Living Wage

by Kerby Anderson, Contributing Author: Much of the debate about the minimum wage has focused on providing a living wage for hard-working people. As admirable that that might seem, there are consequences to raising the minimum wage, especially to the level demanded by activists who want everyone to have a living wage.

One of the prime targets has been Wal-Mart. The company did raise its base wage last April and is scheduled to increase the base wage again next month. Last month, Wal-Mart announced a 10 percent decline in earnings per share for the third quarter. The CEO claimed it was due to the higher wages.

Andy Puzder is the CEO of CKE Restaurants, and recently explained in his op-ed that certain companies can weather an increase in the minimum wage better than others. He provides a comparison between Wal-Mart and Apple to show the stark difference.

Apple is the most profitable company on the Fortune 500. Its annual profit is $39.5 billion with about 97,000 employees. The means Apple’s annual profit per employee is $407,000. Remember that amount.

Wal-Mart has nearly the same annual profit ($36.4 billion) but has 5.8 million employees. That means their annual profit per employee is $6,300. As you can see, there is a stark different between $407,000 and $6,300.

Increasing the base wage just one dollar an hour increases the annual wage cost by nearly $2,000. You can do the math. Subtracting $2,000 from $407,000 does not have much of an impact. Subtracting $2,000 from $6,300 has a great impact. Retail stores like Wal-Mart at some point actually start losing money by having employees on staff. To survive they have to fire some or not hire new employees.

This is some of the harsh economic reality to attempts to raise wages to a level demanded by activists.
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Kerby Anderson is a radio talk show host heard on numerous stations via the Point of View Network endorsed by Dr. Bill Smith, Editor, ARRA News Service

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