Shocking! – And by ‘shocking’ I mean ‘not shocking at all.’ If you are familiar at all with how business works, then you know that retail companies typically operate on a limited profit margin (Wal-Mart averages at about 3% a quarter). They do not have much of a margin. They certainly don’t have the margin that the Activist Left apparently thinks that retail stores do! So if wages go up, either expenses go down, or profits do – and you need a buffer for bad months and/or years, otherwise the company starts losing money and then things get messy.
Here’s Wal-Mart’s comment, by the way: “Wal-Mart spokesman Kory Lundberg told Bloomberg that the company is reducing hours, but the reductions only affect stores that have have been overstaffed.” Translation: Wal-Mart can no longer afford to be easygoing about job performance. Time to earn that nine bucks an hour…
PS: I am indifferent about the fate of Wal-Mart, but I wish more people would sit down and actually think about the math involved in running a business.