Walmart Minimum Wage Of $12 Wouldn't Drive Up Prices, Says Study

WASHINGTON- If Walmart were to pay its employees a minimum of $12 an hour, what would that wage baseline do to the retail behemoth’s famously low prices? According to a new study, probably not much.

Researchers at the University of California, Berkeley’s Center for Labor Research and Education argue that such a wage bump for the retailer’s lower-paid associates would translate into an extra cost to shoppers of about 46 cents per trip, or $12.49 a year, if the brunt of the increase was passed on to consumers. The study’s lead author, Ken Jacobs, claims that the findings support the idea of a “big box” wage ordinance that would set a minimum wage for large American retailers like Walmart who are entering urban areas. Such an ordinance failed to make it into law in Chicago a few years ago.

“It wouldn’t affect the competitiveness of their prices, but the benefits could be substantial on the worker side,” said Jacobs, who chairs UC Berkeley's labor center. “There’s this assumption that if Walmart was to improve its wages and benefits they couldn’t exist as they do. But most of what they do to bring down prices is based on the supply chain. Labor is only one part of that picture.”

Dan Fogleman, a spokesman for Walmart, said the company already offers good wages, in many cases better than those paid by competing retailers. “At Walmart we create jobs that offer competitive wages, competitive benefits, and the chance to have a career,” he said. “Time and again we’ve seen examples of store managers who started out as associates.”

Jacobs argues that since the higher product prices would be absorbed by customers across the socioeconomic spectrum, a minimum wage of $12 would disproportionately benefit working-class people. Walmart employs more than 1.4 million workers in the U.S., and the average wage of a Walmart associate is $11.75 an hour, according to Fogleman.

In recent years, Walmart has made a big push into American cities, where it has been met with resistance over wage issues and the potential impact a big box store could have on local businesses. Unions and working-class advocacy groups have recently held rallies and collected signatures opposing the opening of Walmart stores in Washington, D.C., where the company has settled on four sites. Walmart has also been fighting battles recently in New York City, where politicians and unions have so far managed to keep the retailer out, and in Chicago, where the effects of Walmart's entry into the area several years ago are still hotly debated.

According to Fogleman, associate wages are typically higher in the company’s urban stores. Even so, some advocacy groups say the wages aren’t enough to live on, particularly in expensive metropolitan areas.

“This report shows that Walmart can clearly afford to pay associates a fair wage,” said Jennifer Stapleton, assistant director of Making Change at Walmart, a campaign led by the United Food and Commercial Workers International Union. Stapleton pointed out that the increase “would cost [consumers] less than the cost of a pack of gum at the cash register.”

The UC Berkeley labor center produced a 2007 study that found the opening of one Walmart store in an area pushed down local retail wages by about 0.9 percent, a drop that Jacobs attributes to the need for other retailers to compete. For their most recent study, the center made statistical projections based on wage figures that have trickled out in Walmart litigation, in some cases several years ago. Jacobs said he and his colleagues were unable to get up-to-date figures from Walmart.

Comments

[zoucou]

12:59 PM on 04/21/2011

I worked at a Walmart for three years and when I quit I was making $7.85 an hour, full time. The majority of the people I worked with could not afford to support themselves on their pay. We have to live with family, and the way Walmart does schedules it makes it impossible to take on a part time job. You can set your preferences to certain days and hours to take on another job but Walmart lets you know that in doing so you will most likely get even fewer hours. If you quit you cannot get on with another store for X amount of time so you have to find a job outside of retail altogether. They promote people who are unqualified to be dept managers while leaving their most trained and experienced people in low paying positions. Counts, bin audits, mods, floor plans, and price pointing mistakes are made by those who have manager on their name tag. Associates do what they are told, and if they try to reason, transfer, or point out to upper management the mistakes being made they get badgered, bullied, and put on late shifts with hour cuts. The open door policies only work if the store manager has a backbone. Most do not. Walmart is fast paced, ever changing, the business aspect of it all is amazing but they blow it by not paying those who do the work better and by over managing stores.

[Hawkes George]

10:34 AM on 04/21/2011

As we all know most associates if you can call them that are not worth $8.00 a hr. Many are so retared they can't even answer a question and get it right. If Wal Mart employees ever gets 12.00 a hr then Mc Donald workers should get 20.00 a hr.

