President Obama on Tuesday delivered his fifth State of the Union address, which included a heavy focus on income inequality and the need to increase the minimum wage. The president called 2014 a "year of action" for such efforts, claiming that what unites Americans is the "simple profound belief in opportunity for all. The notion that if you work hard and take responsibility, you can get ahead."
That belief, however, has suffered "serious blows" recently, as corporate profits and stock prices have "rarely been higher," but average wages have "barely budged."
"Inequality has deepened, upward mobility has stalled. Even in the midst of recovery, too many Americans are working just to get by, let alone to get ahead," the President said.
A call for immigration reform, equal pay for women
President Obama touched upon this theme throughout his nearly hour-and-a-half-long speech, including a call for immediate changes to "our broken immigration system" and the wage gap of women.
"If we're serious about economic growth, it's time to heed to call and fix our broken immigration system ... Independent economists say immigration reform will grow our economy and shrink our deficits by almost $1 trillion in the next two decades. And for good reason: When people come here to fulfill their dreams — to study, invent, contribute to our culture — they make our country a more attractive place for businesses to locate and create jobs for everybody. So let's get immigration reform done this year. It's time," he said.
Women, he added, make up half of our workforce, but still make 77 cents to the dollar of men. "In 2014, it's an embarrassment," he said. Women, he added, hold a majority of lower-wage jobs.
"Americans understand that some people will earn more money than others and we don't resent those who achieve incredible success. But Americans overwhelmingly agree that no one who works full-time should ever have to raise a family in poverty," he said. "... When women succeed, America succeeds."
The minimum wage debate
The ongoing minimum wage debate was also a major focal point of the SOTU, and President Obama noted that in the coming weeks, he will issue an executive order requiring federal contractors to pay their federally-funded employees a fair wage of "at least $10.10 and hour." This is up from the current federal rate of $7.25.
"If you cook our troops' meals or wash their dishes, you should not have to live in poverty," he said.
The President has asked Congress to raise the minimum wage throughout the past year, and five states have since passed laws to raise theirs. Many businesses are also heeding the call, including John Soranno, owner of Minneapolis-based Punch Pizza.
Soranno was in attendance during Tuesday night's speech, along with his employee Nick Chute. The company, which has eight locations throughout the Twin Cities, announced in November that it would increase wages to a minimum of $10 for entry-level employees, and pay other positions higher wages to ensure it attracts and retains the best employees in the food sector, according to a news release.
In November, Punch announced that it would increase wages to a minimum of $10 for entry-level employees, and pay other positions higher wages to ensure the company attracts and retains the best employees in the food sector.
"As we continue to grow Punch we recognize that only the most dedicated employees will position us to compete and maintain the highest quality food and the best service in the market," Soranno said. "The sweat and hard-work that our employees give to make our pizza and service excellent is emblematic of the American Dream."
The investment will cost Punch almost $3 million over the next 10 years. The owners of Punch say the increase in employees' pay is the type of investment that will continue to make Punch a "great company."
"John just gave his employees a raise to 10 bucks an hour, and that's a decision that has eased their financial stress and boosted their morale," President Obama said during the SOTU. "Tonight I ask more of America's business leaders to follow John's lead. Do what you can to raise your employees' wages. It's good for the economy; it's good for America."
He also pointed to profitable corporations such as Costco that have increased their wages and have consequently experienced a boost in productivity and a reduction in turnover.
The timing is right, he added, because the federal minimum wage today is about 20 percent less than it was during President Reagan's first SOTU address in 1982. The President outlined the efforts of Tom Harkin (D-Iowa) and George Miller (D-California) to introduce a bill that would raise the federal minimum wage, also to $10.10.
"This will help families. It will give businesses customers with more money to spend. It does not involve any new bureaucratic program," he said. "Join the rest of the country. Give America a raise."
Restaurant, retail industry opposition
The minimum wage debate has been thrust into the national conversation in large part because of the growing strikes held by quick-service employees throughout the country in 2013. However, in light of President Obama's SOTU speech, Dawn Sweeney, president and CEO of the National Restaurant Association, said "dramatic increases in the minimum wage are not the silver bullet that national labor unions and others are portraying them to be."
"Such a drastic increase in the minimum wage would limit opportunities for teens, low-skilled and entry-level workers where unemployment rates are the highest. Strong majorities of Americans believe that education and job training are much more effective strategies to provide real opportunity to upward mobility," Sweeney wrote in a prepared statement. "Instead of focusing on shortsighted and ineffective approaches primed for election year politics, let's spend our time and energy on pro-growth proposals that will help create jobs and put more money back into the economy ... The livelihood of so many of our employees, managers and business owners would be impacted by the outcome."
The restaurant industry provides jobs and careers to more than 13 million people, she added. Many of those jobs are managers, crew supervisors and chefs — salaried positions that offer competitive pay and benefits.
"Nine in 10 salaried employees started as entry-level employees," Sweeney said. "Providing individuals with a path to upward mobility is a critical national issue with long-term economic implications."
The National Retail Federation's CEO, Matthew Shay, agreed, saying a minimum wage hike would bring "minimum opportunities."
"We welcome the president's focus on the economy and jobs, but a minimum wage hike runs counter to that goal. Raising the minimum wage would 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. It's simple math — if the cost of hiring goes up, hiring goes down," he said.
"Fewer than 5 percent of hourly workers are paid the minimum wage. It's really a starting wage that allows teen-agers or others with little job experience to enter the workforce. A mandated hike in labor costs would negatively impact businesses that employ people in entry-level jobs and ultimately hurt the people it is intended to help," he said.
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