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Friday, February 21, 2014

A $10.10 Federal Minimum Wage Would Raise Walmart Prices by a Penny per $16 Item

Posted by on Fri, Feb 21, 2014 at 1:34 PM

According a report by Bloomberg News, a hike in the federal minimum wage from $7.25 to $10.10 an hour might only cost consumers an additional penny on a $16 purchase.

A boost in the minimum wage to $10.10 would add $200 million — or less than 1 percent — to Wal-Mart’s annual labor bill, the University of California Berkeley Center for Labor Research and Education estimates.

If Wal-Mart passed along the estimated $200 million in extra labor cost to consumers, it would equal about a penny per $16 item, said Ken Jacobs, the Labor Center’s chairman. Meanwhile, the rise may boost purchases among the chain’s core shoppers, many of whom could see their earnings climb, he said.

Walmart has remained neutral in the current minimum wage debate, but actually lobbied on behalf of a higher wage floor the last time it was raised. “The U.S. minimum wage of $5.15 an hour has not been raised in nearly a decade, and we believe it is out of date with the times,” then CEO H. Lee Scott said in a speech in 2005. “Our customers simply don’t have the money to buy basic necessities between pay checks.” The same is true today.

 

Comments (12) RSS

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Will in Seattle 1
There you go using logic & math again ...
Posted by Will in Seattle http://www.facebook.com/WillSeattle on February 21, 2014 at 1:49 PM · Report this
2
Why are you framing it like this....

According a report by Bloomberg News, a hike in the federal minimum wage from $7.25 to $10.10 an hour might only cost consumers an additional penny on a $16 purchase.

This is actually the problem with MW increases when it comes to Big Business VS Small Business. Small business can't combat a 20% labour increase with a penny.

Posted by swakinc on February 21, 2014 at 2:11 PM · Report this
collectivism_sucks 3
@ 2
You are 100% correct. Wal-Mart can afford it because they have a massive operation. A small business doesn't and they can't just cut stock dividends to make up the difference.
Want an America full of nothing but Wal-Marts and McDonald's? Support a higher minimum wage!
Posted by collectivism_sucks on February 21, 2014 at 2:17 PM · Report this
collectivism_sucks 4

And it also should be noted that the only reason Wal-Mart is this big is because government has done nothing but support it through tax credits and using eminent domain laws to let them steal people's property and build those ugly big boxes in their place. In a real free market system Wal-Mart would not have their government given edge and would have to compete with smaller, more agile competitors.
Posted by collectivism_sucks on February 21, 2014 at 2:21 PM · Report this
5
Current minimum wage is $7.25; raising it to $10.10 would be an increase of $2.85

The basics of the math are that Walmarts labor cost would rise and profits would fall by an equal amount - some of that extra labor cost would be offset by smaller profits. There is an increase in payroll taxes as well on that new salary.

But let's say, it adds up that the overhead on this new wage is 50% of the wage - essentially that the $2.85 bump equates to $4.28 in extra costs to Walmart. However, some of that increase in cost is offset in a decrease in taxes on profits - let's be generous and say that tax rate is just 15% (the low end of corporate tax). So we reduce the extra cost by that 15% and arrive at a figure of an extra $3.63 per minimum wage hour - less for employees making between the federal minimum and between 10.10 already.

This implies that Walmart employs about 55 million minimum wage hours per year. There are ~4,000 Walmarts in the US, so that's 13,774 hours per store; 264 per week; or about 9 minimum wage workers per store (working an average of 30 hours per week).

A Forbes article cited 1.4 million low-wage Walmart employees; so that $200m in extra costs works out to just $168 per employee per year, or about $0.10 per labor hour.

Anyways. I'm no economics expert. But that's my back-of-the-envelope math.

Posted by fetish on February 21, 2014 at 2:27 PM · Report this
6
@3 um; deep down they DO want an "america full of walmarts and mcdonalds". a state controlled walmart and mcdonalds is better than a mom and pop that wont do business with gay couples or neglects to hire minorities.
Posted by I'd be down with 30$ per hr mw on February 21, 2014 at 2:40 PM · Report this
collectivism_sucks 7
@6
That is indeed, unfortunately, the truth. Whether willingly or not, people like Goldy are the useful idiots of corporatism.

That's why so many corporations donated to Obama's campaign, but none donated to Ron Paul. Liberalism is always MUCH better for giant corporations than real conservatism or libertarianism ever is.
Posted by collectivism_sucks on February 21, 2014 at 2:46 PM · Report this
8
I'm pretty sure homeboy knows what he's doing; his whole stadium schtick leads back to the same veiled agenda. [I'm not attacking the stranger writer personally; he's essentially acting out of self-interest which is healthy]
Posted by followup post on February 21, 2014 at 2:58 PM · Report this
Fnarf 9
@5, you are also forgetting that minimum-wage earners, including Wal-Mart workers, will spend more because they will have more income, thus increasing Wal-Mart's sales and profits (and a lot of other people's). That's the whole basis of our economic strength -- buying power in the hands of the masses. Henry Ford understood that a hundred years ago.
Posted by Fnarf http://www.facebook.com/fnarf on February 21, 2014 at 3:24 PM · Report this
keshmeshi 10
Yes, yes. Every asshole and his dog in this country is a small business owner, and regardless of how badly that asshole and his dog run their respective businesses, it's the government's responsibility to make sure those businesses never go under.

For my part, if a $10.10 or $15 minimum wage drives a stake through the heart of the types of businesses that get featured on Kitchen Nightmares, I am completely okay with that.

Given that the minimum wage would be $10.50 an hour had it kept up with inflation, bootstrapping American "small business owners" have been getting a free ride for far too long.
Posted by keshmeshi on February 21, 2014 at 3:27 PM · Report this
MrBaker 11
So, it doesn't come out of corporate profits, and the 1 percenter's pockets?

SHOCKED, I and absolutely shocked!

You actually have to change the tax system, and take the money to run the government directly out of corporate and 1 percenter's pockets, and completely eliminate all taxes (state and local) for people below the poverty line.

The state could refund all of the sales tax to people making below the poverty line, have people submit their completed federal income tax forms to the state, the state issues a check.
If the state needs more money, they have to look elsewhere.

Raising prices a penny on things that 1 1-percenter infrequently buys is not particularly effective.
Posted by MrBaker http://manywordsforrain.blogspot.com/ on February 21, 2014 at 4:24 PM · Report this
12
Swathes of the United States would starve without Wal-Mart.

Or be unable to buy tools. Or a swimming pool for their back yards. Or a fly swatter. Or grits.

It's too late to argue right or wrong about that situation.

The day the the fags stop being elitist is the day a bunch of Russians and other assorted commies had more kids than other people. For 20 years.

Dang.

Stranger authors arguing in favor of motherfucking Bubba. Come on guys.

And that's really all there is to say.
Posted by you_might_be_a_redneck_if on February 22, 2014 at 11:05 PM · Report this

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