How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More

[Azure]

Worth posting because people need to hear about this.

BENTONVILLE, Ark. — A couple of years ago, Walmart, which once built its entire branding around a big yellow smiley face, was creating more than its share of frowns.

Shoppers were fed up. They complained of dirty bathrooms, empty shelves, endless checkout lines and impossible-to-find employees. Only 16 percent of stores were meeting the company’s customer service goals.

The dissatisfaction showed up where it counts. Sales at stores open at least a year fell for five straight quarters; the company’s revenue fell for the first time in Walmart’s 45-year run as a public company in 2015 (currency fluctuations were a big factor, too).

To fix it, executives came up with what, for Walmart, counted as a revolutionary idea. This is, after all, a company famous for squeezing pennies so successfully that labor groups accuse it of depressing wages across the American economy. As an efficient, multinational selling machine, the company had a reputation for treating employee pay as a cost to be minimized.

That set in motion the biggest test imaginable of a basic argument that has consumed ivory-tower economists, union-hall organizers and corporate executives for years on end: What if paying workers more, training them better and offering better opportunities for advancement can actually make a company more profitable, rather than less?

It is an idea that flies in the face of the prevailing ethos on Wall Street and in many executive suites the last few decades. But there is sound economic theory behind the idea. “Efficiency wages” is the term that economists — who excel at giving complex names to obvious ideas — use for the notion that employers who pay workers more than the going rate will get more loyal, harder-working, more productive employees in return.

http://www.nytimes.com/2016/10/16/up...ople-more.html

Might be a good time to buy Walmart stock. Not preforming very well right now but how has to think their efforts will pay off in the long run similar to Costco.

[iggy_oi]

So raising wages didn't lead to job cuts? Shocking. Also interesting that in the article they mention how the company was cutting jobs before all this to try and save labour costs. According to many of the economic experts on this forum that should only happen in a profitable company when minimum wage is increased.

[OMG!WTF!]

Originally Posted by iggy_oi

So raising wages didn't lead to job cuts? Shocking. Also interesting that in the article they mention how the company was cutting jobs before all this to try and save labour costs. According to many of the economic experts on this forum that should only happen in a profitable company when minimum wage is increased.

You realize this article is an argument against minimum wage increases right?

[iggy_oi]

Originally Posted by OMG!WTF!

You realize this article is an argument against minimum wage increases right?

They gave a raise to their minimum wage/low paid workers and their business profited, they raised their average wage by 16% and the consumer costs only rose 2%. Sounds like a lot of myth debunking, but not an argument against raising minimum wage.

[firebug]

Originally Posted by OMG!WTF!

You realize this article is an argument against minimum wage increases right?

Weird, I didn't get that vibe from it at all...

To labor activists, it was a sign that political campaigns to raise the minimum wage were paying off. To Wall Street analysts, it was the company owning up to the weaknesses long apparent in customer surveys and sales numbers.

And in the company’s own framing, it was about doing the right thing. “It’s clear to me that one of the highest priorities today must be an investment in you, our associates,” Mr. McMillon said in the video.

It was all of these things, Ms. McKenna acknowledged.

The improving economy made it harder for Walmart to get good workers without paying more. Political momentum toward a higher minimum wage meant that entry-level pay would soon be rising in many places anyway. And executives really had concluded that customer service woes and slumping sales were because of underinvestment in employees.

It seemed pretty neutral on that fact to me. It did seem to say that paying staff the absolute minimum possible may not be all that wise.

[TheScorpion]

I love Walmart. It's one of my go-to stores.

[puffnstuff]

Its not an endorsement of an artificially high minimum wage.

[OMG!WTF!]

Originally Posted by iggy_oi

They gave a raise to their minimum wage/low paid workers and their business profited, they raised their average wage by 16% and the consumer costs only rose 2%. Sounds like a lot of myth debunking, but not an argument against raising minimum wage.

The theory here is an efficient wage. It's essentially a psychological argument that says the employee who is making more than the usual wage for his/her position will apply more effort to the job. And it works. It works great. However when you artificially mandate a higher minimum wage that psychological commitment and motivation goes out the window. You can pay someone twice as much but if that is the least possible amount they could get for doing the same job anywhere else, why bother with trying to earn that wage?

[blankall]

This article really doesn't touch on the issue of minimum wages. It deals with a business in a competitive environment. It raised it's wages to make them higher than its competitors, and, as a result, gained business from its competitors. Minimum wages deal with the wages of the population as a whole. There are different macroeconomic factors there.

[White Out 403]

Jesus Christ. This article doesn't mention minimum wage but people who read it and think it's AGAINST a higher minimum wage are smoking crack, to be gentle.

[iggy_oi]

Originally Posted by puffnstuff

Its not an endorsement of an artificially high minimum wage.

What happens if all of these big corporations that can afford to pay people more but haven't for years, start realizing that what this article is saying makes sense? So they all start paying more for their staff? The biggest argument people make against raising minimum wage is that it will put small businesses out of business. If those businesses can't get staff because they are paying way less than bigger companies, they won't be able to deliver their service which will also put them out of business.

Just out of curiosity what would you consider an artificially high or artificially fair minimum wage?

[puffnstuff]

It would depend on the location, availability of workers, and a myriad of other economic factors. There isnt a correct answer. But economic viability of both large and small business is key. I already know you think the NDP is right to jump the wage, youve posted on it once or twice.

