Wal-Mart could raise employees pay?

[Keith]

Wal-Mart could raise pay and keep prices low, study says


CHICAGO (Reuters) — Wal-Mart Stores (WMT) could significantly increase employee wages and benefits without raising prices, and still earn a healthy — albeit smaller — profit, research released Thursday concluded.

The Economic Policy Institute study comes as the world's biggest retailer faces a barrage of criticism from labor unions, politicians and community activists, who say it pays poverty-level wages and drives competitors out of business.

Wal-Mart, which has taken steps to improve its health care and other benefits, argues that its low prices boost consumers' buying power and increase their standard of living. The retailer regularly cites a Global Insight study that found Wal-Mart saves U.S. families more than $2,000 a year.

"The more important question for the future isn't whether Wal-Mart is a force for good or evil in the American economy, but whether the economic benefits provided by Wal-Mart can be preserved even if their labor compensation is dramatically improved," economists Jared Bernstein and Josh Bivens wrote.
They concluded that if Wal-Mart reduced its profit margin to about 2.9%, where it stood in 1997, from the 3.6% margin it recorded last year, that would free up about $2.3 billion to pay workers without raising prices. That works out to just under $2,100 per non-managerial employee, the researchers calculated.

They noted that rival Costco Wholesale (COST) posted a profit margin of about 2% in 2005. The study did not mention Target (TGT), Wal-Mart's biggest competitor in the discount sector, which reported a 4.7% profit margin for last year.

Bivens said his research was aimed at rebutting "outsized" claims that Wal-Mart saved consumers hundreds of billions of dollars and that its margins were so thin that it simply could not afford to pay employees more without forcing low-income consumers to foot the bill.
"I always thought that they had really, really tight profit margins," he said. "They're really a microcosm of the U.S. economy. They are very, very good at generating income, but it needs to be spread out more equitably."

His research rebutted many of the findings from the Global Insight study released last year regarding how much money Wal-Mart saved consumers.
Jim Dorsey, a spokesman for Global Insight, said the research firm stood by the accuracy and methodology of its study, which was independently reviewed.
"Our study produced estimates of Wal-Mart's impact on prices and consumer savings that make common sense and are consistent with the findings of other rigorous, peer-reviewed studies on the subject," he said.

"In its criticism of Global Insight's findings, the Economic Policy Institute's paper does not properly account for the indirect impact of Wal-Mart on prices."
Wal-Mart said that its stores were good for U.S. working families, and noted that they created tens of thousands of jobs last year, many of them in underserved neighborhoods.

The retailer also criticized the Economic Policy Institute as "funded by big labor."

"We will treat the findings of this study with the same amount of skepticism as other statements made by labor leaders who oppose us," Wal-Mart spokesman Kevin Thornton said. "We are proud of the economic impact we have on communities — from the job opportunities we provide, to the money we save working families, to the tax revenue we generate, to the contribution we make to local charitable organizations," he added.

Thornton said Wal-Mart's average full-time wage is $10.11 an hour, and the retailer does market analysis to ensure its wages are competitive. He noted that Wal-Mart offers 18 different health care plans that cost as little as $11 a month in some areas.
Bivens and Bernstein concluded: "Wal-Mart does a lot right. It has expanded productivity by being more efficient and leaner than many other companies. Many of the benefits shoppers accrue from Wal-Mart's expansion could be preserved even if the retailer had to meet the expectations of its critics regarding fair worker compensation."

[OklaCity_75]

One thing you have to keep in mind is the fact that the cost of living has risen quite a bit over the last few years.

In order for everyone to survive the new increase in the cost of living, wages are going to have to increase at all levels.

I think that in the near future we are all going to see a significant pay increase. When the cost of living goes up, quality workers look for higher paying jobs. All working class jobs including Wal-Mart will have to pay more than they do or run the risk of losing quality employees.

Wal-Mart is learning the lesson many businesses have learned over the years. If you want to have a quality business, you need a quality staff to run the store. In the end, Wal-Mart will still pay less then some retailers but they will not pay the worst either. If anything, I think they will shoot to keep all low-level employees at or just above the median income of the area in which the store is located

[HFK]

CHICAGO (Reuters) — Wal-Mart Stores (WMT) could significantly increase employee wages and benefits without raising prices, and still earn a healthy — albeit smaller — profit, research released Thursday concluded.

Thank goodness for research institutes: how would we ever figure such things out without them?

No mention of the stockholders, and how the company's value might be affected by adopting such a policy.

[Yodachaos]

The problem is store level management just got a pretty nice raise. Store managers got a 10 to 15 thousand dollar I believe and Assistant managers recieved a 20 thousand dollar raise. Ofcourse the regular employees got squat, which in most cases that ive seen the regular employees work harder than the managers, in some cases.