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$15 Minimum
Wal-Mart Woes: Perils of the Minimum Wage Hike?

If advocates of a $15 national minimum wage were motivated by evidence rather than ideology, then Wal-Mart’s recent stock slide would give them pause. At least, so argues Jed Graham in a perceptive piece for Investor’s Business Daily:

Wal-Mart’s second profit warning in two months should be a wake-up call for the political left. If America’s largest private employer is struggling with its own pay increases, how will other businesses cope with even larger minimum-wage hikes?

Long the scourge of progressives for its relatively low wages, Wal-Mart (NYSE:WMT) announced early this year that it would unilaterally boost its own base wage, first to $9 an hour this past April and to $10 by February 2016. […]

Wal-Mart’s stock price promptly suffered its sharpest one-day sell-off in a quarter century. Shares kept falling Thursday, and edged lower Friday afternoon.

The stunning hit to profitability for the nation’s biggest retailer raises serious questions about the Democrats’ economic agenda to raise the minimum wage to $12 or $15 an hour, while asking low-wage employers to provide their workers with health insurance and paid sick leave.

Wal-Mart decided that it would trade profitability for employee retention, on the assumption investing further in its workforce would raise profits over the long run. But even raising base wages from $8 to $9 had a tremendous impact on its short-term profit margin. One can only imagine the way profitability would collapse if the company were forced to wage its minimum wage to $12—or $15, or whatever number Democrats are advocating three years from now. At some point, it would simply become impossible for the business to operate.

As we’ve argued again and again, the minimum wage—especially the federal minimum wage—is a blunt instrument. There are of course instances where companies’ base wages could and should be raised—as Wal-Mart is doing now, voluntarily. But this decision is best left up to management, not to federal regulators who know nothing about a company’s position or market strategy. Read Graham’s whole piece to see why federal action to double the cost of labor in a fragile economy could be devastating to American business.

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  • bannedforselfcensorship

    I’m coming to the opinion that any candidate that advocates a national minimum wage increase is an economic illiterate that doesn’t understand Coon Holler Arkansas has very different cost of living from San Francisco. Minimum wage, if it exists should be a local issue for this reason.

    • Jim__L

      Leftists do not want to help people. They don’t even necessarily want to implement their ideas. They just want as much power as possible over as many people as possible. Either that, or their minds are only big enough to consider one level of government, and are terminally confused by different places having different practices.

      This is why they have decided to make so many issues into National issues, instead of making those issues State or Local issues. At the level of several states and a large number of cities, Leftists have the constituencies to pass whatever laws they deem fit. In San Francisco, they pass laws at will, without any GOP opposition at all.

      Can anyone find a non-pathological reason that this does not content them?

  • Blackbeard

    A national minimum wage is a perfect issues for progressives to run on.

    If it doesn’t pass the failure can be blamed on the heartless, greedy plutocratic Republicans.

    If it does pass unemployment and inequality will increase. Again, these are good issues for progressives to blame on Republicans. But it would be the progressives own fault you say? Sure but facts don’t matter if the MSM is on your side.

  • Tom

    If you haven’t figured out that this is a feature, not a bug, in the plan to raise the minimum wage you’re not paying attention.

  • Rick Johnson

    Minimum wage laws make it illegal to employ young low skilled workers at a wage they are prepared to work for. Anyone who claims they care about the poor who isn’t advocating scraping minimum wage laws is a hypocrite

  • Fat_Man

    The minimum wage is now, and always will be $0.00. If you don’t understand that, you are a fool.

    • BetinaVillagrosa

      Was true couple of hundreds of years ago. It was called Slavery. You wish for those good old days, right?

      • Fat_Man

        Nope.

      • Tom

        No, slavery is involuntary labor for no money.
        When it’s voluntary, it’s called an internship.

  • Jacksonian_Libertarian

    During the “Great Depression 1.0” the Federal Government made lots of rules favoring Union employment which raised the cost of employing people and was one of the major reasons for extending and deepening the Depression. It seems the Stupid Government Monopoly is intent on doing the same thing again with the minimum wage, which will make the “Great Depression 2.0” all it can be.

  • BetinaVillagrosa

    Investor’s Business Daily? Wow! Is AI so clueless as to think IBD has any credibility. What’s next? An article on Obama’s a secret member of ISIS in World Net Daily?

    There is something called reality and then there is an alternative reality of Faux “News”, WSJ Editorial, Talk Radio, IBD,..
    AI, normally a sane rag, slipped into the alternate universe.

    • Beauceron

      Anything that doesn’t agree with my politics is insane propaganda!!

      • BetinaVillagrosa

        Nope. The American Conservative, The American Interest doesn’t agree with me and they are not a propaganda machine, sane or insane.
        National Review Online and The Weekly Standard disagree with me they are sane but not insane propaganda

    • stan

      Bigots stereotype and slander. It’s what they do.

  • Beauceron

    I doubt those pushing for a minimum wage hike are the least concerned about a corporation’s profit margins.

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