--by Jody Knauss and Mary Bottari
To much fanfare, Walmart has announced a program to raise wages for its lowest paid workers.
In a “Letter to Associates” (later released as a blogpost under the tag “Opportunity”), Walmart CEO Doug McMillon announced a plan to raise wages to at least $9 per hour for all Walmart workers starting in April. Next February, workers currently on the company’s payroll (and thus with at least a year of seniority, though it is doubtful Walmart would ever use that word) will earn a minimum of $10 per hour.
Combined with wage increases at other company “pay bands,” Wal-Mart calculates the changes will increase wages for half-a-million people in its U.S. workforce of 1.3 million.
The announcement was greeted with applause in some quarters, panic in others.
AFL-CIO chief Richard Trumka lauded the firm. "For years Walmart has kicked and screamed that raising wages was not a feasible business model, Workers everywhere are glad to see Walmart change their view."
Christine Owens of the National Employment Law Project congratulated Walmart workers. “The announcement is clearly the result of years of organizing by Walmart employees,” she said. “Few could have envisioned a group of workers forcing Walmart, ruthlessly committed to cost-cutting, to unilaterally raise wages. But, standing together, Walmart employees have done just that, providing inspiration to worker movements everywhere.”
But low-wage warrior Michael Saltsman, who works for the PR firm Berman & Company and its fake “think tank,” the Employment Policies Institute, complained to the Washington Post “Just because a $10 minimum wage is the right choice for Walmart ... does not mean it should be mandated for all other businesses.” Berman and the restaurant industry have long fought to keep the tipped minimum wage at $2.13 an hour.
How big of a deal is the wage hike at the nation’s largest private employer? Was it an act of corporate benevolence? Or a reflection of labor market realities?
Walmart Raise in Perspective, $1 Billion Compared to $485 Billion in Annual Sales
The increases will not fundamentally change the wage structure at Walmart. While there is little independent data on what Walmart workers are actually paid, the company forecasts the average hourly wage for full-time workers to rise 15 cents an hour, from $12.85 to $13.00, while the average for part-timers will bump up from $9.48 to $10.00 per hour.
The higher wages and training costs are expected to cost Walmart about $1 billion, barely half-a-percent of its $485 billion in annual sales. The New York Times reports that Walmart made more than $7000 in after-tax profits per worker in 2014, and that profits-per-worker are up substantially post-global-meltdown compared to pre-2008 levels.
Nor does the company even expect the wage increase to pinch its profitability. According to Reuters, CEO McMillon “expressed confidence the investment would eventually pay off with increased traffic to its stores.”
But Walmart workers are still feeling the pinch. $9 an hour is still poverty wages, and since Walmart defines “full time” as 34 hours a week, many "full-time" workers will make $16,500 a year. After a year’s seniority workers would make $18,360. The poverty level for a family of four is $24,250.
Holly Sklar of Business for a Fair Minimum Wage notes many Walmart workers rely on foodstamps and other forms of public assistance to make ends meet. And “given that the buying power of the 1968 federal minimum wage is nearly $11 [per hour] adjusted for inflation, Walmart should be setting higher targets than $9 in April 2015 and $10 in 2016,” she said.
Walmart Responding to State Minimum Wage Increases
Why is Walmart making this move now? The answer may lie in a report released the same day as the announcement.
Elise Gould of the Economic Policy Institute, an actual think tank located in Washington DC, documented that 2014 was generally not a good year for wages. Wages fell for workers at almost every income level. The only income group to see a non-trivial increase in average wages was the bottom 10 percent.
She further demonstrates that 2014 minimum wage increases that occurred in 17 states and DC are the most likely cause of higher wages at the bottom. She concludes that “strong labor standards can improve outcomes even when the unemployment rate remains elevated and workers have severely reduced bargaining power.”
In sum, with wages rising at the bottom of the ladder, firms like Walmart are having to pay more to keep people. Other low-wage retailers, including The Gap, have also raised wages.
Emily Wells, in a statement from OUR Walmart, an organization of Walmart workers organizing for better wages and working conditions, wants Walmart to address the fact that most workers are not getting the hours they want and need to support their families.
“Especially without a guarantee of getting regular hours, this announcement still falls short of what American workers need to support our families. With $16 billion in profits and $150 billion in wealth for the owners, Walmart can afford to provide the good jobs that Americans need – and that means $15 an hour, full-time, consistent hours and respect for our hard work,” she said.
Learn more about Walmart at CMD's fact checking resource on Sourcewatch.org.