Yahoo – AFP,
Jeremy Tordjman, 19 Oct 2015
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Walmart
employees stock the shelves at a Walmart store on February 19,
2015 in Miami,
Florida (AFP Photo/Joe Raedle)
|
Washington
(AFP) - Wal-Mart caused a stir when it raised the pay of 500,000 of its
workers. But now the US retail giant seems to regret the move after its profit
outlook plunged, reviving a minimum wage debate.
The
nation's biggest employer blames its recently released lower forecast on a plan
it unveiled in February to hike minimum hourly compensation to $10, up from
$7.25 at the federal level.
Wal-Mart's
move followed mounting criticism by labor unions and others that its low wages
have locked workers into poverty and even pressured some of them to seek public
assistance to make ends meet.
The
decision had a snowball effect, spreading most notably to fast food chain
McDonald's at a time when several US states including New York and major US
cities -- Los Angeles and Seattle among them -- took similar action,
effectively bypassing hostile Republicans in Congress.
But now
Wal-Mart's woes could put the brakes on this trend. They have already prompted
reactions from the large camp of those opposed to increasing the minimum wage,
something that hasn't been done since 2009.
"Wal-Mart's
announcement that their plan to increase wages is a contributing factor to
their disappointing earnings report confirms the obvious truth that increasing
wages has significant impacts, even on the largest of employers," Randy
Johnson, an official with the US Chamber of Commerce, the powerful business
lobby, told AFP.
The
reasoning is that companies could jeopardize their bottom line by boosting
paychecks.
"If
even Wal-Mart feels the pinch then other employers will certainly have
problems," Johnson added.
This
argument has also been used to hit back at US fast food workers who have
stepped up calls and actions demanding that the minimum wage be increased to
$15.
"A
rise in the minimum wage to $15 would very definitely mean that the jobs of
large numbers of people would be at risk," said Tim Worstall, a fellow at
the Adam Smith Institute in London.
"Companies
would have to become intensive users of well-trained labor ... rather than
extensive users of low skill and lowly paid labor," he wrote in a piece
published by Forbes magazine.
'Absurd'
Eyeing
Wal-Mart, will other big businesses back away from paying their workers better?
That remains
to be seen.
"The
companies for whom it makes business sense will continue to do it,"
Michael Strain, of the conservative American Enterprise Institute, told AFP.
But
"the others might think twice about this."
Strain
noted that companies might be torn between wanting to score points with the
greater public or win favor with shareholders.
 |
Walmart
blames its recently released lower forecast on a plan it unveiled in
February
to hike minimum hourly compensation to $10, up from $7.25 at the
federal level
(AFP Photo/Joe Raedle)
|
"The
corporate responsibility community will say: 'you raised your wages
voluntarily, that's great,' but the business community and the shareholders are
like 'jeez, this is really not helping our earning statements,'" he said.
Experts are
divided.
David
Cooper, economic analyst at the Economic Policy Institute in Washington, sought
to put the negative impact of Wal-Mart's minimum wage hike into perspective.
"The
notion that this pay increase will threaten the profitability of the company is
absurd," Cooper told AFP, highlighting the fact that the measure's cost of
1.5 billion dollars represents just 0.3 percent of the giant's turnover.
"This
is a drop in a very large bucket for them," he said, pointing to pressure
from online competitors and a strong dollar as additional reasons for its
lackluster performance.
Cooper and
others maintain that the benefits of a minimum wage hike will only become
apparent over time.
"Spending
this money on the workforce may not please short-term investors but it's good
business policy for the long-term health of the company," he told AFP.
Cooper
added that, as the labor market improves, it will become harder to attract and
retain the best people.
But
"when you raise wages, workers will stay on longer," minimizing
turnover, which comes at a significant cost, he said.
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