- "The days of a national minimum wage are really over," thanks to states increasing their base pay laws and companies increasing their hourly wages, LaSalle Network CEO Tom Gimbel says.
- "While [the pay boost] is done by the government, they're doing it as a result of the organic economic growth," he says in an appearance on "The Exchange."
- "It's an indirect result of the great economy and of the companies doing this," he says.
The need to adjust the federally mandated base pay is moot thanks to the strength and present dynamics of the U.S. economy, staffing expert Tom Gimbel told CNBC on Monday.
"The days of a national minimum wage are really over," Gimbel, founder and CEO of LaSalle Network, said on "The Exchange." "That's why the interesting thing about this economy is [that] now you're seeing companies out of New York and out of San Francisco, specifically, that are opening up other offices in other parts of the country."
Wages are already increasing in America, a trend that is "being fueled" by government action and regulation at the state and local levels, he said of the bump in pay that workers reportedly saw last month.
Wages rose 4.5% year over year for the bottom 25% of earners, while pay for the top 25% of earners grew 2.9%, Federal Reserve Bank of Atlanta statistics show. The numbers came during another reading of stronger-than-expected job gains in November. The unemployment rate dipped to 3.5%, the lowest mark since 1969, according to the Labor Department.
Almost two dozen states boosted their minimum wage laws in 2019, and more wage increases are planned in the new year. Gimbel, whose company is based in Chicago, connected the move to increase the base hourly pay in 21 states, in addition to municipalities such as New York City, to the country's strong economy.
"While [the pay boost] is done by the government, they're doing it as a result of the organic economic growth," Gimbel said. "It's an indirect result of the great economy and of the companies doing this."
The latest developments in pay advances — whether mandated by local governments or increased by individual companies — come years after fast-food workers began grabbing headlines in 2012 by demanding an hourly wage of $15 and the right to unionize.
Income was stagnant during much of the current economic expansion — now the longest on record — that kicked off at the lowest point of the financial crisis about a decade ago. Hiring had picked up during the recovery, but pay had not begun to grow until earlier this year.
A basket of states enacted laws mandating the pay floor gradually increase to $15 an hour over the years, while some cities including New York and San Francisco have raised minimum wage to $15 an hour. The federal bottom pay has remained unchanged at $7.25 since 2009, though some lawmakers are making efforts to raise the national rate to $15 as well.
Although the federally mandated minimum wage has remained flat the past decade despite inflation, the U.S. Department of Labor will enforce new mandatory overtime pay rules expected to extend overtime pay to some 1.3 million salaried workers on Jan. 1.
"If unemployment weren't at 3.5%, if it were what it was five, six, seven, eight years ago, if it were 7% [or] 8% unemployment, then people wouldn't be talking about higher wages," Gimbel contended. "They'd just be talking about getting jobs."
Lawmakers, however, do not deserve all of the credit for why businesses are paying employees more, according to Gimbel.
In recent years, companies such as Amazon, Walmart, Costco and Target have either increased or announced plans to increase their bottom pay. Walmart began paying employees at least $11 an hour in January 2018, and Amazon began offering at least $15 an hour in November 2018. Costco raised its minimum hourly pay to $15 in June, and Target has plans to increase its base pay to $15 by the end of 2020.
Bank of America earlier this year also revealed plans to lift pay to $20 an hour in coming years. The bank raised its base hourly pay to $17 in May, up from $15 in 2017. CEO Brian Moynihan, by comparison, was awarded a 15% raise to $26.5 million in 2018 after leading Bank of America to a record annual profit.
"So whether it be Amazon or Walmart and the big box retailers that have had to [raise pay] to attract the level of people [they need], or it's been the local guy down the corner," Gimbel said, "companies are having to do it because they need to attract people, and you only have to do that in a low unemployment rate."
Correction: This story has been updated to reflect that that Costco raised its minimum hourly wage to $15 in June.