Should Walmart Pay More? Other Successful Stores Do

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Image the effect on the economy if Walmart paid its 1.4 million employees more money.

Now that the minimum wage has moved into the public consciousness, debates again rage over Walmart workers’ pay.

What do you think?

On one side are folks who share the views of business experts who believe Walmart should hire more workers and raise their pay because not only would that lessen the misery of those assigned repetitive, menial work, but because it would give employees incentive to make the company more profitable.

Some experts point to the success of companies like Trader Joe’s and Costco. Adam Davidson wrote in a column in The New York Times:

[At those stores] workers are paid more than at their competitors; they are also amply staffed per shift. More employees can ask customers questions about what they want to see more of and what they don’t like, and then they are empowered to change displays or order different stock to appeal to local tastes. (In big chains, these sorts of decisions are typically made in headquarters with little or no line-staff input.) Costco pays its workers about $21 an hour; Walmart is just about $13. Yet Costco’s stock performance has thoroughly walloped Walmart’s for a decade.

The argument is a more analytical version of one brought forth by journalist Barbara Ehrenreich, who wrote the 2001 book “Nickel and Dimed: On (Not) Getting By in America,” about her failure to lead a productive life while working minimum-wage jobs, including one at Walmart.

On the other side of the argument are people like Doug Altner, an analyst and instructor at the Ayn Rand Institute who wrote a column for Forbes countering arguments such as those raised by Davidson. He wrote:

Well, nobody has to work at Walmart if he feels underpaid or underappreciated. He can always seek another job. So why do 1.4 million Americans choose to work at Walmart, many for well under $12 per hour?

But what about the argument that paying more results in more profitable businesses?

Costco and Trader Joe’s are unlike Walmart in other ways, some say. Megan McArdle wrote in a column for Bloomberg:

In other words, Trader Joe’s and Costco are the specialty grocer and warehouse club for an affluent, educated college demographic. They woo this crowd with a stripped-down array of high quality stock-keeping units, and high-quality customer service. The high wages produce the high levels of customer service, and the small number of products are what allow them to pay the high wages. Fewer products to handle (and restock) lowers the labor intensity of your operation. In the case of Trader Joe’s, it also dramatically decreases the amount of space you need for your supermarket … which in turn is why their revenue per square foot is so high. (Costco solves this problem by leaving the stuff on pallets, so that you can be your own stock boy).

Who’s got it right? Should Walmart pay its employees higher wages? And do you think it should? Imagine the impact on the economy if 1.4 million Walmart workers made more money. Comment below or on our Facebook  page.

Stacy Johnson

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