. That means Walmart’s move to $9 an hour won’t make much difference in macroeconomic terms. The $1 billion it will effectively put in the hands of 40% of its 1.3 million U.S. employees is a tiny fraction of our $16 trillion economy. Damon Silvers, the policy director of the AFL-CIO, estimates that even if all low-wage employers followed Walmart’s lead, it wouldn’t move the needle on labor’s share by even a single percentage point. “That’s not to say that the Walmart workers’ victory isn’t an important step forward for low-wage workers,” he says. “But it also shows what a small piece of the pie they’ve been getting.”

Indeed, the Walmart workers who have spent much of the past year in parking lots with bullhorns were asking for $15 an hour and better schedules. “When I started, I saw how many of us were working for one of the richest companies in the world and yet we had to be on public assistance,” says Kelly Sallee, 22, who has worked for Walmart for eight months and took part in wage protests in Dayton, Ohio. Despite the pay increase, employees like Sallee, who says she’d like to work full time but can’t get enough hours, are still struggling for improvements in scheduling, an important labor-rights issue. Retailers across the country use software to optimize scheduling around store traffic. This often means less notice given for when workers must report to their jobs and erratic cuts in some of their hours, which labor activists believe may also be intended to decrease the number of workers on full-time benefits. Walmart denies this and says it would prefer more full-time workers to multiple part-timers. The company also says that the $9 it will pay is better than the $7 and change paid by many other retailers, even some unionized ones, and that it gives more notice of shift changes than many others. It says that workers can ask for more hours via Walmart’s intranet system and that 1 million hours a week regularly go unclaimed.

But the fact that Walmart workers, who aren’t unionized in the U.S., got anything at all shows the PR pressure that companies like it are coming under as economic inequality gains clout as a political issue. Twenty-nine states have raised the minimum wage, and presidential candidates from both parties are expected to wrestle with the challenge for the next 18 months. Whether or not Walmart’s top brass, a conservative bunch, has experienced an ideological shift is not the point. That it is concerned about turnover costs as a better economy gives laborers more options for where to work is most significant.

An extra couple bucks an hour will certainly help low-wage workers, and they’ll be more likely to spend it than the rich, meaning it will drive more economic growth. It will not be a net job destroyer, as some believe. The nonpartisan Congressional Budget Office found that while a $9 minimum wage could put from zero to 500,000 low-end jobs at risk as companies try to limit staffing, it would also lift 1 million people out of poverty and increase earnings for 16.5 million workers. As Sawhill puts it, “That’s not quite a free lunch, but it’s pretty cheap.” That’s a reason for Congress to raise the federal minimum wage. But even if it doesn’t, Walmart workers have proved they can move the most powerful retailer in the world to change. That means they, and others, can do it again. And that, more than anything else, may be the real victory.

TIME cities

Rahm Emanuel Seeks to Avoid Runoff in Chicago Mayoral Election

Chicago Mayor Rahm Emanuel talks with residents at a senior living center during a campaign stop on Feb. 23, 2015 in Chicago.
Scott Olson—Getty Images Chicago Mayor Rahm Emanuel talks with residents at a senior living center during a campaign stop on Feb. 23, 2015 in Chicago.

The incumbent must receive at least 50% of the vote in Tuesday's election

It’s Election Day in Chicago, and Mayor Rahm Emanuel and the four candidates that are vying for his spot spent the past couple of days scrambling for last-minute votes.

Emanuel needs to get over 50% of the vote in order to avoid a runoff in the non-partisan contest. He’s raised about $15 million in the race, according to the Chicago Tribune, and has received vocal support from President Obama, who praised his former White House chief of staff during a visit to Chicago last week. The president has appeared in a radio spot, is featured in Emanuel’s latest ad, and even stopped by a campaign office during his visit.

Emanuel’s biggest challenge comes from Cook County Commissioner Jesus “Chuy” Garcia, who has criticized the mayor for spending big in the race—saying it’s proof that wealthy donors are funding his campaign.

According to a recent Chicago Tribune poll, Emanuel had 45% of the vote while Garcia had 20%. Challengers Alderman Bob Fioretti and Businessman Willie Wilson each had 7% of the vote and candidate William Walls held 2% of the vote.

[Chicago Tribune]

TIME Media

Watch Allison Williams Defend Her Father’s Honor

The Girls star opened up about her father's suspension from NBC Nightly News

The characters on Girls aren’t known for their communication skills, but Allison Williams, who plays Marnie on the HBO show, had a smooth, dignified answer when asked about her father at a talk on Wednesday night.

During an event at 92nd Street Y, host Seth Meyers asked the actress how her father Brian Williams, who was recently suspended from NBC Nightly News, and the rest of her family was doing. Allison is the first member of the Williams’ family to speak out after the controversy over her father’s false report — made on air — that he was in a helicopter hit by an RPG over Iraq in 2003.

The youngest Williams acknowledged that her family was having a “really hard time,” they were grateful for the support they’d received from friends and fans. She also defended her father’s honor, saying:

“One thing this experience has not done is shake my trust and belief in him as a man. He’s a really good man. He’s an honest man. He’s a truthful man. He has so much integrity. He cares so much about journalism. And yes, he’s a really good dad, but I know you can trust him because, as any good daughter does, I have tested him on that.”

She also presented an optimistic front, saying, “I can’t wait until he is back on TV.”

Read next: Brian Williams Isn’t the Only One: Here Are 6 Others Whose Embellishments Threatened Their Careers

Listen to the most important stories of the day.

TIME nation

Water Manager Caught Peeing in Reservoir That Supplies San Francisco’s Drinking Water

The incident does not pose a public health risk, authorities say

A water manager is expected to be disciplined after the San Francisco Public Utilities Commission confirmed he urinated in a San Francisco Bay Area reservoir last month, the Associated Press reports.

Martin Sanchez was reportedly up for a promotion, but now he could face a suspension without pay, according to the AP. The reservoir, located in the Sierra Nevada Foothills, had been drained for maintenance, and authorities say the incident does not pose a public health risk.

Twice, Portland, Oregon, has been forced to drain a reservoir after similar episodes.

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