Nardelli: $15 minimum wage will put some businesses in jeopardy

Walmart (WMT) workers are “Fasting for 15” until Black Friday, calling for their employer to raise the minimum wage to $15 an hour. Walmart, which employs 2.2 million people around the world, raised its minimum wage for 500,000 full- and part-time associates in the United States to $9 an hour in April and said it will raise it to $10 an hour in February 2016. The federal minimum wage is $7.25 an hour.

These protests are the latest salvo in the ongoing debate over raising the minimum wage.

Yahoo Finance recently talked to a veteran industrial, retail, and auto CEO about how he thinks a $15 minimum wage would affect businesses large and small.

Bob Nardelli, former CEO of Home Depot (HD), and Chrysler (FCAU) and long-time General Electric (GE) executive, says it would be troublesome for some businesses.

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“I think when you edict a blanket increase out there, you’re going to put some businesses in jeopardy,” he said. “Look, only a couple of things can happen when you raise rates: You’re either going to get a lower margin, right? Or you’re going to try to raise prices, and if the consumers say, ‘We’re not accepting higher prices,’ then your volume’s going to go down.”

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Nardelli doesn’t think Wall Street would be happy with either outcome. He believes businesses should be allowed to make that wage decisions for themselves, rather than have a higher minimum wage imposed upon them.

When would businesses choose to raise rates?

If they’re focused on employee retention, and if they’re confident that the increase in rates is “recoverable in product prices,” says Nardelli, who makes clear that he is not saying people don’t work hard and don’t deserve to make a better living.

“They do [work hard]. But I think when you start imposing these things on corporations, it’s just another layer of regulation. And just think about [this]: the government has created more jobs than the industrial sector this year. That’s out of balance.”

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