{"id":4808,"date":"2015-03-09T02:00:40","date_gmt":"2015-03-09T02:00:40","guid":{"rendered":"http:\/\/newsroom.chainstoreguide.com\/?p=4808"},"modified":"2015-03-09T02:00:40","modified_gmt":"2015-03-09T02:00:40","slug":"wal-mart-will-raise-minimum-wage-how-should-we-react","status":"publish","type":"post","link":"https:\/\/www.chainstoreguide.com\/offthechain\/2015\/03\/wal-mart-will-raise-minimum-wage-how-should-we-react\/","title":{"rendered":"Wal-Mart Will Raise Minimum Wage: How Should We React?"},"content":{"rendered":"

2014: A Rough Year<\/span><\/strong><\/p>\n

Last year wasn\u2019t an easy one for the world\u2019s largest retailer. Not only did Wal-Mart tie for last place in the American Customer Satisfaction Index for department and discount stores, but it has also been criticized for underpaying and over working employees, being anti-union, and has been described in a slew of colorful derogatory terms.\u00a0 This year alone, the company has come under fire for imposing stricter uniform guidelines (which the employees are expected to buy), cutting health care for about 30,000 part-time employees, and slacking on their donations to charity<\/em><\/a>.<\/p>\n

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Wal-Mart\u2019s Best Friend: The Press<\/span><\/strong><\/p>\n

Gawker Media Group wrote a series called \u2018<\/em>Life at Wal-Mart: The Workers Speak, Surviving on the Inside, and Welcome to Hell\u2019<\/em>; The Huffington Post wrote an article called \u2018How Wal-Mart\u2019s Low Wages Cost All Americans, Not Just Its Workers\u2019<\/em><\/a>;<\/em> MarketWatch wrote an article called \u2018<\/em>4 reasons Wal-Mart is the most-hated retailer in America<\/em><\/a>\u2019<\/em>; and the list goes on. \u00a0To top it all off, the company has been featured on Russell Brand\u2019s YouTube show, The Trews, and the outspoken comedian turned news enthusiast is not shy in letting people know his opinion on the company. He devotes an entire episode (How Can We Confront Walmart?<\/em>) to discussing his eye-opening views. With all of this negative press, it seems as though Wal-Mart\u2019s reputation has become increasingly negative.<\/p>\n

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The Silver Lining? <\/span><\/strong><\/p>\n

While it is easy to focus on the bad, especially when that\u2019s all that seems to be reported about the company, Wal-Mart does have a unique role in not only shaping the retail industry, but also the business world as a whole. Because it is the largest company in the world and employs over a million workers in the US, it makes sense that its every action is analyzed under a microscope. While this hasn\u2019t been the best thing for it in recent years, it does mean that when it does something good, not only will people talk about it, but it has the potential to produce significant changes that would affect millions of people.<\/p>\n

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One Action, Many Opinions<\/span><\/strong><\/p>\n

On February 19, 2015, Wal-Mart announced that it plans to raise the salary of 500,000 of its lowest paid workers, first to $9 dollars an hour and then to $10 dollars an hour by 2016.<\/p>\n

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The Optimist Pro-Wal-Mart View:<\/span><\/strong> This raise may not add more than an extra 50 cents per hour for many workers, but it is definitely a step in the right direction. This raise will hopefully create a ripple effect and encourage other companies (especially fast food) to also increase their wages. TJX Companies has already announced that it will also be raising its minimum wage to $9 dollars an hour by June, and $10 dollars an hour by 2016. \u00a0Another plus to this decision is that, \u201cPaying workers better will lead to reduced turnover, better morale and higher productivity\u201d (Paul Krugman). Wal-Mart seems to have been listening to the criticism and is finally doing something about it. Kudos to them.<\/p>\n

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The Optimist Anti-Wal-Mart View<\/span>: \u00a0<\/strong>In Paul Krugman\u2019s Op Ed for the New York Times: \u2018Walmart\u2019s Visible Hand\u2019<\/a>, <\/em>he points out that what Walmart is doing is <\/em>a <\/em>good thing. <\/em>But, it is no secret that many of the employees are on food stamps and receive Medicaid. He argues that Wal-Mart should,<\/p>\n

\u201cRaise 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\u2019ll suddenly turn into Weimar Germany. It\u2019s not a hard list to implement \u2014 and if we did these things we could make major strides back toward the kind of society most of us want to live in.\u201d<\/em><\/p>\n

Basically, in simplistic terms, those with this belief view this as a step in the right direction, but much much more needs to be done.<\/p>\n

