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Steven Syre | Boston Capital

Walmart hike offers hope for lower-paid

WWal-Mart Stores Inc. boosted its minimum wage to $9 an hour two weeks ago, and then to $10 next year.REUTERS

Any economist will tell you that the last recession officially ended more than 5 ½ years ago. The basic laws of supply and demand have taken nearly that long to do much for the people on the lowest rungs of the jobs ladder.

True, the pace of month-by-month job creation has been picking America up for a while now, and US unemployment has fallen to 5.7 percent. But the news that has caught my eye in recent weeks is about companies that are increasing the hourly wages of their lowest-paid employees.

Wal-Mart Stores Inc. did just that two weeks ago, boosting its minimum wage to $9 an hour, and then to $10 next year. The off-price retail giant TJX Cos., of Framingham, which operates TJ Maxx and Marshalls, did the same last week.

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Decisions like that will ripple throughout the retail world and beyond, particularly to industries such as hospitality and food service.

A few other retailers, including Gap Inc. and Ikea, had raised their minimum pay as long as a year ago. But business decisions by giant companies put irresistible pressure on entire parts of the economy.

A year or so from now, we’ll look back and say that Congress didn’t raise the federal minimum wage above $7.25 per hour. Walmart effectively did it.

The wage decision at Walmart will cost the company about $1 billion a year. It affects about 40 percent of its US workforce of 1.3 million people, but many will see a pay raise of less than $1 per hour. That does not make Walmart any kind of business hero. The company has a long and odious history when it comes to paying employees.

Walmart’s decision also comes as unions and other activists press a national $15-an-hour “living wage” campaign. Wages have been hot topics in many states, including nine that boosted their minimums so far this year. (The Massachusetts minimum rose to $9 per hour on Jan. 1.)

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But why now exactly? Walmart is the focus of a lot of political and union criticism over the wages of its lowest-paid employees.

But I don’t see Walmart bending very much under pressure like that when it comes to expenses, and TJX didn’t have protesters in its store parking lots before it raised its minimum wage.

Good publicity helps. But more important, the economy is creating lots of jobs now, even pulling people who had been on the sidelines back into the workforce, looking for employment.

“The available supply of qualified workers is getting tighter by the month,” said Doug Handler, chief US economist at IHS Global Insight in Lexington. “At Walmart and TJX, somewhere in their headquarters there’s a business plan that says by paying employees more they can hire better people and keep more of the good ones you have.”

Keeping good employees is really the important thing. Turnover may be as high as 40 percent at Walmart and other companies with low-wage workforces. It costs money to hire and train replacement workers. A modestly higher hourly wage may actually be a less expensive alternative for employers in an improving economy.

This is not a unanimous point of view. Josh Bivens, research and policy director at the left-leaning Economic Policy Institute, told me he continues to see practically no pressure on wages in the US economy.

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Bivens thinks that Walmart reacted mostly to political and social pressure. He doesn’t see the wage decisions by Walmart and TJX having much influence on competitors over the next year or two.

“Is this actually going to show up in economic data?” he asked. “The answer is pretty much ‘no.’ Walmart is big, compared with other companies, but compared with the overall economy it’s not big.”

That’s true enough. But more employers are going to follow.

Call that a good start. Beyond actual wage rates, the number of work hours available may be even more important to lower-paid employees. Career tracks, paths to some kind of better job, make a big difference to workers looking to move up.

Walmart talked about career tracks when the company raised its minimum wages. That would help employees and Walmart’s ability to retain workers. We’ll see how that actually works out.

But rising minimum wages at Walmart, TJX, and other employers is a faint sign that the years-old economic recovery is starting to reach working people at the bottom of the ladder.


Steven Syre is a Globe columnist. He can be reached at syre@globe.com.