Quick Take: Walmart Bites the Bullet

One of the United States’ largest employers, Wal-mart Stores Inc. (NYSE: WMT), will start raising wages for its 1.2 million workers on 10 March. The wage hike was set in motion a year ago, when the company decided to raise minimum wages in all Wal-mart and Sam’s Club stores. Wal-mart’s move is momentous because of the company’s size and market influence (Costco has already announced a similar wage hike). The company should also be commended for taking a financial hit; Wal-mart reported that operating expenses increased in the first six months of FY2015 partly due to the wage increase for associates, triggering, a drop in share price.

Wal-mart is betting that this move will pay off in the long haul. Just like all other industries, it needs to attract and retain talent. More importantly, it needs to rebuild goodwill among workers after years of stormy labor relations for which Wal-mart has severely been criticized. Increasing wages is not going to end acrimonious labor relations, but is a step in the right direction. Like it or not, the company that everybody loves to hate is slowly becoming a company that we might just all learn to love.


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