There is a diary currently at the top of the rec list written by NBBooks titled "WalMart execs panicking over lousy sales.” The diarist's key conclusion:
Don't count on the geniuses running WalMart to figure out the problem anytime soon. Rather than looking at how the meager pay of millions of working Americans, the execs are blaming the expiration of the payroll-tax break on Dec. 31. The Bloomberg report noted that "For a person making $40,000 a year, that is about $15 a week." $15 a week is wrecking WalMart? Really? Or is it the fact that nearly one in every five U.S. households earns less than $20,000 a year?I have no desire to criticize the intent of the diary, but I think that analysis is wrong, from both a purely logical and a political standpoint. Most importantly, it misses a golden opportunity.
The 2% increase in payroll taxes that went into effect the beginning of this year hit low earners proportionally harder than any other economic demographic. Their rent didn't change. Their other mandatory expenses didn't change. They still have to pay their utility bills, their car payments and/or other transportation costs, and medical insurance if they have any. These aren't optional expenses for most people.
Many within that economic demographic spend a high percentage of whatever remains of their meager paychecks at Walmart. If what remains is only a couple hundred bucks a month, and the payroll tax increase cut their paycheck by $15 a week, that's 7.5% less they have to spend. At Walmart. Which can very logically translate into a "sales disaster" for Walmart.
This should be much more than an opportunity to criticize Walmart for their lousy business practice of paying low wages. It is a golden opportunity to use as evidence that the increase in the minimum wage proposed by President Obama in his SOTU address is not only good for low earning taxpayers, but would also be a tremendous benefit to Walmart and other retailers.
If a 2% increase in payroll taxes produces a "sales disaster", a 24% increase in the federal minimum wage from $7.25 to $9.00 should produce a "sales explosion.” The burden of additional costs for higher wages Walmart would have to pay their thousands of employees would be more than offset by the millions of minimum wage workers with increased resources to spend in their stores.
Liberals should embrace Walmart's explanation for their sales drop, not dismiss it. It is precisely the proof needed to encourage fair wages.