Basic Economics: Walmart Hikes Minimum Wages, Then Makes Completely Predictable Move

As far companies with big pockets go, you would expect Walmart to pretty high up on the list, and you would be right to make that assumption. However, it would seem that the retail giant’s attempt to offset these wage hikes is not only affecting their employees, but the customers, as well.

Earlier this year, the retail behemoth became one of several corporate heavyweights to raise wages for its meagerly compensated workers, around 500,000 of which are now set to receive at least $9/hour and $10/hour by Q1 2016. The move will cost somewhere around $1 billion this year.

Late last month we highlighted an internal memo circulated at Arkansas recruiting firm Cameron Smith & Associates which looked to be an attempt to prepare the firm’s employees for layoffs at Wal-Mart’s home office. Not a week later, Bloomberg ran a story detailing the grievances of some senior Wal-Mart employees who suddenly realized that although they may still be making more than their subordinates, the wage hierarchy had been distorted and that distortion had nothing to do with merit. As we put it, “higher paid employees don’t understand why everyone under them in the corporate structure suddenly makes more money and if people who are higher up on the corporate ladder don’t receive raises that keep the hierarchy proportional they may simply quit which means that, for Wal-Mart, raising the minimum for the lowest paid workers to just $9/hour will end up costing the company around $1.5 billion if you include the additional raises the company will have to give to higher paid employees in order to retain their ‘talents’and avoid a mid-level management mutiny.”

This isn’t the first time this has happened. In states where the minimum wage actually has been hiked, employers are being forced to do the same exact thing, and those who aren’t are facing the problem of their employees voluntarily giving up hours in order to keep receiving welfare checks. While some people might truly deserve higher wages, it’s difficult to feel sorry for those who aren’t willing to work for it.

For more information go to: Zerohedge

Photo: Mike Mozart on Flickr