How Stupid is Walmart for Not Supporting a Minimum Wage Increase? Very.

In a word? Very. After all, the vast majority of shoppers at Walmart are, themselves, minimum wage earners, if not lower-spectrum middle class families.walmart

Nearly half of Walmart’s 1.4 million U.S. workers currently earn an average of $8.45 per hour for a 34-hour workweek. A higher hourly wage could increase Walmart’s labor costs by $2 billion, according to the University of California, Berkley CENTER FOR LABOR RESEARCH AND EDUCATION . But the payoffs would be far greater.

To illustrate from a historical perspective, Henry Ford revolutionized the industrial landscape when he doubled his own employee’s wages in 1914. In doing so, he enabled his own workers to afford to buy the Model T automobiles they assembled every day.

Though hardly on its own, this move played a major role in the expansion of the middle class…the group most likely to fuel economic growth when they have sufficient money to buy items they WANT instead of just items they NEED; which is why economic growth has been so lackluster under the austerity push from the GOP.

Giving tax breaks to the already wealthy simply has no effect of economic growth. It’s a fact as much as ten is greater than five is a fact. Debating either is an exercise in ignorance of simple mathematics.

For whatever ill-advised, political reasons, Congressional Republicans have thwarted any attempt by their Democratic rivals to increase the minimum wage from $7.25 to $10.10 an hour. Said increase would put discretionary income into the hands of at least 17 million Americans which could be the single most important impetus to breaking out of this snails-pace recovery.

Going back to Walmart’s short-sighted refusal to back such an increase, according to the study above, as well as a recent Reuters report, Walmart stands to net an additional $13 billion  just by taking the lead in increasing the minimum wages to $10 an hour. Why?  At least one quarter of Walmart SHOPPERS work in minimum wage jobs and they’re more likely to spend that extra cash than save it; and most likely at a Walmart.

In addition, Walmart would break even if their minimum wage customers increased only 60 percent as much as the increase in their wages. In addition to the 17 million Americans directly affected by the hile in minimum wage, another 11 million would see their pay rise indirectly according to Economic Policy Institute estimates.

So what is the benefit to Walmart in not getting behind the minimum wage debate? I honestly cannot tell you. It’s well documented that Walmart’s dominance in the low-price, big-box retail market has been slipping badly. The employees don’t make enough to survive without government assistance and have little incentive to work extra hard for an employer who places their interest ant the bottom of the corporate totem pole.

Shoppers have deserted Walmart in droves because of well-documented ill-kept stores, not enough check-outs, etc.

With another Christmas season about seven months away, Walmart better hope that the wealthy suddenly see their stores as an attractive place to shop, because the lower and middle income class shoppers are abandoning them in droves.

Harvey A. Gold