A simple explanation

Learned economists are discussing why Wal-Mart, after years of resisting all kinds of pressures to pay its workers more, should have chosen now to raise its wages across the board--without being required to do so by the minimum-age laws. The reasons offered by those who study the labor market vary: Wal-Mart wants to bolster employee morale, retain workers who show promise of growing with the company as they proceed up its career ladder, or meet and raise its competitors when it comes to hiring lower-paid workers . . . . Other successful companies, from Starbucks to Gap, are also raising their workers' pay. You may have your own theory to explain rising wages these days.

Our explanation is simple--a law older and more effective than all the minimum-wage laws on the books. It's called the law of supply and demand, and it works like this--every time: When the demand for a commodity, in this case labor, begins to exceed supply, its price will increase. So that, as the Great Recession continues to ebb, however slowly, and unemployment goes down, fewer people are out there looking for work, and those who are can command higher wages when they're hired. End of today's lesson in Econ 101.

Often enough things are more complicated than they appear. But some things may be simpler than learned economists believe.

Editorial on 02/26/2015

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