Skip to main content

Employees are People, not Expenses

Yesterday an impressive thing happened. Walmart (WMT), widely known for its competitive prices, and widely attacked by advocates for low wage workers amongst which Walmart’s million plus headcounts has the widest gap, changed its policy on those wages. This was suggested in the announcement that 500,000 full and part time  workers would receive increases in their base salaries by over 24% on April 1st, including the promise of an additional 10% for all “existing associates” on the following February 1st.

You might be asking why I think this act is impressive. Well notwithstanding the accusations prevailed that Walmart rolled over from staunch and relentless political pressure. But I think such negative perspective undermines the fact that this has happened. And it follows hot on the heels of Whole Foods (WFM) and Aetna (AET)*, two companies we are currently invested in, the latter a healthcare company who recently announced an average 11% increase for employees and for some as high as 33% to $16/hour. So why all the cynicism, and what can be gained from 2 companies out of over 8,000?

One thing worth considering is the benefits of putting more money into the pockets of hourly workers can only have a positive effect on the economy. Much like the recent declines in oil and the effect on the price of gasoline, the increase in spending for the retail sectors of the economy are already evident in the behavior of that sector of the stock market. There are also the broad implications of what I hope will be a reverse politicization of the issue of wages away from the idealized concept of a living wage and into the encouraging and affirming implications of “navigating a raise” (think, hard work). And is it such a stretch to suggest that there looms some human nature to think we’re underpaid or such that no raise has ever been enough? Or if it is possible that one outcome of increased wages could be simply influenced by such attitudes and assumptions.

Also worth noting is that 8,000 companies might have no such complementary plans in the pipeline is illogical. Disney (DIS), and Costco (COST), and the well-publicized Wells Fargo shift under employee pressures are three other firms that have announced changes in their wage scales and as more companies see the value in such moves, regardless of the motivation, the result could just be the first signs of inflation pressures that have been hiding from a Federal Reserve Board eager to normalize (as in raise) interest rates, which would be especially good for all income dependent investors.

Lastly, in all the years that I’ve been managing equities I admit to balking at the notion that wage increases, and other company expenditures take money away from the bottom line leaving the stock prices of said companies reeling from shareholder revolt. Yesterday, it happened with Walmart, but employees are people, not expenses on the balance sheet, and the cynicism that follows the leader in politics and capitalism is showing hopeful signs of fading (call it disruption if you must) into the future. And with history on the side of domestic corporations doing the right thing by their workers, their communities and their shareholders, I hope we continue to see the changes gain momentum. Just don’t count on me going out to buy a hoodie.

Popular posts from this blog

I B!#*$ For A Living

Not really, but I’d like to. The problem is I don’t search, or that is to say I don’t search for this blog. I do search, regularly so, with the same vigor that I flip though a newspaper. I have my pet subjects, finance, art, and sports, politics (not necessarily in that order) I never look at real estate and I rarely look at style articles. One of the reasons I don’t search for this blog is because there is a fine relationship between the price (the value of an asset) and time (the freshness of the analysis) that serve to form my views. That’s the only way I can assure that my posts are mine, grammatical blemishes and all. It also affords me the privilege of some license whereby I’m open to write about almost anything that strikes me as useful in the aim to inform. That’s one of the main reasons I choose to inhabit the space, which brings light to financial news, because it’s so reliant on nearly every other market, across all cultural and political spectrums and best of all it always…

Please Don't Believe Everything You Read

“I have news for you” said Andre
And as I peered through his bad hair weave, and “coke bottle”” glasses I realized he was right.

Nowhere in our collective memories do we ever fully understand the workings of our mind. Driven not by the collective accumulation of information but rather defined by the processes eternally influenced by the random cocktail of chemicals in our heads and poisoned by the principles we carry around in our back pockets with all smug confidence.