Higher Pay is a Gift to the Economy

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Shoppers take advantage of Black Friday sales in the early morning at a Target store Friday, Nov. 26, 2010 in Chicago. (AP Photo/Kiichiro Sato)

With the holiday shopping season fast approaching, Demos has released a new report showing how raising wages in the retail sector would benefit not just workers but the economy as a whole. The study looks at what would happen if the lowest-paid retail employees earned $25,000 a year (the current average is $21,000 for retail sales people and just $18,500 for cashiers).

More than 700,000 Americans would be lifted out of poverty; nearly the same number would rise from near poverty to above 150 percent of the poverty line. Because families living near the poverty line tend to spend almost every penny they have, the additional wages would likely go right back into the economy — Demos estimates that the GDP would increase between $11.8 and $15.2 billion over the next year, leading employers to create an additional 100,000 jobs. The retail sector itself would earn an additional $4 to $5 billion from its own workers. Another way the wage increase might help pay for itself is through greater productivity and higher sales generated by happier workers.

On the flip side, the additional payroll costs for the 15 million workers in the sector would add up to $20.8 billion. If retailers passed half that cost onto their customers, the average household would pay 15 cents more per trip to the store, or $17.73 per year. Sounds like a small price to pay for a more robust economy and a slightly more equitable society.

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  • Anonymous

    To put these wages into perspective, consider that Michael T. Duke, Walmart’s CEO, makes $17.6 million per year or about $8,461 per hour. It takes Mr. Duke about 2 hours to make what a cashier in his store makes in a year.

  • http://www.facebook.com/profile.php?id=100001329932348 Ed Lucas

    …Not even doing anything of productive importance most of the time!

  • Anonymous

    I definitely agree with the higher pay for the retail employees. But of course the big retailers will have to raise prices, not lower them as they like to do before the Holidays. Walmart will have to change their slogan, “always low prices”. Do you really think they will do that?


  • Pat Messmer

    It is a great idea but Congress, particularly the GOP would never allow it!

  • taramathea

    Utter garbage! If $250,000 is the baseline for the middle class, then $25,000 is most certainly still poverty level. I wish these economists would get their stories straight… if we really want to boost the economy, we need to start by paying FAIR wages versus slave wages.

  • Anonymous

    “What ever happened to Henry Ford’s simple but then radical idea to double the wages of his assembly line workers? After all, Ford reasoned correctly, it was the workers who would be buying the cars coming off the assembly line. They couldn’t buy the cars without money. Henry Ford seemed to know instinctively that his own success would be fleeting without the participation of the middle class…”

    Read more about The Face of Capitalism at


  • Stuart Dunn

    It is not just retail workers who should earn a living wage, everyone should. This is best accomplished by increasing the national minimum wage to $10.55/hr. Just part of the fiscal plan i present in my book, “A More Perfect union – A Fiscal Plan for America.”