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Megan McArdle

Beware: Wal-Mart's Raises Are Not a Victory

Watch for rising prices (and closing stores). The labor movement needs a better target.
Not the best target for labor activists.

Not the best target for labor activists.

Photographer: Daniel Acker/Bloomberg

The past year has been a very interesting one for Wal-Mart. For years -- decades, really -- the low-cost retailer has been a stout bulwark for low prices and low wages, against increasingly fierce pressure from left-wing activists who want Wal-Mart wages to be closer to those of the old manufacturing jobs that have disappeared. Wal-Mart ferociously refused to cave into pressure -- until suddenly in February of last year, the company announced a substantial hike in its entry-level wages.

This has not gone quite as you might have expected. The labor activists were not as pleased as you might have thought; they complained that the company offset its higher wage costs by cutting back on the hours that people worked, at the same time as investors complained that the higher labor costs were coming out of corporate profits. And longtime Wal-Mart workers seem to have been made unhappy by the rising minimums, which meant that they would be getting less of a premium for their loyal years of service.