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.