An article in the New York Times illustrates that Walmart is working to raise wages for their employees. This is due to the fact that many employees are leaving and their hope is that they will retain the employees that they have already. The wages are said to change from $12-$18 an hour to $14-$19 an hour. These changes will be taken into effect in March 2023. Some challenges that can arise from this pay increase could worsen the company. There are risks of a recession that could end up financially hurting the employees and company. The generation shift from the baby boomers leaving the workforce could result in loss of employment. Another issue that arises is that the wage increase will help Walmart lower their inflation strain however, this could prolong inflation throughout the economy. Overall, there are benefits to the rising pay for Walmart employees however there are also future challenges that could greatly impact the community.
This article corresponds with what we talked about in class with incentives. Walmart was struggling to keep their employees therefore they gave them higher wages to incentivize them to stay and work for them. This type of incentive is called: Material incentive.
Article: https://www.nytimes.com/2023/01/24/business/walmart-minimum-wage.html
5 comments:
It is surprising to see that Walmart has decided to raise wages while others are cutting costs and laying employees off. It will be interesting to see how this decision pays off for Walmart because of how big the company is. Given that real inflation is not going away, I would not be surprised if Walmart decides to cut workers as a result of increasing costs of labor. Walmart also has invested a lot into using self-check and other machines to do unskilled tools, so maybe the cheaper robotic alternatives have freed up cash for them to be able to afford a wage raise.
I'm not sure if this incentive system is a good idea for Walmart. Last semester in National Income and Business cycles we learned that companies like Walmart raising peoples wages can contribute to inflation and it almost creates this loop of there being inflation, then people demanding to be paid more because of the inflation, and businesses respond by raising their prices.
Hello Annabel,
This is a problem many companies are facing and is not just an issue of Walmart management. High inflation hikes within the last year have caused virtually all businesses to raise their wages to a more feasible rate. Many companies are pressured into raising their wages as they must be able to compete with other hiring companies who may offer a higher wage. What I will note is that if we do see another hike in wage rates we will indefinitely see a prolonged effect of inflation. The inflation rate and wage rate are almost indefinitely correlated.
However, something we must recognize is that if the wage rate stays consistent or is still larger than the inflation rate then we may not see these negative effects. Considering what the federal reserve has been doing in terms of IR hikes I believe that we won't see inflation rise as much as it would have risen a year ago.
Overall, well-done.
-Ryan Stefancin
Walmart's idea of raising their employee's wages won't be very effective in the long run. 14$ an hour in most places is what almost all jobs are already paying giving no incentive to come to Walmart to work. With all the social stigma there is around working at Walmart you would assume they would attempt to raise their wages above the average but they have failed to do so by only raising them one to two dollars from what they were before. Their biggest competitor in Target has been paying a 15$ minimum for years now meaning they have still yet to compete with Target wage-wise. In order to compete they will need to raise their wages again in the near future in my opinion.
Walmart raising their wages should have been done over a year ago. This country while unemployment is at a low is still facing a huge issue which is the amount of people not looking work right now. Walmart is one of the most richest companies in the world and it can be safe to say that they have been able to increase wages for a long time. With this increase in wages we could see an increase in prices throughout there company as a way to balance it out, this could be a common thing done by many companies this year.
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