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Walmart: hurting workers more than they are helping
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 Walmart announced that they were raising the minimum starting wage they paid to $11--and made it a political statement by saying that it was to pass along their savings from the new tax bill.   As it turns out, the statement was disingenuous in at least two ways:  The same day, they closed 63 of their Sam's Club stores, displacing or laying off workers in 10% of their locations. 

 

Secondly,  according to Walmart's own press releases, this will not have much of an effect: as of 2016, the average pay was $13.38.  So only new hires are affected by the "increase"--and how many new hires will there be if Walmart is closing stores. 

 

Taken in context of what is happening in retail on-ground businesses, this is probably a reasonable financial decision. But communicating the message that it is good for wage earners in light of the store closings had a back-firing effect. 

 

Walmart stock price was up slightly on Friday, but traded slightly lower after hours.

 

Source: "Walmart's Bumpy Day: From Wage Increase to Store Closings," by Michael Corkery, New York Times, January 11, 2018.

 

Follow up

  • What relationship, if any exists between wages paid to workers and stock price?
  • What is your reaction to the Walmart brand? Was it changed in any way by this latest action?