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Why Walmart needs to support a higher minimum wage

Daily Ticker

Could Walmart (WMT) be the deciding factor in the higher minimum wage debate? A new Reuters Breakingviews column argues that the nation's largest retailer should throw its support behind proposals to raise the minimum wage.

Nearly half of Walmart's 1.4 million U.S. workers currently earn an average of $8.45 per hour for a 34-hour workweek. A higher hourly wage could increase Walmart's labor costs by $2 billion, says Breakingviews editor Rob Cox. But the payoffs would be much greater.

"Walmart has been vilified for its low wages," says Cox in the video above. "This could be Walmart's Henry Ford moment."

Related: America’s 30M hourly workers deserve a raise: Ralph Nader

Ford Motor Co. (F) founder Henry Ford revolutionized the industrial landscape when he doubled his employees' wages to $5 per day in 1914. The pay increase allowed his workers to buy the Model T cars they assembled every day on the factory line. The decision helped give rise to the burgeoning middle class. (Ford's gesture was not entirely benevolent; he raised wages to "stabilize the workforce" according to Ford historian Bob Kreipke. The decision also doubled Ford's profits.)

Congressional Republicans have thwarted efforts by President Obama and Democrats to boost the federal minimum wage, a cornerstone of the Democrats' midterm election campaign. Last month Senate Republicans blocked a bill that would have gradually raised the minimum wage from $7.25 an hour to $10.10 an hour. At least 17 million Americans would be directly affected by a higher hourly wage.  

Related: How Walmart and McDonald's can raise wages and still boost profits

Breakingviews estimates that Walmart could net an additional $13 billion if the minimum wage jumps to $10 an hour. At least one quarter of Walmart shoppers work in minimum-wage jobs and they're more likely to spend that extra cash than save it, Cox notes.  

Related: One solution to McDonald’s pay standoff

For now, Walmart has stayed mum on the issue. But that's to the company's -- and employees' -- disadvantage, Cox says. "It's the right thing for the working man, who also happens to be their customer," he adds.

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