Forget Presidential fiat and government mandates, Wal-Mart’s recent move to raise its wages is a reminder that the free market system works – and works best!

As we reported last week, Wal-Mart announced that it was raising its minimum wages to $9 by April and to $10 within the next year. Some 500,000 employees nationwide have scored big with this announcement. Even more of Wal-Mart’s 1.2 million workers will benefit from additional training, free or low-cost college credit opportunities, and changes in scheduling that give workers more control over their hours which can boost their pay.

By the way, Wal-Mart is not alone. Last year, the Gap raised its minimum hourly rate to $9 and again to $10 this year, which means more money in the back pockets of some 65,000 employees of Gap, Banana Republic, Piperlime, Athleta, and Intermix. Last June, furniture giant IKEA announced it would raise the average minimum hourly wage for workers to $10.76. 

There are a host of other companies that pay employees above the federal minimum wage by choice as the Christian Science Monitor reports. Moo Cluck Moo, a small fast food chain based in Canton, Michigan, starts employees out at $12 an hour and bumps up the pay to $15 an hour after 60 days. In-and-Out Burger, a fast food chain in California and Southwest, starts its employees off at a wage of $10.50 an hour and they get other benefits like paid vacation.

These companies realize that to attract and retain the best talent, it’s best for their bottom line to offer competitive wages – even setting the pace for the competitors. This is a business decision not compliance with government mandate. It also serves as ammunition for business groups against efforts by President Obama and other lawmakers to force private industry to let the government set their compensation packages.

The Hill reports:

The move won accolades from the White House and other proponents of higher wages for hourly workers.
But business groups are also pouncing on the action, saying it is evidence that decisions about employee wages are best left to the private sector — not the federal government.
“Our members feel this is the perfect example of the free market working the way it is intended to work,” said Jack Mozloom, a spokesman for the National Federation of Independent Business (NFIB).
“Wal-Mart made a decision based on what is best for Wal-Mart and our members want that benefit of the doubt.”
Though they want to, Mozloom said not all businesses could afford to do what Wal-Mart is doing.
“Small business owners typically rely more heavily on entry level, hourly workers,” he said. “If they were forced by the government and busy-body politicians to keep up with Wal-Mart than they would lose their customers because they would have to raise prices or lay off employees.”

“Government mandates that arbitrarily require businesses to implement politically driven policy are unnecessary and, in fact, create hurdles to job creation, curtail capital investment and pose as barriers to a sustained economic recovery,” NRF President and CEO Matthew Shay said in a statement.

Wal-Mart’s move is likely to touch off a round of raises by other retailers who want to remain competitive. That should be a business decision and not one forced upon businesses by government regulations.

This is especially is a valid concern for smaller businesses who may not be able to make such a leap in wages all at once.  The majority of businesses in this country are one-man shops and small businesses with fewer than ten workers. Being forced to raise wages because of minimum hikes may mean they have to choose to fire workers just to stay afloat.

And let’s not forget that minimum wage hikes aren’t the only profit-cutting regulations that businesses must grapple with. ObamaCare is another example of politically-motivated policies that hoist greater administrative burdens and increased costs of operation on the shoulders of employers. In aggregate these burdens can make staying afloat difficult at best.

Allow the private sector to work and it does. Workers are happier, companies can expand, and customer follow companies that treat their workers well while still delivering quality products people want. When government plays the boss, everyone suffers.