Is this really that a factor with 24/7 surveillance and legal repercussions for theft? I mean...you're making it sound like it is, and I believe you but it's just so hard to people employees are that stupid.
Yes it's a big factor. Walmart employees, watched by 37 cameras from right over their heads, will still steal cash from the purchase flow. For an organization their size, it's a big problem. You can guess the kind of people you often get for $11 per hour, when you need a million of them (ie 1% stealing means you've got 10,000 people stealing from you).
Not much has actually changed regarding this structurally, the surveillance has been there for 30 years and the legal aspect forever. Desperate and or stupid people, do desperate and stupid things. What has changed, is Walmart now has dramatically less cash flowing through it at the point of sales (due to cards or Walmart Pay et al). Merchandise theft is by far the bigger problem these days for Walmart. The same goes for places like liquor stores (which used to be an extremely cash heavy business, but now are mostly cards).
If you increase everyone's wages the quality of employees across the board won't change. If you increase your wages, while other employers' wages stay the same, you'll get better applicants.