[iggy_oi]

Originally Posted by OMG!WTF!

The theory here is an efficient wage. It's essentially a psychological argument that says the employee who is making more than the usual wage for his/her position will apply more effort to the job. And it works. It works great. However when you artificially mandate a higher minimum wage that psychological commitment and motivation goes out the window. You can pay someone twice as much but if that is the least possible amount they could get for doing the same job anywhere else, why bother with trying to earn that wage?

OMG?WTF?

I'd really like to hear you go more in depth about the whole psychological commitment and motivation argument. The same thing could be said if anyone making any amount of money looked at another job and said, well I'm not making as much as they are so I'm not going to work hard.

Why bother trying to earn the wage? Because if it is a wage that someone actually would like to make there will be people wanting that job. Unless of course unemployment reaches 0%

[OMG!WTF!]

Originally Posted by iggy_oi

What happens if all of these big corporations that can afford to pay people more but haven't for years, start realizing that what this article is saying makes sense? So they all start paying more for their staff? The biggest argument people make against raising minimum wage is that it will put small businesses out of business. If those businesses can't get staff because they are paying way less than bigger companies, they won't be able to deliver their service which will also put them out of business.

Just out of curiosity what would you consider an artificially high or artificially fair minimum wage?

Everything you've just said here is in favor of market wages. All the benefit WalMart derives from raising wages to above average disappeares when an artificially high living wage is introduced.

[iggy_oi]

Originally Posted by puffnstuff

It would depend on the location, availability of workers, and a myriad of other economic factors. There isnt a correct answer. But economic viability of both large and small business is key. I already know you think the NDP is right to jump the wage, youve posted on it once or twice.

I would think any party would be right to bump the wage, $12.20 is not enough to live off in this province, is $15 too much? I still think it'd be tough to live off of but it's much better than the current amount, could prove to be too much though. But I still feel the issue wouldn't be as necessary to address if more companies that can afford to pay more would willfully do it, if it was only small businesses that were paying minimum wage, it would have a huge economic benefit. But unfortunately too many companies have put a strain on the system by trying to save in labour they can easily afford, so now changes need to be made to address that.

[OMG!WTF!]

Originally Posted by iggy_oi

OMG?WTF?

I'd really like to hear you go more in depth about the whole psychological commitment and motivation argument. The same thing could be said if anyone making any amount of money looked at another job and said, well I'm not making as much as they are so I'm not going to work hard.

Why bother trying to earn the wage? Because if it is a wage that someone actually would like to make there will be people wanting that job. Unless of course unemployment reaches 0%

I was just going to post an article about efficiency wage theory. But Forbes has already applied what I was saying to the specific WalMart article in the OP. I'm not a big fan of Forbes at all. But it's a common theory. Anyway....

http://www.forbes.com/sites/timworst.../#2d6616191ca1

[iggy_oi]

Originally Posted by OMG!WTF!

Everything you've just said here is in favor of market wages. All the benefit WalMart derives from raising wages to above average disappeares when an artificially high living wage is introduced.

Actually no it does not, the minimum wage needs to be put in place so that companies like Walmart who have spent years keeping their workers poor while taxpayers subsidize their wages can't be allowed to continue to abuse the free market system. If there was another solution to ensure this couldn't happen it'd be great, maybe better laws so that employees can more easily unionize, or high taxes based on company labour costs vs profits. Point is there needs to be some sort of mechanism that protects tax payers and employees against what has been going on. I have no issue with a company making tonnes of profits, as long a we aren't having to suffer for it.

[iggy_oi]

Originally Posted by blankall

This article really doesn't touch on the issue of minimum wages. It deals with a business in a competitive environment. It raised it's wages to make them higher than its competitors, and, as a result, gained business from its competitors. Minimum wages deal with the wages of the population as a whole. There are different macroeconomic factors there.

I understand what you are saying there, but I don't feel as though a lot of the factors that people use as an argument are always justified. My reason is because in every collective bargaining negotiation I've ever been involved in either directly or indirectly the same factors are brought up and proven to be unfounded arguments. "You want more money? Well we'll have to reduce staff." Then at the end of the day when more money is given, the business grows and staff is increased. Walmart have notoriously used this argument in defence of keeping their wages low, and now it's becoming clear that it was all just a scare tactic.

[Harry Lime]

People who think that paying an employee more causes an increase in motivation are not acting in a way that takes into account the long term behavior of the employee. Respect goes a lot farther than money.

If higher wages increased motivation, the motivation would wane as the employee became used to the greater compensation, and service would fall to the original point. This doesn't happen generally (in a situation like this), so I would propose that the wages don't increase motivation due to the monetary windfall, but because an employee feels valued by their employer.

When an employee feels valued, they take pride in the job that they are doing. They want to work harder for the employer that respects them. This results in a lasting increase in productivity, which should be the goal of an business owner or executive.

Paying someone more to motivate them is a losing strategy. Paying them in line with what the employee is potentially worth to the company is a winning one. Employees know the difference, managers know the difference, and CEOs on the golf course apparently frequently do not.

[para transit fellow]

http://www.forbes.com/sites/clareoco...ic-assistance/

Report: Walmart Workers Cost Taxpayers $6.2 Billion In Public Assistance - Forbes