How Raising Wages Would Benefit Workers, the Industry and the Overall Economy
You can read the entire study HERE
Released yesterday, the Demos group published a study that about the rate of pay and its effect on workers and the retail industry and what the impact would be if said retailers increased the average pay rate to somewhere around $25,000 a year for full-time, year-round workers. The study primarily focused on large retailers, 1,000+ employees, such as Wal-Mart and Target. The
following is a quick summary of what the study found.
Effect on Workers and Their Families
More than 700,000 Americans would be lifted out of poverty, and more than 1.5 million retail workers and their families would move up from in or near poverty.
The Effect on Economic Growth and Job Creation
- The economy would grow and 100,000 or more new jobs would be created.
- Families living in or near poverty spend close to 100% of their income just to meet their basic needs, so when they receive an extra dollar in pay, they spend it on goods and services.
- A wage standard at large retailers of $25,000 per year would increase GDP between $11.8 and $15.2 billion over the next year.
Effects on Retail Sales
Increased purchasing power of low-wage workers would generate $4 to $5 billion in additional annual sales for the sector.
Effects on Companies
The additional payroll costs would represent a small fraction of total sales
Effects on Prices
- The potential cost to consumers would be just cents more per shopping trip on average.
- If retailers pass half of the costs of a wage raise onto their customers, the average household would pay just 15 cents more per shopping trip—or $17.73 per year.
- If firms pass on 25 percent of the wage costs onto their customers, shoppers would spend just 7 cents more per shopping trip, or $8.87 per year.
America’s largest retailers play an important role in our nation’s economy and in the well-being of millions of their workers’ lives. It has become conventional wisdom that retail workers must be paid low wages. Yet our study, adding to a growing body of research, demonstrates that retailers could provide the nation a needed economic boost by paying higher wages, while remaining profitable and continuing to offer low prices.11 After years of slow economic growth and income stagnation or decline, retail can help put America back on track, creating meaningful gains for household budgets, GDP, employment, and their own outlook for growth.
I took this photo over the summer in Kansas City MO. It was about 1am.