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The Pessimist Pro-Wal-Mart View<\/span><\/strong>: There are many that think an increase in minimum wage will result in higher overall costs, a decline in the number of jobs available, and that it isn\u2019t Wal-Mart\u2019s responsibility to increase wages for a job when the person knew how much they would make when they accepted the job. The premise of this argument is that if we increase minimum wage, the rest of the economy will be negatively affected.\u00a0 But according to Krugman,<\/em> this simply isn\u2019t true. In the study: Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties<\/em><\/a>, <\/em>by the Institute for Research on Labor and Employment, the co-researchers found that,<\/p>\n

\u201cFor cross-state contiguous counties, we find strong earnings effects and no employment effects of minimum wage increases\u2026How should one interpret the magnitude of the difference between the local and national estimates? The national level estimates suggest a labor demand elasticity close to -1. This implies that an increase in the minimum wage has a very small impact<\/span> on the total income earned by affected workers. In other words, these estimates suggest that the policy is not useful for raising the earnings of low-wage workers, as the disemployment effect annuls the wage effect for those who are still working.\u201d<\/em><\/p>\n

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The Pessimist Anti-Wal-Mart View:<\/span><\/strong> This position views Wal-Mart\u2019s decision as a business move and PR stunt, looking more to improve the reputation of the company than help its workers. Yes, raising the minimum wage is a step in the right direction, but in the same month Wal-Mart announced this decision, Forbes came out with its 2015 list of The World\u2019s Billionaires<\/em><\/a>. <\/em>While the Walton heirs are always on this list, it reinforces many people\u2019s opinions that Wal-Mart could be doing much more. So just how much are the Walton\u2019s worth? Ranked as the 8th<\/sup> richest person in the world, Christy Walton is worth an estimated $41.7 billion. The 9th<\/sup> richest person is Jim Walton with $40.6 billion. Alice Walton is the 11th<\/sup> richest with $39.4 billion, and S. Robson Walton is the 12th<\/sup> with $39.1 billion. While not in the top 20, Ann Walton Kroenke is the 265th<\/sup> richest person in the world with $5.6 billion. Combine these five\u2019s wealth and it comes to a total of $166.4 billion dollars- just for these five in the Walton family. This fact in itself leads many to become skeptical of any \u201ccharitable\u201d or kind act towards the employees, and instead makes them see the company as a corner-cutting, profit-loving company where the only people that benefit from the \u2018Save More, Live Better\u2019 motto are those in the Walton family.<\/p>\n

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Conclusion<\/span><\/strong><\/p>\n

Consumers may or may not like Wal-Mart. Some may be on Wal-Mart\u2019s side, some may hate the company, but whatever the person\u2019s view, there is no denying the power Wal-Mart has, and its role in the economy. At the end of the day it is still the largest \u201centity\u201d in the world and employs more than 1 million Americans. It has incredible power when it comes to the capability of creating change and many are just waiting to see that power put to good use. Wal-Mart will almost certainly always have a place in American society, but whether that is seen as a good or bad thing will be entirely up to them and the actions they choose. Scott Test, assistant professor of business at Arcadia University, perfectly sums up Wal-Mart\u2019s role: \u201cThere is enough turnover in retail as it is\u2026 If your largest competitor raises its wages, you have to follow suit.\u201d<\/p>\n

As for the citizens of America, there is a lot of debate on minimum wage and how much someone should make. As Arry Ritholtz points out, the real question should be, \u201cWhat should it mean to be employed full time in America? Should taxpayers be supplementing the salaries of these often minimum-wage workers at large profitable firms?\u201d There is no perfect answer to this. This is an issue much bigger than Wal-Mart, and it is definitely not an issue it can fix, but to the company\u2019s credit, it made a change when it didn\u2019t have to. On the larger scale, Wal-Mart\u2019s action has put more fire in the national debate on minimum wage, and at this point, that can only be a good thing.<\/p>\n

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-If you have any opinions or questions, please email Rebecca Ewing<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

2014: A Rough Year Last year wasn\u2019t an easy one for the world\u2019s largest retailer. Not only did Wal-Mart tie for last place in the American Customer Satisfaction Index for department and discount stores, but it has also been criticized for underpaying and over working employees, being anti-union, and has been described in a slew… Continue reading Wal-Mart Will Raise Minimum Wage: How Should We React?<\/span><\/a><\/p>\n","protected":false},"author":10,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"post-template-no-sidebar.php","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[16],"tags":[5],"class_list":["post-4808","post","type-post","status-publish","format-standard","hentry","category-grocery-convenience","tag-insight","entry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/posts\/4808","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/comments?post=4808"}],"version-history":[{"count":0,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/posts\/4808\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/media?parent=4808"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/categories?post=4808"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/tags?post=4808"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}