Income inequality may be an issue in presidential politics, but corporate defenders of the status quo aren’t letting that stop their railing against wage increases. Some are even blaming higher pay for Walmart’s decision to close dozens stores.
Walmart, which in January announced plans to close 154 stores in the United States, decided last year to raise its average hourly wages from $9.48 to $10.58 for part-time workers and from $12.85 to $13.38 for full-time workers by Feb. 20. That is still below the $14.95 average hourly wage of U.S. retail workers, according to the Bureau of Labor Statistics. But Andy Puzder, chief executive of fast-food giant CKE Restaurants, which includes the Hardee’s and Carl’s Jr. chains, argued that Walmart had “merely priced people out of a job.”
Puzder suggested in a Wall Street Journal commentary that an April raise for Walmart employees led to a 10 percent reduction in earnings per share in the third quarter. He also noted that a Washington city council member blamed pay and benefits for Walmart’s cancellation of plans to build two stores there.
But Puzder is telling only part of the story. While pay, benefits, and other costs affecting Walmart’s bottom line factored into its decision to close stores and cancel openings, the main challenge for Walmart and other retailers, including Macy’s and Gap, is the consumer exodus to online shopping. Walmart is shifting gears to compete with Amazon, and not just in the United States.
Globally, Walmart is closing 269 stores and laying off 16,000 employees. While its reasons include some stores’ proximity to each other, it also acknowledged a need to boost online sales. That makes sense. The Commerce Department’s retail report for December showed a 7.1 percent increase in sales by online and other non-store retailers from a year earlier, while sales at general-merchandise stores such as Walmart grew only a tenth of a percent.
Of course, department stores aren’t the only businesses trying to compete with the Internet. And like Walmart, many are laying off workers to put more emphasis on online sales.
Instead of bloviating about higher wages, corporate leaders could do more good by helping the unemployed become employable in this brave, new world of e-commerce. They need to stop seeing raises through cloudy lenses that obscure the wage stagnation that too many Americans have experienced for years.
The Economic Policy Institute says the biggest decline in wages from 2013 to 2014 occurred among those with undergraduate and advanced degrees. Just think what it would mean to Walmart if those Americans were paid better salaries: more customers in stores and online.
Published: February 10, 2016 — 3:01 AM EST The Philadelphia Inquirer