Why Big U.S. Retailers Can Afford To Increase Wages

[one...two...tree 2,762]

By 2020, more than one-quarter of U.S. workers will be working low-wage jobs, not making enough money to keep a family of four out of poverty. The corporations that employ the most low-wage workers, meanwhile, "have largely recovered from the recession and most are in strong financial positions." 92 percent of them were profitable last year, while three-quarters are making more in revenues than they were before the recession.

The retail industry is one of those that employs the most low-wage workers. (About 36 percent of low-wage workers work in retail.) And according to a new report from Demos, big retailers could afford to boost their workers' income to $25,000 per year without eating into their bottom line:

The cost of increasing the living standards of more than 5 million Americans, adding $11.8 to $15.2 billion to GDP, and creating no less than 100,000 jobs amounts to just a small portion of total earnings among the biggest firms. The retail sector takes in more than $4 trillion annually and firms with 1000 or more employees account for more than half of that. At the same time labor compensation in the sector contributes only 12 percent of the total value of production, making payroll just a fraction of total costs.

Large retailers could pay full-time, year-round workers $25,000 per year and still make a profit – satisfying shareholders while rewarding their workers for the value they bring to the firm. A raise at large retailers adds $20.8 billion to payroll for the year, or less than 1 percent of total sales in the sector.

At the same time it is very likely the firm will experience benefits that offset the cost of the wage increase — in the form of productivity gains and higher sales per employee — making the net cost of the new wage even lower.

Meanwhile, "if retailers pass half of the costs of a wage raise on to their customers, the average household will see just 15 cents added to the cost of its shopping basket on any trip to a large retailer. That amounts to an annual cost of $17.73."

http://thinkprogress...-wage-increase/

[Gary and Alla 3,694]

Why not just hire illegals and make more profit? You are OK with hiring illegals, right?

[Póg mo 1,749]

Why not just hire illegals and make more profit? You are OK with hiring illegals, right?

What exactly is your fixation with illegal aliens? Does exporting factories to the third world make you feel better?

[^_^ 5,021]

What exactly is your fixation with illegal aliens? Does exporting factories to the third world make you feel better?

FAIR TAX!!!

Help us Ron Paul, you're our only hope!

[Gary and Alla 3,694]

What exactly is your fixation with illegal aliens? Does exporting factories to the third world make you feel better?

Seems disingenuous to be asking for higher pay for Americans and legal residents while defending the employment illegal aliens.

[Póg mo 1,749]

Seems disingenuous to be asking for higher pay for Americans and legal residents while defending the employment illegal aliens.

Who is defending the employment of illegal aliens?

Edited November 20, 2012 by InKorea

[Gary and Alla 3,694]

Who is defending the employment of illegal aliens?

The OP does, I WAS replying to him.

[OnMyWayID 1,489]

The retail industry is one of those that employs the most low-wage workers. (About 36 percent of low-wage workers work in retail.) And according to a new report from Demos, big retailers could afford to boost their workers' income to $25,000 per year without eating into their bottom line:

I think you are correct as a whole but there is a reason it does not happen.

As an example I will use the big grocery strike from a few years ago in California against Kroger (Fred Meyer in CA as well as a few others), SuperValu (then Albertsons which owned Luckys as well), and Safeway. For many years these three companies colluded on wages: they agreed to pay their store employees very good wages and not compete in those areas. This worked well as CA is union so it avoided a lot of problems.. Along comes a new company to town: Walmart. They decided not to play the "Don't compete on Salary" collusion. What happened? The people in California had a choice: Pay a little more and support those that are making good wages as Cashiers and the like or save a buck or two and shop where cashiers made just a tad above minimum.

I think we all know where the Californians decided to shop.. The main grocers started to make less money and became nervous (you can't live forever on yearly drops in store sales even if you currently are making a profit) and asked that either Walmart be forced to use unions or they be let out... They wanted a level playing field. They were told no on both counts as the state had made those concessions to Walmart to get them to build in various locations... The three big grocers then went to negotiate the wages down to compete with walmart - they were told no way by the unions and they striked against all three major chains at the same time.. .eventually both sides caved some and the strike stopped but the chains have not been able to compete effectively.

What was the major result of this? One of the major chains (I worked for them) has gone from 230,000 employees then to under 90,000 employees today.. they have closed over 1000 stores and are struggling to survive. They have moved much of their high paying jobs at the home offices to overseas.

So on to what you are proposing.. Retailers can be forced to pay more.. They will then have fewer people as they attempt to increase the return on what they are paying - they will work them fewer hours to avoid paying medical, they will move more of the higher paying jobs overseas, more warehouse giant boxes will prevail as they are more efficient towards labor costs, and people will buy even more from the internet because local prices are too high.

[spookyturtle 9,466]

I wonder how much Apple pays their retail help? They are the most valuable company on earth, they have about $120 billion in cash, they have the highest sales per square foot of any retailer, etc, etc. And if they only paid $1 an hour they'd have millions of loyalists defending them.

[Danno 1,228]

You know come here to VJ, for Precious stuff just like this.

"Why Big U.S. Retailers Can Afford To Increase Wages"

and this

"By 2020, more than one-quarter of U.S. workers will be working low-wage jobs, not making enough money to keep a family of four out of poverty."

- Wages are set to a market not what walmart can "afford" ....what does that even mean?

I could afford to pay $20. for my morning coffee....is that how we decide what we pay for things now?

It was kinda cool the way it ties "one quarter of workers are low wage workers..... to Family of four. As if all the teens working at McDonalds are raising a family of four.

And who would be having four kids with no spouse and no skills to feed them?

Further more for these folks who have mismanaged all the details in their life.... why should wal-mart be the one to subsidize that by paying twice what they are worth on the market?

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See the problem with this "living wage" concept is that it is a dog trying to catch it's tail.

Because you speak of wal-mart as if this was intended as a carrere choice for most of there worker.

I wonder, What does it take to be a Taxi driver or a carpenter or a handyman or a truck driver or body-shop worker? A little experience. Who here couldn't work in anyone of these fields for 2 years and not be adequately employable? But ....No one is going to hire you as a no-nothing helper-trainee for $18.00 an hour as this story suggests should be the case.

What we have here, (and I am trying to be fai)r is Soviet style economics where economic planners decide how much people will make and all that.

Didn't work there and it won't here.

Our problem is, we have flooded our country with cheap labor for the last few decades, the starting wage is ok but there is a sea of moderately skilled people which depresses the wage in skilled no-college jobs.

But you're not going to fix that will more Gov't.

[rlogan 2,036]

Everyone should send me ten dollars a year.

[Obama 2012 1,714]

No big business in their right mind is going to raise ANYONE's wages until you get congress to pass LONG TERM budget and tax plan.

Think Progress being the left-wing site from people who haven't built a damn thing in their lives, wouldn't understand that the economy can look strong all day long from their perspective, but until they have guarantees into place that they aren't going to be raped by the tax man, they aren't going to spend anything more than what they need to. Actually the tax man can rape them all he wants, so long as you tell them that the suffering will be for X amount of time guaranteed where they can plan layoffs accordingly.