The laws of economics have not been repealed or refuted despite liberals best efforts.
Wal-Mart recently announced the company will close 269 stores worldwide including 154 in the U.S.
The company also says approximately 16000 associates will be impacted by the decision about 10000 of them in the U.S.
While the company couches the decision in the business-speak of needing to manage our portfolio of assets it makes it very clear that it is closing what it calls loss-making stores.
Now what has happened in the last year that might increase the number of Wal-Marts loss-making stores? Oh yes
Wal-Mart made this decision in February of last year.
For our current associates well start by raising our entry wage to at least $9 an hour in April and by February of next year i.e. 2016 all current associates will earn at least $10 an hour. … Were also strengthening our department manager roles and will raise the starting wage for some of these positions to at least $13 an hour this summer and at least $15 an hour early next year.
Of course Wal-Mart is free to pay its employees whatever it chooses and the recipients of the increases will no doubt be thrilled.
But one has to wonder if Wal-Mart abandoned its long-running practice of low wages because it had an epiphany or because it caved to liberal pressure.
Thats what happened on health insurance. Liberal and union groups complained for years that Wal-Mart wasnt providing health insurance and so the company decided to provide coverage--
only to start paring it back in 2011 when costs kept rising.
Today liberals and unions are demanding higher wages--preferably $15.00 an hour--and Wal-Mart agreed.
But most economists have repeatedly warned that arbitrarily raising wages--like a government-imposed minimum wage--increases costs. Some employers will compensate by laying off workers hiring fewer workers or not hiring the least skilled--all of which hurts low-income workers.
Wal-Mart raised wages last year for its least-skilled employees and now its laying off 16000 of them. Higher wages are nice but not when it costs you your job.
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Todays PolicyByte was written by Dr. Merrill Matthews resident scholar with the Institute for Policy Innovation.
