Economics 102: WalMart Cuts Worker Hours After Hiking Minimum Wages, by Tyler Durden

At most colleges the laws of supply and demand are taught in beginning microeconomics, which is usually Economics 101. Raise the price of something, and less of it will be demanded. Raise the price (wages) of labor, and something has to give, especially for the world’s low-cost retailer. From Tyler Durden, at zerohedge.com:

This year, some American executives who heeded loud calls for across-the-board wage hikes for America’s lowest-paid workers received a complimentary refresher course in undergrad economics courtesy of the free market.

Take Dan Price for instance, the 31-year old CEO of Seattle-based Gravity Payments Systems who found out the hard way that setting the pay floor at $70K comes with all manner of unintended consequences.

And then there’s Wal-Mart.

Earlier this year, the retail behemoth became one of several corporate heavyweights to raise wages for its meagerly compensated workers, around 500,000 of which are now set to receive at least $9/hour and $10/hour by Q1 2016. The move will cost somewhere around $1 billion this year.

Now one thing that should have been abundantly clear from the start is that if ever there were an employer that could ill-afford a $1 billion across-the-board pay raise without immediately making up the difference by either firing some employees, cutting hours, or squeezing the supply chain it’s Wal-Mart. After all, they’re the “low price leader”, and you don’t hold on to that title by passing labor costs on to customers.

Predictably, the company moved to extract more “value” from its suppliers and when that didn’t prove sufficient, the folks in Bentonville brought in the “plumbers.”

To continue reading; WalMart Cuts Worker Hours After Hiking Wages

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