265 335 shares Walmart's wage hike to $10 per hour might force other retailers to follow suit
Posted January 22, 2016 in Selected Press
CLEVELAND, Ohio -- Walmart Stores Inc.'s announcement that it will raise wages for 1.2 million hourly workers to $10 an hour at Walmart U.S. and Sam's Club stores was praised by those who had long pushed for higher pay for its associates.
But it also raised eyebrows among others that the world's largest retailer employs so many people less than that. The raises begin Feb. 20 as part of Walmart's two-year, $2.7-billion investment in worker pay.
C. Lockwood Reynolds, associate professor of economics at Kent State University's College of Business Administration, said Walmart is in part responding to an improving economy and rising employment "that tend to push up wages anyway."
With more competition for workers, Walmart is strategically trying to attract more workers and hang on longer to the ones it has. Having a higher starting salary "makes it less likely that they're going to leave to go to Target," he said.
And because it's such a large and influential employer, Walmart could ultimately force other retailers to raise their wages as well, he said.
"If you're the Big Bad Wolf that everybody's always complaining about, it might be less costly for you to do something like this than having
something else forced upon you that's even worse," such as a $15 federal minimum wage, he said.
Reynolds pointed out that although Walmart announced higher wages starting next month, it hasn't said how it will pay for them. "As their costs go up, they have to pay for it somehow," in a way that won't upset its shareholders.
It's not clear, for example, if Walmart would be willing to settle for slightly smaller profit margins or raise their prices to compensate, he said.
Amy Hanauer, executive director of Policy Matters Ohio, a Cleveland-based liberal think tank, said: "It's always good when companies raise wages; it's far better than the alternative. But most companies wouldn't expect a trophy for paying its workers less than what a family of three needs to escape the poverty threshold, so Walmart doesn't deserve a trophy for it, either.
"Ten dollars an hour is still far too low to live on," she said. "A parent with a spouse at home and their infant, if that parent worked for Walmart, that family would be in poverty."
The federal poverty level threshold for a family of three is $20,090.
Hanauer said Walmart still doesn't give its workers enough hours and keeps too many of them working at less than full-time, but nevertheless called the wage hike "a small, small step in the right direction."
"Given the extraordinary profits that they earned last year, I think it's only appropriate" that it pay its workers more, she said. If anything, "it shows that it is possible. It's clear that $10 an hour is very, very doable if Walmart is doing it."
Carl Ivka, president of the United Food and Commercial Workers Union Local 880, which has also protested Walmart's wages, said via email that "It takes more than higher wages to create a happy workforce. It also takes good healthcare benefits, a solid pension, good fringes, and protection against arbitrary and unfair treatment. Walmart's new program falls woefully short."
Hanauer said a higher starting salary -- $9 an hour for those hired since Jan. 1, 2016, with a bump to $10 an hour after they finish six months or more of training -- will help Walmart hire and keep more of its workers.
"They'll find more people willing to work at $10 an hour than at $8.50, but it's still below industry standards," she said. Even after all the wage increases bring Walmart's average full-time hourly rate from $12.96 to $13.38, "the average Walmart worker is still going to earn less than the average U.S. retail worker," who is paid $14.95, she said.
"Walmart wins if poor people are earning more, because in the U.S., poor people spend a lot of their money at Walmart," Hanauer said.
Original Article: http://www.cleveland.com/business/index.ssf/2016/0...