• melanoleuca

    For employers always face a trade-off between low-wage and higher-wage strategies — between, say, the traditional Walmart model of paying as little as possible and accepting high turnover and low morale, and the Costco model of higher pay and benefits leading to a more stable work force.

    Anybody who has worked in retail knows this to be true. I am not a small business owner, but I imagine that they, too, can see the benefit of paying employees more and maintaining a more stable work force. Obviously, some big businesses operate on the same model. I am happy to see that government is beginning to see this as well. There is benefit beyond the bottom line.

    • septimine

      It depends, if you're competing on price because your clients are poor, you have no flexibility in price. For someone on food stamps, a ten cent increase in price is a big deal. So if Walmart competes for the money of those who are on such fixed income, they can't raise prices without driving people to Dollar Tree or elsewhere. If raising wages would increase prices in that environment, you're stuck, if there are raises, then the fixed income people move on, but middle class people don't want to go there because they want a more upscale experience. That's where McDonald's is now. They have food too expensive for poor people, but too poor quality for middle class people. Thus their sales are down.

      Sure ideally pay well, but you're stuck in the prisoners dilemma. Unless everyone does it, you lose sales on price.

      • melanoleuca

        Wal-mart's prices would not be significantly affected by wage increases for their employees (source). Nor would there necessarily need to be an impact on stockholders (source)