Last week Wal-Mart announced that it will be closing all of its 102 Walmart Express stores in the US, and 45 of its regular Walmart stores around the country. As Wal-Mart decided strategically which 45 US-based stores to close, some economists have highlighted the fact that Wal-Mart selected stores largely based on local minimum wage regulations. In essence, some Wal-Mart stores which are forced to pay a higher minimum wage due to local regulations were shuttered by design. The economic consequences of enacting localized minimum wage requirements has been brewing in states such as California for some time now. California, in particular, has become a checkerboard of varying minimum wage requirements - wages change along with city limits all over California.
Economist Mark Perry pointed out that Wal-Mart's decision making was rooted in simple economics. Given the reality that Wal-Mart operates on razor-thin profit margins (only 2.8% last quarter), varying labor costs for entry-level workers can be the difference between one store that turns a profit and another store that barely breaks even, or loses money.
As more and more cities across America write their own minimum wage regulations, we will probably see a replay of this Wal-Mart story over and over again.
Hanover Advisors Inc. issued this content on 2016-01-23 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-23 18:19:03 UTC
Original Document: http://www.hanoveradvisorsinc.com/the-minimum-wage
