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Walmart's Wage Hike Timing, Reasoning Questioned; Company Still World's Largest Publicly Trading Corporation Employer

| Feb 24, 2015 10:32 AM EST

People are walking past a Walmart sign outside a store in Arkansas.

The report by the Economic Policy Institute on broad-based wages stagnation on Feb. 18, Thursday, has coincided with an announcement from Walmart CEO Doug McMillon.

According to McMillon, by this time in 2016, every current employee will be earning at least $10 to $2.75 an hour above the federal minimum wage, CNBC reported.

Walmart holds the unique position of being the world's largest employer among publicly trading corporations. When it adjusts its wages or other labor practices, a ripple effect is thought to resonate throughout the industry. This will cause rival employers to adjust their own labor policies in order to compete.

The significance of the timing becomes key when considering the implication of EPI's report on the same day. The report is a particularly relevant revelation in the current economic times. It alludes to a misalignment in post-recession recovery predictions and what people are actually seeing today.

History has shown that the end of a recession triggers unemployment rates to fall, which sends wages up because of a tighter supply of workers.

Economists predicted much of the same after the last recession, but it did not happen. Since the end of the recession, wages have increased at around the same level of inflation, despite G.D.P growing much quicker. In fact, the federal minimum wage has been frozen since 2009.

Elise Gould, the author of the report, said "The stagnation of hourly wages is the most important economic issue facing most American families." She further elaborated that most key economic challenges are dependent on the increases of hourly wages for the majority.

Although the intricacies of making wholesale changes to wage structures are long and complex, Walmart's rise in wages will surely be welcomed. But it must not be forgotten that by the time the changes come into effect, California will already have introduced its own $10 minimum wage.

This coincidence cannot be overlooked, and much can be inferred about the real reasons behind the announcement.

It has yet to be determined whether competitor retailers react and follow suit in pre-empting the government mandated rise in wages. However, the impact of such far-reaching changes could even be felt nationwide.

The Congressional Budget Office estimated in 2014 that a minimum wage of $10.02 per hour would lead to an overall decrease in unemployment in the United States.

Others, however, believe radical implications to be wide of the mark, citing the fact that other retailers already pay more than Walmart. The chief U.S. economist at Deutche Bank was quoted saying, "This isn't going to move the needle much," The New Yorker reported.

Walmart do certainly employ a lot of people, as much as one in one hundred, but this figure is not representative of how many would be affected by the changes.

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