NCPA - National Center for Policy Analysis


October 26, 2005

Wal-Mart Chief Executive Lee Scott has called on Congress to increase the $5.15 minimum wage. Calling for an increase in the minimum wage amounts to Wal-Mart calling for a hike in the labor costs of its smaller rivals, says the Journal, not to mention any potential start-ups. Wal-Mart already pays its workers an average hourly wage of close to $10 and so Scott is essentially asking Congress to strengthen its competitive advantage.

The CEO said his goal is to "help working families," but minimum wage laws have the opposite effect, says the Journal:

  • By putting a floor under wages, regardless of skills or competition, they can force businesses to cut payrolls or even shut down.
  • Hence, they reduce employment in general, and especially among the low-skilled and inexperienced.

Wal-Mart offers a wide selection of quality goods at low prices, and provides 1.3 million people in the United States with jobs. If Scott feels the market is doing an inadequate job of determining worker compensation, says the Journal, he can always increase the wages of the Wal-Mart workforce, rather than lobbying to increase the labor costs of everyone else, says the Journal.

Source: Editorial, "The Wages of Wal-Mart," Wall Street Journal, October 26, 2005.

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