The big box giant could pour as much as $1.5 billion into the economy and spark raise increases at other companies.
Wal-mart announced it’s bumping the wages of about a half-million full-time and part-time workers. All its employees will make at least $9 this year and a minimum of $10 by Feb. 1, 2016.
“This means there will be more consumer spending, more tax revenue, and more workers who are making more money and feeling better about their place in the economy,” Business Insider said.
Sure, the raises are good news for Wal-mart’s lowest-paid employees, but as America’s largest private employer, Wal-mart’s move will have ripple effects beyond its employees’ paychecks. According to CNBC:
Using a set of “very generous” assumptions, such as figuring that all Wal-Mart workers put in the maximum 30 hours to be considered part time, and they all work 52 weeks a year, that would generate an additional $1.5 billion annually to a national wage base of $7.5 trillion, said Tom Porcelli, chief U.S. economist at RBC Capital Markets, in a phone interview.
“The impact is without question small,” Porcelli said. “The question is … what are the knock-on effects of what Wal-Mart did?”
When you consider the U.S. economy is $17 trillion a year, Wal-mart’s $1.5 billion wage increase may seem small. But how many restaurant meals, gallons of gas, groceries or clothing items, could you buy with $1.5 billion?
Now that Wal-mart is offering higher wages, other retailers – such as Target and Home Depot – may be forced to follow suit, if they want to retain their employees who are currently working for lower wages. According to The New York Times:
“Wage increases could be imminent for other companies,” said Oliver Chen, retail analyst at Cowen & Company in New York.
Aside from competitive pressure to hire and retain low-wage workers, political pressure for higher wages has been building. Several states and cities have raised the minimum wage far beyond the federal minimum.
The federal minimum wage is currently $7.75. However, according to data from the National Conference of State Legislatures, 29 states now exceed the federal minimum wage. Seattle passed a $15 minimum wage in 2014. For large employers there (with 500 or more employees nationwide) the minimum wage is set to reach $15 per hour in four years. San Francisco is also phasing in a $15 an hour minimum over the next few years.
What kind of impact do you think Wal-mart bumping its minimum wage will have? Share your comments below or on our Facebook page.
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