Wal-mart absorbs increased wages, no price increases

[rhino]

The narrative takes a hit:

Economics 102: WalMart Cuts Worker Hours After Hiking Minimum Wages

You mean low-cost retailers don't have the margins to simply absorb billions of dollars in additional costs without finding ways to save elsewhere? I'm shocked!

Hush, you!

 

[bwframe]

The narrative takes a hit:

Economics 102: WalMart Cuts Worker Hours After Hiking Minimum Wages

You mean low-cost retailers don't have the margins to simply absorb billions of dollars in additional costs without finding ways to save elsewhere? I'm shocked!

Hush, you!

Money is only free when you work for the gubment.
I've seen some of the staunchest "conservative" R's that retired from public service to run for and win a political position. Ended up looking like part of the entitlement crowd, because that's all they know. In their world, money came from selling the "fact" that it was needed.

 

[Cygnus]

Why do Hoosiers insist on adding S's?

It's Meijer.

And you're right. I shop for groceries there now. I'm sick of Kroger prices.

Like when people say they have a friend that works at Fords......and shops at Krogers.....

 

[pudly]

The meme takes another hit. Now Walmart is pressuring their suppliers to lower their prices further to pay for the raises Walmart is giving some of their employees. This will result in layoffs and other problems for the suppliers.

Wal-Mart Wage Hike Debacle Continues As Suppliers Forced To Layoff Employees Amid New Fees

 

[KG1]

The meme takes another hit. Now Walmart is pressuring their suppliers to lower their prices further to pay for the raises Walmart is giving some of their employees. This will result in layoffs and other problems for the suppliers.

Wal-Mart Wage Hike Debacle Continues As Suppliers Forced To Layoff Employees Amid New Fees

This sponge is absorbing quite a bit.

 

[bwframe]

[video=youtube;ZacZ_sUxW_w]https://www.youtube.com/watch?v=ZacZ_sUxW_w[/video]

"A raise in pay raises us all"

 

[GodFearinGunTotin]

The meme takes another hit. Now Walmart is pressuring their suppliers to lower their prices further to pay for the raises Walmart is giving some of their employees. This will result in layoffs and other problems for the suppliers.

Wal-Mart Wage Hike Debacle Continues As Suppliers Forced To Layoff Employees Amid New Fees

...it’s Wal-Mart, because after all, they’re the “low price leader”, and you don’t hold on to that title by passing labor costs on to customers.

Hmmm...Seems like I've read before folks would tend to support businesses that treat their people well--even if it costs an extra dollars for their purchases.

 

[rhino]

This sponge is absorbing quite a bit.

That's always okay . . . when it's someone else's sponge.

 

[pudly]

Looks like Walmart couldn't squeeze enough concessions from their suppliers and now has to resort to firing home office staff after voluntarily increasing their own employee costs. Who knew that raising costs for a competitive, low-margin business would actually costs jobs?

http://www.zerohedge.com/news/2015-10-01/economics-101-strikes-again-wal-mart-wage-hikes-prompt-breadwinner-layoffs-headquart

 

[steveh_131]

Nobody saw that coming.

 

[HoughMade]

You know what would fix all of this? A union!

....I owe myself a new keyboard.

 

[BehindBlueI's]

Looks like Walmart couldn't squeeze enough concessions from their suppliers and now has to resort to firing home office staff after voluntarily increasing their own employee costs. Who knew that raising costs for a competitive, low-margin business would actually costs jobs?

http://www.zerohedge.com/news/2015-...ge-hikes-prompt-breadwinner-layoffs-headquart

That was never the argument. There are no free lunches. The argument was people constantly say raising wages raises prices. Not that the money is free. Not that it doesn't leak out somewhere else.

Higher wages certainly increases the incentives to automate the work force, etc. It can actually increase the wage gap, as fewer people are working but those people are making more money. If there was a simple solution, we'd have fixed it by now.

So again, the argument is companies can't simply increase prices because their overhead goes up. Have any of you found anything that contradicts that yet? No? Right.

 

[GodFearinGunTotin]

That was never the argument. There are no free lunches. The argument was people constantly say raising wages raises prices. Not that the money is free. Not that it doesn't leak out somewhere else.

Higher wages certainly increases the incentives to automate the work force, etc. It can actually increase the wage gap, as fewer people are working but those people are making more money. If there was a simple solution, we'd have fixed it by now.

So again, the argument is companies can't simply increase prices because their overhead goes up. Have any of you found anything that contradicts that yet? No? Right.

