Saturday, October 15, 2016

Higher worker pay may pay off for Walmart

Posted By on Sat, Oct 15, 2016 at 1:39 PM

click to enlarge THE MEN AND WOMEN IN BLUE: Paying them more is producing some benefits for Walmart. - WALMART
  • Walmart
  • THE MEN AND WOMEN IN BLUE: Paying them more is producing some benefits for Walmart.

Here's some news that many Arkansas business "leaders" will view skeptically: Higher employee pay might be good for their bottom line. And Walmart offers possible evidence. The New York Times reports:

In 2015, in response to customer complaints, dirty stores and lagging same-store sales, Walmart came up with a revolutionary idea — higher pay for its workforce. (Whether it is still enough is challenged by critics, but still.)

.. there is sound economic theory behind the idea. “Efficiency wages” is the term that economists — who excel at giving complex names to obvious ideas — use for the notion that employers who pay workers more than the going rate will get more loyal, harder-working, more productive employees in return.

The results are promising. By early 2016, the proportion of stores hitting their targeted customer-service ratings had rebounded to 75 percent. Sales are rising again.

That said, the immediate impact on earnings and the company’s stock price have been less rosy.

The question for Walmart is ultimately whether that short-run hit makes the company a stronger competitor in the long run. Will the investments turn out to be the beginning of a change in how Walmart and other giant companies think about their workers, or just a one-off experiment to be reversed when the next recession rolls around?

The future health of the United States economy, and the well-being of its workers, may well depend on the answer.

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