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Remember when corporate America supported minimum wage hikes?

February 14, 2013: 11:06 AM ET

Critics of Obama's minimum wage hike say it will make it harder for employers to hire. Not too long ago, some of the biggest employers actually supported higher wages.

walmart

FORTUNE – In Tuesday's State of the Union address, President Obama promised (again) to raise the federal minimum wage to $9 from $7.25, which would boost pay for the nation's cashiers, janitors, and other low-wage workers.

Judging by failed efforts in the past, Obama's plan will likely face stiff opposition. Economists have argued that raising the minimum wage would lead to more joblessness since it would make employees more expensive. Given that the unemployment rate has hovered just below 8%, the president's latest proposal comes at a sensitive time. On Wednesday, House Speaker John Boehner (R-Ohio) opposed raising the minimum wage: "When you raise the price of employment, guess what happens? You get less of it," he told reporters at a news conference in Washington. "Why do we want to make it harder for small employers to hire people?"

But not all employers think raising the minimum wage is such a bad idea. It's worth noting some big players in corporate America have in the past supported a similar bill. In 2007, the last time Congress approved raising the minimum wage; it rose from $5.15 per hour to the current rate of $7.25 by July 2009.

MORE: State of the Union: Plenty of plans, not much economic promise

For all the gripes about Wal-Mart (WMT) not paying workers enough, in 2005 then CEO Lee Scott urged Congress to consider raising the minimum wage so customers wouldn't have to live paycheck to paycheck.

"The U.S. minimum wage of $5.15 an hour has not been raised in nearly a decade, and we believe it is out of date with the times," Scott said in October 2005. "We can see first-hand at Wal-Mart how many of our customers are struggling to get by. Our customers simply don't have the money to buy basic necessities between paychecks."

Scott's remarks speak to the notion that raising the minimum wage would stimulate rather than stifle the economy by putting more money in the pockets of consumers. For instance, a 2011 Federal Reserve Bank of Chicago study that shows that for every dollar increase to the hourly pay of a minimum-wage worker, spending would rise by $2,800 a year at such households.

Wal-Mart (No. 2 on the Fortune 500) has been repeatedly criticized for its own wages and benefits policy, but Scott's support nonetheless says something -- especially coming from the world's biggest retailer and America's largest non-union private employer. Current CEO Mike Duke was unavailable for comment, a company spokesperson said Wednesday.

As the White House noted, discount retail chain Costco (COST) also supported a minimum wage hike. In 2007, then CEO Jim Sinegal said the move could actually end up costing businesses less in the end.

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"In my view, some of these industries that pay minimum wage are constantly turning their people," Sinegal told The Washington Post. "They spend more on turnover than they would in paying the additional wages."

The companies have been mum lately, but it will be worth watching how corporate America might respond to Obama's latest plan.

Raising the minimum wage has been overwhelmingly contentious. Democratic lawmakers have made several efforts. Last year they introduced a bill that would raise the wage to $9.80 by 2014, but it didn't gain enough traction to pass.

Could a slightly lower hike to $9 make a difference?

For those working full-time and earning minimum wage, it would. An increase could mean earning $3,500 more a year.

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About This Author
Nin-Hai Tseng
Nin-Hai Tseng
Writer, Fortune

Nin-Hai Tseng covers economics and finance. Before joining Fortune, Tseng was a reporter at The Orlando Sentinel and a public affairs associate at GE. She holds an MPA from Columbia University and a BS in Journalism from the University of Florida. She lives in New York City.

Email | @ninhaitseng | RSS

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