An oft-repeated phrase during the most recent national conversation on raising the minimum wage has been, “But how much will it end up costing?” A week ago, Walmart released a number — $1.5 billion — but other retailers might end up paying much more if they play the same game.
According to research from the Hay Group as reported by Bloomberg Business, matching Walmart’s plans to raise employees’ wages to a minimum of $10 per hour could cost other retailers as much as $4 billion more than their 2014 wage expenses. Craig Rowley, director of retail practice for the Hay Group, told Bloomberg that the inflated numbers could be a factor of an economy that’s not currently favorable to costs of this nature.
“We are still in a slow-growth economy,” Rowley said. “When you take on an expense like raising wages, you’ve got to take less profit.”
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While raising wages constitutes one side of the turbulent labor market, Rowley told Fortune that turnover among retail employees sits at about 65 percent — up 15 percent from the recession years but down 25 percent from pre-2008 numbers.
“That tells you it’s getting harder to hire people,” Rowley said. “The pool of talent is shrinking, and that is putting pressure on wages.”
Even if not a single company chooses to match Walmart’s wage hikes, Jennifer Bartashus, an analyst at Bloomberg Intelligence, told Bloomberg that the move has the potential to affect just about all players in Walmart’s field. Because workers who stock shelves, run cash registers at fast food restaurants or greet customers at the door all have similar skill sets, retailers might find that the labor pool they’re used to drawing on is suddenly accustomed to a slightly higher starting hourly wage.
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If that’s the case and retailers are forced to come to $10 an hour kicking and screaming, the Walmart-enforced price tag could be much higher than just $4 billion.
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