One of the world’s largest retailers, Wal-Mart, has recently been under criticized of underpaying it’s employees. Many argue that their wages are too low and can afford to increase their workers’ salary as much as 50% without harming their business. Mathematical equations using the revenue of Wal-mart and their costs as well as stocks prove that Wal-mart can easily pay their employees more without it’s stock rapidly decreasing.Many critics argue that because Wal-Mart made $17 billion in profits last year, it can afford to pay more and even has an obligation to do so. Payscale, a salary information website, estimates “Wal-Mart CEO Mike Duke’s 2012 pay of $23.2 million was 1,034 times more than the company’s average worker”. This figure easily emphasizes the fact that employees could be making more money.

Wal-mart’s concern is that if they are to raise the wages, that could lead to a decline in stocks, shareholders could feel that will not be getting enough value or stock in the company if potentially Wal-mart’s profit was to decrease due to the increase of variable costs (employee wages). The reality is that stocks could change slightly if Wal-mart was to give raises, but they wont change to an extreme degree due to the sheer size and power that Wal-mart has in the market.

There is also the possibility that an increase in salary could give Wal-mart a positive outcome in the stock market. An example of this happening was in 2010, Google announced a 10% raise for their employees “the stock dropped a bit but mostly recovered within a year. And Google’s stock is 60% higher now than it was before the raise”.

In the long run, giving their employees a higher salary would be beneficial to their to the over productivity of employees and possibly the stock market.

http://finance.fortune.cnn.com/2013/11/12/wal-mart-pay-raise/