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Breakingviews: Wal-Mart's pay opportunity

Friday, May 23, 2014 - 02:51

May 27 - Jeffrey Goldfarb and Richard Beales discuss how a hike in the U.S. minimum wage could actually boost Wal-Mart's bottom line.

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It's almost a hundred years ago today. Henry Ford decided to double the way the rape that he pays its workers to five dollars today shock the world. And we think that today the Walton of Wal-Mart might have a chance do the same thing. As the debate over the minimum wage reaches across the United States Richard you work with -- and rightly. Bledsoe so at first sight and in the sort of common debate about this wolf loves the loves company that support them rise in the minimum wage right because. They have a lot of minimum wage work is they have relatively slim margins and if you it would close the week we calculated about two billion dollars a year extra if it went from where it is now -- about ten dollars at 815 to about ten rings -- -- in round numbers. So that woody that would take at best a chunk out of that profit. But it's those simple as that because if everybody. In the US who's on the minimum wages payable a lot of those people so -- -- -- and you can make some assumptions about how they -- expendable. And if you know he makes him what we think are reasonable assumptions about that they spend enough -- And even -- to take you know that -- -- -- costs that will what net net may actually make more profit from it. That is is so the idea here is that. Wal-Mart could be proactive and us and if they were to be proactive pay their workers more. That it would influence the debate and maybe get policy -- that is since the math tells you when things right so as you that maybe date if they can actually benefit from way and then the question is. Do you take proactive action to make you know -- which would certainly make them look good than. You know maybe go against what people have people perceive what that's as as a kind of exploit which lately no defense the president have it there's a public relations. Central bands and this huge -- it would. Presumably push rivals and all kinds of other companies to people -- on some of the assumptions here are essentially that. That people would make up roughly really saying you know about 20% more so we assume that that if everyone in the country who makes that point -- -- more. Part of the assumption is that people putting -- actually probably spend. But rough and I let someone else say they -- what it's immoral woman which is not say they spend all the extra money that it will -- it just whatever it was spending it will look they spend. What is -- rivals and around more up yet and actually have to -- And again this big assumptions and in any calculation like this but do we figured as any ability they -- any of the that they went up by an average of 20%. If it's David and you have to today spend maybe 60%. All of that suit twelve assembled at Wal-Mart. Full well look to breakeven on the whole idea of hiking the minimum wage lot of assumptions right right fireball we will leave it there. And -- we will be back more reviews tomorrow.

Breakingviews: Wal-Mart's pay opportunity

Friday, May 23, 2014 - 02:51

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