[Image of: RetailWire Logo and Tagline (for print)]

BUSINESS TIPS

ChannelAdvisor:
Online Selling Strategies
RR Donnelley:
In-Store Marketing
LoyaltyOne:
Enriching Customer Relationships
 
[12 comments]

Walmart supports (maybe) a minimum wage hike

May 16, 2014

Back in 2005, many people were shocked when then CEO Lee Scott came out publicly to express Walmart's support for an increase of the minimum wage, which was then at $5.15 an hour. Today, many believe Walmart's management has given tacit, if not official, support for another hike since the company has not openly opposed it.

Bill Simon, president of Walmart U.S., told The Wall Street Journal, "We are not opposed to minimum wage increase, unless it's directed exclusively at us." Mr. Simon's disclaimer referenced an effort by the Washington D.C. city council to impose a higher starting wage on Walmart than other employers in the district.

Part of Walmart's support (our words) comes from the company's contention that it pays higher than minimum wage now. The company estimates that only about 5,000 of its 1.3 million workers in the U.S. are paid the minimum. In essence, if the federal government mandates that other companies pay higher wages, Walmart will benefit.

Walmart will also benefit from many of its low-income customers having more in their purses and wallets to spend. The company has seen customer traffic fall for six straight quarters while same-store sales have been down for five consecutive quarters.

Back in 2005, Mr. Scott said that doing the right thing was critical to Walmart's culture. It was with that as a backdrop that he and the company threw support behind raising the minimum wage. Roughly eight-and-a-half years later, Walmart has taken a more nuanced approach.

"Just because we don't oppose it, doesn't mean we support it," Brooke Buchanan, a Walmart spokesperson, told The Wall Street Journal. Of course, Ms. Buchanan could have also said that just because Walmart doesn't support it, doesn't mean it opposes it either. ;o)

FINANCIALS:     [NYSE:WMT] [ ]

Discussion Questions:

How likely are we to see an increase in the federal minimum wage in the near future? Is it in Walmart's competitive interests for Congress to pass an increase?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How much would Walmart be helped or hurt by Congress passing an increase in the minimum wage?

Comments:

Being a Canadian, I won't begin to speculate on what will happen with minimum wages in the US. However, the drum I find myself beating more and more lately is that companies like Walmart, who made $17B last year, NEED to pay their staff more. The banks are the worst offenders.

Costco is a great example of putting staff first, and shareholders second. That only seems to have helped them ... look at their consistent bottom line and share price for proof.

Yes, profit is important and shareholders deserve a fair rate of return. However, you can't do that on the backs of staff and not pay them fairly. If you're making billions, surely you can figure out a way to pay your staff an extra buck or two an hour.

[Image of: View Braintrust Panelist button]
Kevin Graff, President, Graff Retail

I learned long ago not to put bets on outcomes of political debates inside the beltway... but when push comes to shove I believe the increase will happen.

As to Walmart's competitive interests, it should not be impacted since the law will become part of the cost structure across the industry.

[Image of: View Braintrust Panelist button]
Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

Given the current political climate in Washington, I'll expect to see a federal minimum wage hike shortly after the lobster whistles from the hill. And, even if a particularly talented lobster does so, it won't matter much to Walmart either way.

[Image of: View Braintrust Panelist button]
Warren Thayer, Editor & Managing Partner, Frozen & Refrigerated Buyer

So long as Republicans control the House, the likelihood of a minimum wage increase is small. Not only is it in Walmart's best interest, but it's in the country's best interest to raise the minimum wage. People who work 40 hours a week should be able to live on that wage. It's good for the economy and good for the country.

[Image of: View Braintrust Panelist button]
Max Goldberg, President, Max Goldberg & Associates

I believe we will see an increase in the minimum wages, but I am not sure that it will occur in the near future at a federal level. There have instances where the minimum wage has been raised by a state or even in city but getting a minion wage hike through congress is going to take time.

The issue is the amount. There have been discussions from raising it to $10.10 to a demand from fast food workers that it be $15. Neither of these is going to gather enough support to occur at the federal level. The push to raise it to double digits doesn't help garner support from small businesses and/or the Republican party.

When it passes, will it help Walmart? That depends on many factors, including the extent of the wage. It helps if it does increase their average wage or only does so a little. However, if it increases it a lot, the Walmart customer may have more money to spend, but will find that they will also be paying more for their goods.

