- The Washington Times - Tuesday, October 25, 2005

Wal-Mart CEO

urges Congress


Wal-Mart Stores Inc. Chief Executive Officer H. Lee Scott urged Congress to raise the minimum wage, saying the company’s customers “are struggling to get by.”

“The U.S. minimum wage of $5.15 an hour has not been raised in nearly a decade, and we believe it is out of date with the times,” Mr. Scott said in a speech Monday to company executives.

“Our customers simply don’t have the money to buy basic necessities between paychecks.”

He also outlined a new health plan for employees and several energy conservation initiatives.

Mr. Scott said Congress should take a “responsible look” at the minimum wage to help working families. Wal-Mart’s pay and benefits have been criticized by unions, lawmakers and labor advocacy groups. Full-time employees earn 20 percent less per hour at Wal-Mart than the average retail industry wage. City and state legislators have used the issue to derail the company’s plans to open stores in Queens, N.Y., and other locations.

“Talking the talk is a good first start,” said Jim Russell, who helps oversee $22 billion at Fifth Third Asset Management in Cincinnati. “They are playing a very leading role as a corporate citizen and reacting to criticisms they have received. We’re going to wait and see what they put in place and see how significant those actions prove to be.”

Fifth Third sold its Wal-Mart shares earlier this year because of the company’s lackluster sales at stores open at least a year, he said.

Sen. Charles E. Schumer, New York Democrat and a member of the Senate Finance Committee, called for Congress to take action on the minimum wage.

“If Wal-Mart can push for an increased minimum wage, so can the House and Senate leadership,” he said yesterday.

Although Mr. Scott advocated a change in the federal scale, he said it was unlikely Wal-Mart would increase pay for its workers. The Bentonville, Ark., company, the world’s largest retailer, has about 1.3 million employees in the U.S.

“Last year we earned $10 billion in profits, so our critics argue that we should pay more to our associates,” he said in the speech. “Even slight overall adjustments to wages eliminate our thin profit margin.”

Mr. Scott is taking action as Wal-Mart’s share price has fallen and the company’s customers are cutting spending amid soaring gasoline prices and waning consumer confidence.

Wal-Mart’s shoppers have an average family income of about $40,000, said Todd Jones, an analyst at PNC Advisors in Philadelphia, making them more vulnerable to higher energy prices.

Last week, the Senate rejected a proposal by Sen. Edward M. Kennedy to raise the minimum wage to $6.25 in the next 18 months.

The Massachusetts Democrat’s proposal, and a competing Republican measure that would have raised the wage but exempted small businesses, both failed to gain the 60 votes required.

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