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Barry Ritholtz

Wal-Mart's Minimum Wage Breakdown

Wal-Mart plans to raise the wages of hourly workers because it didn't have much choice as minimum-wage rates rise and the labor market tightens.
Maybe $10 an hour isn't so great.

Maybe $10 an hour isn't so great.

Photographer: Anadolu Agency/Getty Images

Last week, we learned that Wal-Mart was giving the lowest paid of its hourly employees a raise. In a blog post, Wal-Mart Chief Executive Officer Doug McMillon said that as of April, the company will pay a minimum of $9 an hour. That is $1.75 more than the federal minimum wage of $7.25, which has been unchanged for almost six years. Next February, Wal-Mart's lowest hourly rate will rise to $10. All told, about a half-million Wal-Mart workers in the U.S. will be affected. 

There has been lots of theorizing about why the nation’s largest retailer did this: See this, this and this. But I have a much simpler explanation: The Wal-Mart business model is broken.