Basic economic theories/laws are pretty tried and true. When you disrupt the equilibrium of a system, the system will do what it has to to try to restore that equilibrium. As the article points out the raises given to the workers on the lower end of the food chain appears to be causing other workers to completely lose their jobs as Walmart management attempts to accommodate that self inflicted wound. It remains to be seen whether, on the whole, the company and its employees will be better off in the long run or not.

 

[Mr Evilwrench]

They seem to be trying everything but raising prices, and they're running out of things to cut so don't be surprised when they finally break down and hit up the customers.

 

[GodFearinGunTotin]

They seem to be trying everything but raising prices, and they're running out of things to cut so don't be surprised when they finally break down and hit up the customers.

If the narrative is true, that people will support those retailers that are trying to pay people a "living wage", why wouldn't they do that and announce to the world that they've done all they can and now it's the Walmart customers' turn to help out their neighbor by paying just a little more?

 

[BehindBlueI's]

They seem to be trying everything but raising prices, and they're running out of things to cut so don't be surprised when they finally break down and hit up the customers.

That's because the market won't let them. Raising prices pushes more customers to not only other brick and mortar retailers, but also to Amazon and the like.

It's not they wouldn't rather raise prices. If they could, they would have, and without waiting for overhead to increase.

Something does have to give. Options include cutting overhead, reducing profit, reducing return to investors, etc. However even an economic powerhouse like Wal-mart cannot simply set market prices.

If the narrative is true, that people will support those retailers that are trying to pay people a "living wage", why wouldn't they do that and announce to the world that they've done all they can and now it's the Walmart customers' turn to help out their neighbor by paying just a little more?

Right after the Walton family, who's wealth equates to the combined wealth of the bottom 42% of the US, cut back on their take. Anyone who wants to get to their levels of wealth just needs to work harder, or so I've read on INGO. In the mean time we can ask the bottom wage earners to keep kicking in more and more to support other low end wage workers...right?

 

[steveh_131]

So again, the argument is companies can't simply increase prices because their overhead goes up. Have any of you found anything that contradicts that yet? No? Right.

This entire scenario contradicts it. Of course they can raise prices. Sometimes prices must be raised.

Walmart raised their wages beyond that which the market dictated. They were ultimately left with two options, as everybody here predicted: Raise prices, or cut wages. There is no 'absorbing' anything. Those were the options. They chose to cut wages, in the form of layoffs and reduced hours - because it was economically more viable than raising prices.

If a fat person decides to eat a Big Mac, and I tell him that he's going to have to exercise more to burn that off or he'll get fatter, I would be correct. If he opted to eat the Big Mac then throw it up and didn't gain any weight, did he prove me wrong? No. That's ridiculous.

 

[BehindBlueI's]

This entire scenario contradicts it. Of course they can raise prices. Sometimes prices must be raised.

Walmart raised their wages beyond that which the market dictated. They were ultimately left with two options, as everybody here predicted: Raise prices, or cut wages. There is no 'absorbing' anything. Those were the options. They chose to cut wages, in the form of layoffs and reduced hours - because it was economically more viable than raising prices.

If a fat person decides to eat a Big Mac, and I tell him that he's going to have to exercise more to burn that off or he'll get fatter, I would be correct. If he opted to eat the Big Mac then throw it up and didn't gain any weight, did he prove me wrong? No. That's ridiculous.

So why haven't they raised prices?

I'm not saying they can't go out with their little price guns and mark cans of tomatoes at $50 a piece. Sure they can. The cost will be they never sell another can of tomatoes. Effectively, they cannot raise prices. Competition remains too tight. Low prices is their draw. If they raise prices to match higher end retailers with better service, better facilities, etc. shoppers will move there, reducing Wal-mart market share. Online retailers like Amazon? If you aren't price competitive with them all you're getting is low information or "need it right now" customers, because you can't compete with their convenience.

Keeping the costs in-house is pretty much the definition of absorbed, but as you like. The fact remains it didn't lead to price increases. Spin away, but that's where we're at.

 

[GodFearinGunTotin]

Right after the Walton family, who's wealth equates to the combined wealth of the bottom 42% of the US, cut back on their take. Anyone who wants to get to their levels of wealth just needs to work harder, or so I've read on INGO. In the mean time we can ask the bottom wage earners to keep kicking in more and more to support other low end wage workers...right?

This sounds like occupy Wall Street sort of thinking.

 

[Mr Evilwrench]

...The fact remains it didn't lead to price increases...

Hasn't yet, no, but the narrative from the start was they could raise wages arbitrarily without doing so. With all the havoc that's causing, they're getting bracketed.