WalMart hikes pay nationally

[spuwho]

Per Benchmark Reporter:



According to market analysts, Wal-Mart`s decision to increase the wages of 500,000 staff from April is going to have an ripple effect on many industries and States across America. They said, Wal-Mart`s decision last week to pay at least $9/hour to their staff, which is $1.75 above federal payment have already have an impact in other industry.

According to market experts retailers are finding it hard to retain and find good entry level staff from April. In a statement last week Wal-Mart CEO Doug McMillon said, "These are strategic investments in our people to reignite the sense of ownership they have in our stores. As a result, we firmly believe customers will benefit from a better store experience which can drive higher sales and returns for shareholders over time".

In recent times Wal-Mart had struggled to retain and hire new staff, after another retail giant GAP increase their minimum wages to $9/hr last year. They also promised to increase it to $10/hr in 2015. After Wal-Mart`s decision last week Wal-Mart now have the one of the highest staff turnover level in USA.

Wal-Mart`s decision on pay hike is now one of the major talking points among other retail giants. In a recent interview with a local Media TJX, owner of budget chain TJ Maxx (TK Maxx in U.K.) pledge to increase their minimum wage level. They said, they will increase the hourly pay to $9 in June and $10 from 2016. TJ Maxx CEO Carol Meyrowitz said: "This pay initiative is an important part of our strategies to continue attracting and retaining the best talent to deliver a great shopping experience for our customers, remain competitive on wages in our US markets and stay focused on our value mission".

Another discount retailer Dollar Tree (DLTR) said, they have no intention of following Wal-Mart. When asked about the pay hike their CEO Bob Sasser said, "We watch the industry trends carefully, and of course, we're compliant with all the state and federal regulations. But I'll tell you, outside of complying with the continued changes in the regulations, we've made no plans for a sweeping change to our minimum wage rates. But we will continue to pay competitive wages, market by market, just as we always have done based on the prevailing rates".

Wal-Mart`s decision also have an effect on some States, Andrew Cuomo, Governor of New York State, said all waiting staff and other staffs whose wages are supplemented by tips, will have a pay rise. He also confirmed that, by the end of this year he wants to make their minimum wage $7.5/hr. Chicago also increasing the minimum wages from $8.25 to $10 an hour from July and $13 from 2019. According to Federal law the minimum wages across USA is $7.25 since 2009. Barack Obama want Congress to increase it into $10.10/hr.

[Josh]

With Walmart employees costing taxpayers over $6B/year in government assistance, this is only a good thing. Especially as someone who does not shop there.

[fsquid]

Other retailers will follow

[coredumped]

So the market works without government intervention, who knew!

[fsquid]

amazing

[finehoe]

How the pie is sliced depends upon more than economic forces:

Walmart's Visible Hand, by Paul Krugman, Commentary, NY Times:

A few days ago Walmart, America's largest employer, announced that it will raise wages for half a million workers. For many of those workers the gains will be small, but the announcement is nonetheless a very big deal, for two reasons. First, there will be spillovers: Walmart is so big that its action will probably lead to raises for millions of workers employed by other companies. Second, and arguably far more important, is what Walmart's move tells us — namely, that low wages are a political choice, and we can and should choose differently.
Some background: Conservatives — with the backing, I have to admit, of many economists — normally argue that the market for labor is like the market for anything else. The law of supply and demand, they say, determines the level of wages, and the invisible hand of the market will punish anyone who tries to defy this law.
Specifically,... a minimum wage, it's claimed, will reduce employment and create a labor surplus... Pressuring employers to pay more, or encouraging workers to organize into unions, will have the same effect.
But labor economists have long questioned this view..., workers are people, wages are not, in fact, like the price of butter, and how much workers are paid depends as much on social forces and political power as it does on simple supply and demand. ...
Walmart is ready to raise wages.... And its justification for the move echoes what critics of its low-wage policy have been saying for years: Paying workers better will lead to reduced turnover, better morale and higher productivity.
What this means, in turn, is that engineering a significant pay raise for tens of millions of Americans would almost surely be much easier than conventional wisdom suggests. Raise minimum wages by a substantial amount; make it easier for workers to organize, increasing their bargaining power; direct monetary and fiscal policy toward full employment, as opposed to keeping the economy depressed out of fear that we'll suddenly turn into Weimar Germany. It's not a hard list to implement — and if we did these things we could make major strides back toward the kind of society most of us want to live in.

