South Dakota business owners predicted a variety of problems would arise from the voters’ 2014 decision to raise our minimum wage from the federal $7.25 per hour to $8.50 plus annual cost-of-living increases. Empirical data from South Dakota and elsewhere indicate no discernible economic harms from recent minimum wage hikes.
Reinforcing the economic case for raising the lowest wages is Walmart. The mega-retailer raised its starting wage to $10 last February. Walmart’s operating costs are up 8%, but sales are up 3% and earnings are up 12% while Target and other retailers struggle. Walmart is contending that higher base wages are a net benefit for the company:
A Walmart executive told CNNMoney that customer service scores have improved since the raises went into effect. Workers are more enthusiastic — and the pool of applicants for new jobs is strong, in part because of the higher wages [Paul R. La Monica, “Americans Are Shopping… at Walmart,” CNNMoney, 2016.08.18].
Of course, Walmart pads its profits with its long-standing practice of reducing staff and shifting costs to the public sector:
Retail consultants told Time that Walmart likely has about 400,000 fewer workers in the U.S. today than a decade ago. In giant stores that can range up to five acres, that translates into one worker for every 524 square feet of retail space — a 19 percent decrease in workers per square foot from 10 years ago. The greeters at the entrances are gone, many cashiers have been replaced with automated checkout scanners, and there are simply fewer eyeballs monitoring everything than before.
That all proved beneficial for Walmart’s bottom line, as sales per employee grew 23 percent over that same time period. But just like some Walmart detractors accuse the company of relying on government aid programs to subsidize its workers, critics say Walmart is skimping on security and implicitly farming the cost out to publicly-financed police forces [Jeff Spross, “Why Criminals Flock to Walmart,” The Week, 2016.08.23].
Giant corporations like Walmart should hire enough people to tackle the problems they bring to their communities. But at least Walmart is recognizing that paying better wages results in better workers.