By Curt Hopkins
(photo credit: Washington Times)
Retail powerhouse Walmart prides itself on providing customers with “everyday low prices.” But labor experts believe the retail giant scored itself a public relations bargain with a much-publicized but less-than-generous pay increase for some of its workers.
For more than half a century, Walmart has paid its 2 million-plus employees such depressed wages that many full-time workers cannot live on them. So many full-time employees are on state and federal welfare programs.
That’s how Walmart ended up becoming the single largest private-sector beneficiary of public assistance. U.S. taxpayers, according to Barry Ritzholtz of Rithholz Wealth Management, “have been subsidizing the wages of this publicly traded, private-sector company to the tune of $2.66 billion in government largesse a year.”
The world’s largest company by revenue has long pushed back against every labor pressure to increase wages, hours, and benefits. So why is Walmart really raising wages for half a million of its associates?
Turnover in Tightening Labor Market?
Walmart has seen a 44% annual turnover rate among its hourly employees—a marked difference from the 6% turnover rate at rival Costco. That’s because Costco pays workers an average of $20.89 an hour, while Walmart pays $12.85.
This practice may cost more than it saves. The Harvard Business Review estimates that for “skilled and semi-skilled jobs, the fully loaded cost of replacing a worker who leaves (excluding lost productivity) is typically 1.5 to 2.5 times the worker’s annual salary.”
Joel Naroff, chief economist at Naroff Economic Advisors, believes that “Wal-Mart’s move to raise their employee pay base is a sign that the labor market has already tightened.” Moreover, Walmart may just be trying to stop its workforce from leaving for better opportunitiesas the economy improves.
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