Walmart’s pay increases may force rivals such as Target Corp. to follow suit, said Brian Yarbrough, an analyst at Edward Jones & Co. in St. Louis.
“This forces all retailers to take a look at their pay levels, but definitely Target,” he said. “They have to be competitive.”
That’s enough, according to economists, to nudge up wages in rural parts of the country where Walmart is the dominant employer. Still, the retailer’s move in itself isn’t sufficient to give much of a boost to U.S. average hourly earnings, which have only grown only about 2 percent annually for almost all of the five-and-half-year-old economic recovery.
Economists said the labor market hasn’t yet improved enough to persuade the Fed to begin raising interest rates.
Fed Minutes
Minutes of Fed policy makers’ January meeting warned that “tepid nominal wage growth, if continued, could become a significant restraining factor for household spending.”
Walmart’s action alone is unlikely to change the most widely watched measure of wages, average hourly earnings, according to Newedge USA economist Omair Sharif. He estimated that the company’s pay decision will provide a one-time boost to earnings of about a hundredth of one percent, or little more than a rounding error for an economy with a labor force of more than 155 million people.
While long criticized for underpaying its workers, Walmart was under hardly any political pressure to reverse course on its employment practices.
President Barack Obama proposed in January 2013 lifting the federal minimum wage in stages to $10.10 from $7.25. But the odds that the Republican-dominated Congress will act on the Obama’s proposal are virtually zero.
No Chance