[Image of: View Braintrust Panelist button]
Steve Montgomery, President, b2b Solutions, LLC

Many states, such as Michigan, are attempting to preempt a federal initiative but passing a "compromise" state law raising it higher than the current minimum wage, but lower than the proposed federal standard. So, it may be slower going than increase proponents hope for.

As to Walmart -- Henry Ford didn't pay workers $5.00 a day because he was a friend of labor. He did it because he needed people with enough disposable income to buy his cars. 'Nuff said!

[Image of: View Braintrust Panelist button]
Ryan Mathews, Founder, ceo, Black Monk Consulting

Due to the widely varied cost of living around the country, it seems that minimum wage is best left to be handled by individual states rather than the feds.

'beavertontim'

There are strong sentiments on both sides of the issue. There are likely to be some companies offering a higher minimum wage, even if there is no legislation. Cuts in benefits and support for people who are working but can not make enough money to support a family and no increase in minimum wage will discourage workers and lead to more homelessness. Paying workers to support themselves is more productive than having to pay people to keep them off the streets. Walmart benefits because more people can purchase products at Walmart.

[Image of: View Braintrust Panelist button]
Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

I know that some of my fellow panelists think the minimum wage increase is a good thing, BUT - for small business, it is a profit killer. I don't need or expect any sympathy for our cause, but many of these jobs we give to young kids 16-18 and college students will begin to dry up. We are not Walmart or a giant drug chain, and we can not suck up the increase like they can. Add in the ACA mandates, and you have a perfect storm for small business failures across the country, especially in rural poor areas.

I pay minimum wage to high school students who appreciate the work, and if this minimum wage increase kicks in, what about the spiraling effect of my other employees who will demand 13-20 dollars an hour? This will crush the spirit and the profits of the pizza shops, family restaurants, and other smaller community businesses, who simply can not grow their way out of it, since we have no growth.

This debate will continue until the pressure for votes and power hit the fan, and than the DC folks will cave, and pass this to protect their phony boloney jobs. If anyone wants to stand in a small business retailer's shoes, with the oncoming regulations we'll be seeing, let me know, as it is going to get real ugly. Can I change what is going to happen with this legislation? The answer is no, and if it does, we'll talk later, and see the results of this train wreck.

[Image of: View Braintrust Panelist button]
Tony Orlando, Owner, Tony O's Supermarket & Catering

Let's assume Washington does get off sitting on their hands and passes a minimum wage increase. Is that really going to help? Does it provide a true living wage?

[Image of: View Braintrust Panelist button]
Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

As Mr. Graff indicates, the social responsibility of paying a living wage is good for business. A higher minimum wage will still fall well below poverty level for most Walmart worker families. They probably will fall in to support the minimum wage hike - after all they have the most to gain because their core customer base will gain dollars to spend in their stores. They have virtually nothing to lose.

Having said that, I'll add that the increases in minimum wage don't work because they don't take anyone off the public subsidies. They become an excuse for increasing prices (above the actual cost of the wage hike) just like an increase in the price of a barrel of oil gives the gasoline retailers a convenient excuse to increase prices well above the cost increase.

At some point here, hopefully nearer than further away, the public will favor and support with their spending, the companies that provide a livable working wage and independent retailers where the owners are directly earning their living from working in their businesses.

Sid Raisch, President, Advantage Development System

I agree with Tony that minimum wage is more of a teenager thing, or people who act like teenagers. I think Kevin Graff misses the point comparing with Costco. Costco tends to hire younger, fitter, quicker on their feet employees for long-term employment. Costco pays a premium to get a better class of worker. Walmart is a short-term, warm body employer that focuses on hiring the "less than ordinary" employee that Sam Walton wanted to get an extraordinary output from.

As for raising the minimum wage, it would have little effect on Walmart since most of their employees are above any level the government would mandate the increase to. How Walmart would benefit is that a minimum wage increase would financially hurt its competitors.

As for the employees, it's just a symbolic increase. When Walmart says or does something that makes us go "huh, what?" then look for an ulterior motive.

David Livingston, Principal, DJL Research

Search RetailWire
Follow Us...
[Image of:  Twitter Icon] [Image of:  Facebook Icon] [Image of:  LinkedIn Icon] [Image of:  RSS Icon]

RetailWire's
Getting Started video!

View this quick tutorial and learn all the essentials...

RetailWire Newsletters