Everyone seems to have an opinion about Wal-Mart's
The EPI's opinion might be the most amusing one yet, since it suggests that Wal-Mart can sustain higher wages for employees simply by accepting lower profit margins. The group argues that if Wal-Mart reduced its profit margins to their 1997 levels, employees could use their higher wages to cover the rapidly increasing costs of health care, rent, and other essential services.
Gee, I bet Wal-Mart never figured out that mathematical relationship. Sarcasm aside, while the math can hardly be argued, its unintended consequences can. Taking care of employees is a positive, but lowering margins isn't a healthy way to do so, since it ignores the formidable competition Wal-Mart faces from companies like Target
Witness the grim lessons of the auto and airline industries. Ford
Another example: Long before Sears Holdings
We're all free to debate Wal-Mart's pay policies until we're blue in the face, but let's not forget that Wal-Mart is run for its owners -- the shareholders. It operates in competitive markets, and ultimately it will have to pay competitive rates, or become an employer of last resort. If you don't think that has an effect on the owners of the company and their returns, I think you're sadly mistaken.
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At the time of publication, Nathan Parmelee had no financial interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.