Wednesday, January 27, 2016

Economics in Action: Wal-Mart Raises Wages Then Closes Stores

by Merrill Matthews

The laws of economics have not been repealed or refuted, despite liberals’ best efforts.  Wal-Mart recently announced the company will close 269 stores worldwide, including 154 in the U.S. 
The company also says, “approximately 16,000 associates will be impacted by the decision, about 10,000 of them in the U.S.”

While the company couches the decision in the business-speak of needing to “manage our portfolio of assets,” it makes it very clear that it is closing what it calls “loss-making” stores. 
Now, what has happened in the last year that might increase the number of Wal-Mart’s “loss-making” stores?  Oh, yes, Wal-Mart made this decision in February of last year.

“For our current associates, we’ll start by raising our entry wage to at least $9 an hour in April, and, by February of next year [i.e., 2016], all current associates will earn at least $10 an hour. … We’re also strengthening our department manager roles and will raise the starting wage for some of these positions to at least $13 an hour this summer and at least $15 an hour early next year.” ....Wal-Mart raised wages last year for its least-skilled employees, and now it’s laying off 16,000 of them. Higher wages are nice, but not when it costs you your job.

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