According to a report from ThinkProgress, a raise in the minimum wage to $10.10 an hour would increase the price of a product at Walmart that costs $16 by exactly one cent. Devastating burden for the consumer, huh?
Estimates from Ken Jacobs at the Labor Center at U.C. Berkeley show that the increase would add $200 million to Walmart’s current labor costs, which amounts to just 0.8% of what the retail giant spends annually. It also represents a tiny 0.06% of the company’s sales each year.
Bloomberg has reported that Walmart is actually considering supporting a minimum wage increase, since it would result in millions of its customers having “additional income,” although no decision has yet been made. The increase could give 16.5 million workers across the country $31 billion more in earnings. “That penny per $16 an item may not turn out to be necessary,” Jacobs noted.
[box type=”shadow”]There are also other ways the company could increase pay for its employees without needing to raise its prices. A report from think tank Demos argued that instead of putting $7.6 billion on buying back shares of its own stock, it could use that money to give its workers a $5.83 raise, which would ensure they would all make over $25,000 a year when working full time. That has been one of the key demands made by striking workers over the past year.
Businesses like Walmart don’t just potentially benefit from higher sales when Americans have more money. They can also see benefits within their own workforces, such as improved efficiency and lower turnover.
Other retailers are ahead of the game. Realizing the benefits of an increase, The Gap announced that it would be raising its employee hourly wage to $10 starting in June of 2015.[/box]
“Our decision to invest in frontline employees will directly support our business, and is one that we expect to deliver a return many times over,” Gap CEO Glenn Murphy said. ThinkProgress reports that other companies such as Costco, In-N-Out Burger and Boloco already pay their workers well over the $7.25 minimum wage requirement.
President Obama has thrown his weight behind a bill that will require all business to pay their employees at least $10.10 an hour. When the bill was introduced last year, it was unanimously voted down by the GOP.