Calculating Walmart's wages

An investment manager does the math on paying workers more
12/30/2013

Retailers operate on crazy, low margins. That means they have little wiggle room on expenses.

That is one of the facts not often mentioned in the debate about Walmart's notoriously low wages. If Walmart were to significantly raise its wages, it would either a) lose money or b) need to raise its prices to maintain its current profitability.

How much of a price increase or profitability swing are we talking about? About $34 billion worth, according to investment manager Mariusz Skonieczny.

In a recent article, Skonieczny calculated what would happen to Walmart’s bottom line if it were to pay $15 an hour to its workers.

In a nutshell, he calculated that Walmart’s operating profits would go from a gain of $27.8 billion to a loss of $6.2 billion.

Read the full story here.

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