While workers at Missouri Walmart stores have reason to rejoice that the retail behemoth announced recently its plans to dedicate over a billion dollars to workers’ pay raises, better training for their workers and improvements to employee scheduling, don’t assume the decision was philanthropic in nature.
In the company’s announcement last month, Walmart said worker’s base pay would rise to $9 and transition up to $10 per hour. The retail giant’s decision was motivated largely by a need for American consumers to spend their money shopping at Walmart. Consumers flock more readily to stores that are staffed by content workers who enjoy their jobs, according to research done at the Wharton School of Business at the University of Pennsylvania, Massachusetts Institute of Technology and other places.
One 2007 study on understaffing indicated that for each dollar increase in a store’s payroll totals, a correlating increase of $4 to $28 per month could be seen in their sales. One prime indicator of Walmart’s economic viability, its same-store sales, dipped a half percent last year from 2013. This was the third year since 2010 that those sales declined.
While nowhere near a death knell for the company, a recent scoring by the American Customer Satisfaction Index showed that Walmart was last on the ranking list of discount and department stores. The index is considered to be an accurate indicator of public opinion.
Walmart has long defended its low wages by stating that keeping labor costs at a bare minimum allowed them to offer consumers lower prices while still maximizing their profits. But their strategy apparently hasn’t been paying off as well as they would like.
When workers receive a higher rate of pay, companies see fewer employee turnovers, which in turn cuts training costs and results in more knowledgeable workers able and willing to assist customers with a positive attitude.
Customers tend to spend more money at stores where they are treated respectfully by cheerful employees, which drives up profits for the company. It’s a win-win situation.
No matter where you work, wage discrepancies and violations can crop up that sometimes require legal intervention. Employees may need to seek out professional legal advice if necessary.
Source: Huffington Post, “One Overlooked Reason Walmart Gave Workers Raises” Emily Peck, Feb. 26, 2015