Why backing the minimum wage hike makes sense — for Wal-Mart


What if she had more to spend? (Dayna Smith/The Washington Post)

Looks like Wal-Mart  is in an open-minded mood these days, telling Reuters that it's "looking at" the idea of supporting a hike in the federal minimum wage.

Wait, what?

That's shocking at first, given the ferocity with which the world's biggest retailer has fought unions trying to organize workers around higher wages. If you think about it, though, it makes a lot of financial sense — because, as spokesman David Tovar put it, the 140 million people who shop at its stores every year would "now have additional income." No kidding. 

Wal-Mart has very real influence on its customers' earnings potential. As Dan Gross outlined in the Daily Beast last year, it employs about 1 percent of those 140 million customers, and its wages set the standard for everyone around it as well. Its core shoppers are also those making minimum wage in other establishments. When they can't spend much, rather than saving by shopping at Walmart, they'll go to dollar stores instead — a lesson the company learned when food stamps were cut this year. A hike to $10.10 would mean 900,000 are no longer poor.

Wal-Mart also is much better able to absorb a minimum wage increase than its smaller competitors — especially if everybody has to pay it. The National Retail Federation and National Federation of Independent Businesses stridently oppose any minimum wage hikes, because every single one of their members are smaller than Walmart. A study out of the University of California-Berkeley found that if  Wal-Mart raised its minimum wage to $12 and passed 100 percent of it on to consumers, it would only have to raise prices by 1 percent — and they'd still be lower than everybody else's.

Sure,  Wal-Mart fought a measure in D.C. that would've raised the minimum wage for big-box retailers to $12.50 an hour, but only because it exempted those with collective bargaining agreements. If it had included unionized grocery stores, like Safeway and Giant, it probably would've felt differently. It wouldn't even be that out of character — the huge retailer also backed a significant minimum wage hike back in 2007.

Finally,  Wal-Mart may have realized that making its employees a little more happy is probably a good way to tamp down the labor unrest that's started flaring up with greater frequency in recent months. "With the increase in a minimum wage, you retain good people," Florida store manager Claudine McKenzie told me. "The higher people get paid, the more satisfied they are."

If it can do that in an environment in which everybody else has to raise wages too, then there's no way  Wal-Mart doesn't come out on top.

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.
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