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Walmart, Wages and The Fed

Sigma Investment Counselors

February 23, 2015

Walmart, the largest private employer in the country, recently announced that all its U. S. workers would earn at least $9 per hour by April and at least $10 per hour by next February.

In the opinion of the author, this is the right thing to do.  “The workman is worthy of his hire”.

This should keep the company’s compensation policy ahead of most current and contemplated State and Federal minimum wage legislation.

The company has stated that it is seeking to improve the customers’ shopping experience, which includes competitive pricing, employee attention, store condition and location.

The goal is, of course, improved same store sales gains.  This is a metric that is easy to measure and is generally considered to be the gold standard for retailers.

Investors should take into consideration that Walmart’s strategy will be noted by other retailers and could lead to a general increase in wages.  The Fed has been clear that one of its key considerations in determining an appropriate level for interest rates is wage inflation.

All comments and suggestions are welcome.

Walter J. Kirchberger , CFA®

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