Walmart sits in the top spot in the Fortune 500 list of largest public companies. It is the world's largest company by revenue, as well as the biggest private employer in the world with 2.2 million employees. In terms of market value, it is one of the world's most valuable companies.
When you're sitting at the top of a hill, you're an easy target. And this company is a magnet for criticism of our capitalist system. And there are other reasons why Wal-Mart has drawn fire: mostly, its famously cheap pay scales. In the past, many employees at Wal-Mart have taken home some such meager paychecks they need government assistance to pay bills. Not long ago, in a panel discussion, a percentage from a number of years ago resurfaced: the Wal-Mart family, which owns the majority of the public company's stock, has more wealth than the entire bottom 30-40 percent of the American population.
All of this is why Wal-Mart's decision represented very good news indeed, a clarion call to all companies considering how much to pay their workers:
More than 1.2 million Walmart U.S. and Sam's Club associates will receive a pay increase under the second phase of the company's two-year, $2.7 billion investment in workers. The pay raise, which takes effect Feb. 20, will be one of the largest single-day, private-sector pay increases ever.
What the Wal-Mart story actually represents is opportunity our private sector faces to help heal the American economy. It's exemplary of many things, but right now it should be celebrated for serving as an example of what a company can do to help close the wealth gap, not make it worse. Wal-Mart was praised for announcing this pay hike, but it was quickly followed by qualifications. There were complaints that the retailer was simply reacting to public ire over its wage policies. Others suggested it was trying to hang onto workers in a tougher labor market, where increasing jobs meant its people could defect to another employer at any moment.
Even if those are the motives, it's to the company's credit. It ought to protect its brand, which depends on public opinion about how the company is run. And it ought to pay people enough to make them want to stick around and work creatively for the company's future. Aside from its macro-economic benefits, this is the most fundamental point of a fair wage: to inspire loyalty and a sense of mission throughout a company, from top to bottom. I suggest any effort to discredit the company's motives are beside the point. What it's done is set an example for the rest of the private sector: it's granting of higher wages represents a recognition that workers are a company's number one priority now.
Eventually companies will wake up to the fact that employees are what matter most in any enterprise. In a world where customers have can choose from multiple providers--for hotel rooms, flights, groceries, household goods, and nearly every other product and service--employees have become the origin of added value. Get your employees on board in building trust with customers by working toward personalized solutions, even in the simplest purchases, and you will win in the market.
Not only that, you will begin to stimulate our sluggish economy. The private sector, in its choices on how to pay workers, represents are best hope for averting an economic meltdown--every pay raise is a form of "stimulus spending." With a third or more of the population struggling with debt, our first order of business is to build a profitable future for everyone by helping lift those people out of the red and into the black.
Peter Georgescu is the author of The Constant Choice. He can be found at Good Reads.