Washington, D.C. — As politicians in Washington and state capitals debate raising the minimum wage, a new report from the Center for American Progress gathers new evidence showing that the United States’ top retailers are deeply concerned that stagnant wage growth and middle-class weakness are holding the economy back.
CAP’s analysis, “Retailer Revelations: Why America’s Struggling Middle Class Has Businesses Scared,” showed that 88 percent of the top 100 U.S. retailers cite weak consumer spending as a risk factor to their stock price, while 68 percent cite falling or flat incomes as risks. These findings support policies aimed at strengthening the middle class, including raising the minimum wage, which would benefit the entire retail sector by fueling more consumer spending.
“It’s simple: When Americans don’t have disposable income, retailers don’t have customers. Our retailers won’t recover until their best customers—the middle class—recover,” said Brendan V. Duke, a Policy Analyst for CAP’s Middle-Out Economics project. “Working people are our economy’s true job creators, but a decade of stagnant wages and rising costs have squeezed them like never before. It’s time for retailers and the rest of corporate America to connect the dots and realize the only way our economy can sustain consumer demand is by giving their workers a raise.”
CAP analyzed financial statements, also known as 10-Ks, of the top 100 retailers in America, finding that of retailers that filed 10-Ks in 2006 and 2014, the share citing consumers’ incomes doubled in the last eight years. Fifty-seven percent of top U.S. retailers cite rising energy, health care, housing, and other essential costs as risks.
Wall Street economists are even more explicit about the risk low wages pose to the economy, arguing that they drive low demand and high unemployment. Just recently, Standard & Poor’s released a report showing that inequality is holding back economic growth, while Morgan Stanley issued an analysis finding that low and declining incomes and weak consumption are stifling the recovery. Morgan Stanley specifically stated that “stronger growth in wages and salaries is essential to the macro outlook, because it would help households spend more broadly across the income spectrum.”
Despite the fact that dozens of America’s top retailers have cited weak consumer spending or falling or flat incomes as risks to their success, many retailers employ Washington lobbyists to oppose policies that raise wages. Lobbying groups such as the U.S. Chamber of Commerce and the National Retail Federation have spent millions of dollars opposing a minimum-wage increase, modern collective bargaining rights, and the types of sick and family leave policies that would build and strengthen the middle class, which in turn would expand retailers’ customer and revenue bases, CAP’s report notes.
The National Retail Federation may be slowly coming around to this logic: incoming National Retail Federation Chair Kip Tindell of the Container Store said recently that “it’s unbecoming to speak out against raising the minimum wage” and that he was “working, frankly, to get the [National Retail Federation] to maybe moderate its view on that.”
CAP’s new analysis comes on the heels of a separate CAP report, “The Middle Class Squeeze,” that underscored the growing squeeze on the middle class brought by stagnant incomes and growing costs. That report found that the collective cost increase for key middle-class investments such as child care, higher education, health care, housing, and retirement rose $10,600 between 2000 and 2012 for a median married couple with two kids. As a result, a typical middle-class family had $5,500 less for basic necessities such as groceries, clothing, and emergency savings—traditionally, the pool of money that goes to retail spending.
Click here to read “Retailer Revelations: Why America’s Struggling Middle Class Has Businesses Scared” by Brendan V. Duke and Ike Lee.
For more information, contact Allison Preiss at gro.ssergorpnacirema@ssierpa or 202.478.6331.