[I-10east]

Target is following suit with pay increases. I guess that these 'trendsetting 800lbs gorillas' of the world set the tone ala Universal piggybacking Disney with admission increases, or whatever the hell.

http://www.cnbc.com/id/102508233?__source=xfinity

[spuwho]

But labor economists have long questioned this view..., workers are people, wages are not, in fact, like the price of butter, and how much workers are paid depends as much on social forces and political power as it does on simple supply and demand. ...
Walmart is ready to raise wages.... And its justification for the move echoes what critics of its low-wage policy have been saying for years: Paying workers better will lead to reduced turnover, better morale and higher productivity.
What this means, in turn, is that engineering a significant pay raise for tens of millions of Americans would almost surely be much easier than conventional wisdom suggests. Raise minimum wages by a substantial amount; make it easier for workers to organize, increasing their bargaining power; direct monetary and fiscal policy toward full employment, as opposed to keeping the economy depressed out of fear that we'll suddenly turn into Weimar Germany. It's not a hard list to implement — and if we did these things we could make major strides back toward the kind of society most of us want to live in.

Perhaps not Weimar Germany but definitely France.

If people truly believe that Walmart succombed solely to social or political pressures to raise their wages, then many people underestimate their capacity to analyze their situation.

You can bet that Walmart ran the needed forecasting models to see how a wage increase would play out across all the areas noted in the NYT article. If those models showed that they would lose money or it would constrain needed profit for capital investment, you would have seen a PR and lobbying campaign like no other.

Clearly they calculated what products they would have to raise prices on, what products they would stop carrying, or what suppliers would have to change to support the increase in pay.

In summary, social and political pressures may have triggered the analysis, but if they couldnt make it work, I am pretty sure it wouldnt have happened.

[finehoe]

If those models showed that they would lose money or it would constrain needed profit for capital investment...

Clearly they calculated what products they would have to raise prices on, what products they would stop carrying, or what suppliers would have to change to support the increase in pay.

Or perhaps they calculated that out of the $129.74 billion profit they made in 2014, they could afford to distribute a few pennies less to the Walton family.

[Non-RedNeck Westsider]

If those models showed that they would lose money or it would constrain needed profit for capital investment...

Clearly they calculated what products they would have to raise prices on, what products they would stop carrying, or what suppliers would have to change to support the increase in pay.

Or perhaps they calculated that out of the $129.74 billion profit they made in 2014, they could afford to distribute a few pennies less to the Walton family.

How about the taking the simple route and analyzing the spending habits of their own employees?

I you come to the realization that a good portion of your employee's paychecks go back into the company, wouldn't it make more sense to increase those paychecks?  It gives the appearance of goodwill while increasing gross sales and assuredly, the net margins.

[urbanlibertarian]

The simple reason for this wage increase is that with the economy slowly improving, the pay/benefits they were offering were no longer competitive to attract the workers they need to satisfy their customers.  With apologies to Mr. Krugman, labor is worth whatever someone is willing to pay for it and the price just went up.

[finehoe]

labor is worth whatever someone is willing to pay for it

Unless it's tech workers, and then they claim its only about skills.

[urbanlibertarian]

Employers compete with each other for workers with the right skills and workers compete with each other for jobs they have the skills for.  Supply and demand affects both what employers pay and what workers accept.

[finehoe]

"It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate." - Adam Smith

[JC]

So the market works without government intervention, who knew!

The implications of this comment are somewhat ironic given the fact that WalMart is the largest recipient of SNAP benefits.

Here us a great article in Forbes

http://www.forbes.com/sites/clareoconnor/2014/04/15/report-walmart-workers-cost-taxpayers-6-2-billion-in-public-assistance/

Walmart's low-wage workers cost U.S. taxpayers an estimated $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing, according to a report published to coincide with Tax Day, April 15.