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The broader ramifications of Wal-Mart's wage hike

Some have noted that the one-off bonus will be less beneficial than a generalized increase in wages, and that the new starting hourly wage would only catch up to the mandated minimum that is already in effect in some states.

By Mohamed A. El-Erian | Updated on January 12, 2018
Will the move translate into greater short-term consumption and growth, as well as greater corporate investment and higher growth potential? (Photo: Shutterstock)

Wal-Mart joined other companies in announcing an employee wage hike and bonus program. Citing “the opportunities tax reform creates for us,” the retailer said Thursday that the measures “will benefit the company’s more than one million U.S. hourly associates.” 

Interest in this announcement extends well beyond the company itself. The move raises relevant questions for those seeking to predict the future economy: Does this event mark the attainment of a critical mass that makes it inevitable the corporate sector as a whole will pass on part of the relief from the recent tax-cut package in the form of higher wages? Will it translate into greater short-term consumption and growth, as well as greater corporate investment and higher growth potential? And will it assuage those who are concerned about higher government debt?

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