More than 16,000 Arkansans working for Wal-Mart Stores Inc. will see tangible evidence of a pay increase beginning with their April 23 paychecks.
When the state and others will begin to see the economic benefits from those pay raises is harder to gauge. Economists agree that the increase in wages for those workers is good for Arkansas, but in ways that, at least initially, are difficult to measure.
"Wal-Mart is such a large employer, particularly in rural communities across Arkansas and the nation, so the fact they have increased wages means something," said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville. "These folks are unlikely to show up in wage data in a way you can say, "See! There it is!" It's an incremental piece that will go along with other wage increases we've seen during this period of economic recovery. There are indirect effects over and above these 16,257 people."
Wal-Mart is increasing pay for about 500,000 employees nationwide. That amounts to roughly 40 percent of its 1.3 million workers in the U.S.
A company spokesman said three groups are included among the workers in Arkansas and elsewhere who are earning wage increases. Associates earning less than $9 per hour are getting raises. So are workers at the maximum level of their pay band, who are in line for a 2 percent increase.
Wal-Mart also is adjusting the "floor and ceiling" of its pay bands, so additional increases could result for other employees, as well.
Texas, Florida, Georgia, North Carolina and Tennessee are the states with the highest number of employees who will be receiving raises. All five states are among the company's top 10 for most store locations.
Employees in Arkansas will be earning $1.75 an hour above the current federal minimum wage and $1.50 above the state minimum wage as a result of the wage increase, the company said. Wal-Mart workers in Arkansas are now earning an average full-time wage of $12.28 an hour.
The total of all personal income in Arkansas is close to $112 billion, according to Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.
"For the 16,000-plus employees, it's a big deal," Pakko said. For the state's economy, "it's not a huge impact or easy to measure. And even then you have to consider what the other offsets here might be. An additional $1 per hour is coming from somewhere else. Is it higher prices for customers? Fewer dividends for shareholders? Those resources are coming from somewhere."
Executives have acknowledged that the company's overall $1 billion investment in its workers could affect the company's bottom line. In its annual report Wal-Mart told shareholders that its "comprehensive associate training and educational programs ... may impact our ability to leverage operating expenses in fiscal 2016."
While the company hasn't discussed the possibility of price increases or other measures to help recoup the expense for the raises, it stands to reason Wal-Mart is considering its options, Pakko said.
Wal-Mart has said it views the wage increases and other employee initiatives as potential moneymakers in the long-run. Theoretically, that will allow the company to keep costs associated with turnover low, and the improved morale is seen as a way to make the shopping experience better for customers.
"I really see this as a fundamentally business decision by Wal-Mart," Deck said. "They want their associates to have a better work environment, which includes being paid more and providing more regularity to their schedules. If associates have a better work environment, there's a better chance they stay, and we have to remember those workers are also customers who will have more money to spend."
Business on 04/09/2015