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To Boost the Economy and the Retail Industry, Raise Retail Wages

Daily Kos

If Walmart and other major retailers would just raise worker wages to a livable level, not only would 700,000 people be lifted out of poverty, but the economy and retail sales would grow. That's the conclusion of a new report by Demos' Catherine Ruetschlin, anyway. And her argument has backup in today's retail industry:

Zeynep Ton, an expert on the retail sector at MIT, has shown that businesses that make an investment in their retail workforce find that well-paid, knowledgeable, and experienced employees can be a driver of sales, rather than costs. Paying for high quality workers who can answer customer requests and identify priorities meets the long term goals of the business, as opposed to simply satisfying short-term cost minimization. Ton’s findings are supported by other research on the performance of retail firms. Comparing high-wage retail employer Costco with its warehouse club rival, low-wage employer Sam’s Club, reveals a substantial payoff to paying fair wages: sales per employee at Costco are nearly double the average sales per employee at Sam’s Club.

Costco notwithstanding, retail cashiers make an average of $18,500; retail sales people make $21,000 per year. Giving the lowest-paid workers at the largest retail businesses (so no Romneyesque wailing about the fate of small business here) a raise to the equivalent of $25,000 for a year of full-time work would not only lift 700,000 out of poverty, but it would reach 1.5 million people who are either below or just above the poverty line, and would affect 5 million workers total. It's something of an understatement to say that $25,000 is not an outrageous amount of money for full-time work—in fact, it's below the median wage, and it's less than Walmart claims to pay its full-time workers.


Low-wage employers and Republican politicians would share an objection to this: They'd claim it would hurt businesses, causing them to hire fewer workers or even lay people off. But that doesn't take account of the fact that poor people don't have money to spend; if retail workers at or near the poverty line get a raise, that money will go toward meeting basic needs they haven't been able to cover. That means a boost to the economy in general and the retail industry in particular.