Walmart Takes a Significant, if Insufficient, First Step

“The Fight for $15” began last year with a number of activist organizations, particularly Fight for $15 itself, which brought together American fast food workers to push McDonald’s and other fast food companies to pay its low-wage employees $15 per hour. This cri de coeur might have begun at Walmart, where many of the company’s low-wage employees have been protesting the company’s employment policies since early in the decade. On Black Friday 2014, perhaps the busiest day of the year for the American retail sector, many Walmart employees participated in a national strike led by OUR Walmart.

On Thursday, February 19th, Walmart announced it would raise the minimum wage for employees on the floor at its stores, more than a half-million workers, to $9 per hour. According to a New York Times article published the same day, the pay increase will take effect in April of this year, followed by a second increase, to $10, by February 2016.

The increase isn’t very much, only $1.75 more than the federal minimum of $7.25 an hour and still $.10 less than the $10.10 proposed by President Obama. $9 per hour for 40 hours per week generates an annual gross paycheck of $18,720 – compare this with the 2015 poverty guidelines issued by the US Department of Health and Human Services, which lists the poverty guidelines for households of one, two and four members as $11,770, $15,930 and $24,250, respectively. Is there any reason, in this day and age, that someone should be gainfully employed fulltime – in this case by the one of the world’s largest and most profitable companies, first on the Fortune 500 in 2014 – and still remain in poverty?

Walmart made about $17 billion in profits in 2013. In a Fortune article dated November 12, 2013, Stephen Gandel writes:

"Wal-Mart has a book value of $76.7 billion. Take 15.4% of that, and that means investors are looking to get paid $11.8 billion a year. That leaves $101 billion to pay employees...the average Walmart employee’s take home pay should be $33,315."

We applaud this significant first step by Walmart, but it’s not enough. We want to see better pay and benefits for all of Walmart’s fulltime low-wage employees, and better pay for the company’s part time low-wage employees. Walmart can absolutely afford to do it, and without taking a deep cut in profits or knocking down its share price.

There’s no law that says major corporations in the USA have to pay their employees more than the federally-mandated minimum wage, whether it remains at $7.25 or leaps all the way to $10.10, but wouldn’t it be fantastic if they did? For public relations, the goodwill this would generate is immeasureable. What’s far more important, though, is the improvement of the quality of life for the more than one million people – approximately 1% of the American workforce – working for the Walton family, which owns about 50% of the company. Once these workers are provided something closer to a living wage, they will in turn put more money into the American economy, perhaps spending even more of their income at Walmart stores.

This is from Paul Krugman’s 2 March 2015 column in The New York Times, Walmart’s Visible Hand:

"A few days ago Walmart, America’s largest employer, announced that it will raise wages for half a million workers. For many of those workers the gains will be small, but the announcement is nonetheless a very big deal, for two reasons. First, there will be spillovers: Walmart is so big that its action will probably lead to raises for millions of workers employed by other companies. Second, and arguably far more important, is what Walmart’s move tells us — namely, that low wages are a political choice, and we can and should choose differently."

Here’s hoping the Waltons have the vision and largess to choose differently, and that ultimately they decide to pay their people what they deserve. And need. And that other American corporations follow in their bold footsteps.