NEW YORK (TheStreet) -- Ignore the ding to first quarter earnings: Wal-Mart's (WMT) decision to raise employee wages, while raising ire among some investors and observers, is a smart long-term investment in its own business. In the most obvious way, this investment enables Wal-Mart to attract and keep better workers, which translates to productive, happier, better-paid workers and better store experiences for customers.
In some areas, Wal-Mart stores function as a de facto town square, a center for the community economically and socially. They are a main driver for employment and the growth of many of the regions in which they operate, and employ a significant proportion of the country's working population for any one firm. Raising its wages improves employees' quality of life in its more than 4,100 stores -- and better quality of life for others in the communities in which these stores are located. Increased quality of life in turn will drive Wal-Mart's business in the long-term as happier people with more money in their pockets shop and buy more.
Wal-Mart raising wages also helps the broader American economy. Recent studies have shown that workers who don't make a living wage often turn to government assistance. The UC Berkeley Labor Center found public services offered to low wage workers cost U.S. taxpayers approximately $152.8 billion a year. The problem is no longer what used to be derisively called "welfare queens" (those assistance recipients who don't work) but welfare workers: that is employed workers who don't make enough from their employers to make ends meet.
After news that Wal-Mart's short-term earnings in the first quarter took a hit, its stock lost 3% of its value after their earnings announcement, so it would be safe to say investors didn't approve. But were those investors who were investing in the long-term health and prospects of a major corporation -- or were they short-term bettors who were focused on making transactional profits?
There has been a change in the way investors are looking at companies. No longer is the financial bottom line, while still a vital marker, the sole deciding factor for support.
Regardless of the cost and potential short-term earnings affect, Wal-Mart isn't alone in increasing wages. Companies as diverse as McDonalds (MCD) , Ikea and Aetna (AET) have all raised wages for their lowest-paid employees in an effort to recruit and retain better talent and focus on longer-term benefits to the company.
As Wal-Mart CEO Doug McMillon said: "Overall, these are strategic investments in our people to reignite the sense of ownership they have in our stores...As a result, we firmly believe that our customers will benefit from a better store experience, which can drive higher sales and returns for our shareholders over time."
Other CEOs could take a page from McMillon on this front. Many service-oriented companies like Darden Restaurants (DRI) , Applebee's and RiteAid (RAD) have all been outspoken critics of -- and lobbyists against -- raising the minimum wage. In a marketplace where income inequality is a hot topic and millennials drive the market, companies doing the right thing for the long-term will win.
In this area, Wal-Mart is showcasing a kind of leadership that other corporations should be emulating. It's an important reminder that corporations play a vital role not just in our economy, but also in our society: They make the things we buy and sell, they employ us and provide economic stability to our communities, and they power our economies and our lives.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.