[Keyop]

07:39 AM on 04/21/2011

I hate wal mart and avoid it . Plus its always packed with freaks on Jazzy wheelchairs and lots of half tards wondering around.

[danglines]

02:51 AM on 04/21/2011

But it would effect their greedy profits.

[uniquindividual]

11:19 PM on 04/20/2011

But wouldn't it hurt the Walton"s

http://www.usatoday.com/money/perfi/taxes/2005-04-05-waltons-usat_x.htm

[tacevad]

12:08 PM on 04/20/2011

all of the furor over public servants being "overpaid" is asking the wrong question while the very wealthy keep getting richer. The correct question is WHY ARE PRIVATE WORKERS BEING UNDERPAID?

[edg1]

03:32 PM on 04/20/2011

Good point. Republicans don't care particularly about public sector wages. They want everyone (except themselves) to work for minimum wage or no wage at all. Just think what would happen to corporate profits if workers would just work for free. It would be Republican utopia.

[Sherrie714]

09:45 AM on 04/20/2011

The Walton family has consistently been on the Forbes 400 since 2001. They are currently worth about 18 billion each. Now I commend them for being smart enough to know if you buy cheap from China and sell at a higher cost in America, you will make a profit. But will they really be devastated to be worth 16-17 billion and spread the wealth to their minimum wage making employees? Now before some of you start screaming about "The rich deserve all of their money..they work for it"..I agree with you. But they would have never made it without hard working employees. In high school, I worked at a HUGE food warehouse...making 4.25 per hour. I was a cashier, managed the recycling center (bottle returns), did re-shop (items that customers do not purchase at the register), and ran the customer service counter when called upon (I usually helped customers locate what they wanted). At times I would work the glue gun and place price labels on items. I used to come home with back aches so my mom brought me a weight belt. That was the most grueling job I have ever had. It made me excited about going to college. I could not imagine doing that kind of work for so little pay for the rest of my life. I feel for the workers of Walmart who work very hard only to to see their CEO's make billions while they get scraps.

[INDIVIDUALTERRY]

12:42 PM on 04/20/2011

You do know that those billions are not bundled up in cash and stored in their basement ,right?
Stock and ownership is a whole lot different than cash in hand to be" passed out to the workers".

Good post and you did exactly what you should have done which is work to better yourself so you don't have to be bitter about stocking shelves at Wallyworld.

[iamsnowking3009]

02:02 PM on 04/20/2011

They are stored stocks which is basically a basement to avoid paying higher taxes

[hawhite2000]

02:13 PM on 04/20/2011

Stocks are a mechanism by which business are able to get the capital to expand or for financing certain large scale projects not for executing normal operations; so all of those billions should not be in the stock market.

If every business were not to pay their employees a decent wage then who will be left to purchase their goods. The average chinese worker will not be able to buy the items sold at Walmart.

[AussieHugh]

08:32 AM on 04/20/2011

I was a little puzzled that people could earn as little as $12.00 for a full time job.

Just did a check on minimum wages in USA about $7.25 p/hour. In Australia it is $15.00 p/hour and we get 10 day paid sick leave and 20 days paid annual leave. (and universal health care etc)

Reasonable minimum wages support the economy and meand that workers can actually survive on 40 hours per week. They can then aslo spend their money on stuff that stimulates the local economy rather than living hand to mouth.

[TedEjr]

08:47 AM on 04/20/2011

The Scrooges have pretty much dictated wage policies here in this country from the inception. Some here would even prefer that we revert to legal slavery. But then again, with the working conditions in some occupations, slavery is an apt description.

I consider myself lucky to be currently earning 16.80 an hour. I just got this job a couple of months back. And with the overtime, and on call extras, I am finally moving forward instead of treading water. And my prior job was 14.00 an hour. And I am single, with some prior (marriage) credit card debt, and general living expenses. Imagine that. Fourteen an hour, and still struggling. I could not imagine trying to exist on 7.50 an hour.

BTW, does Australia need any computer techs?

;-)

[expat50]

05:37 PM on 04/20/2011

You have just illustrated why, unlike the USA, Australia is a struggling third world country, just like France, Germany, Norway, Denmark and Sweden.

[nomoredead]

08:03 AM on 04/20/2011

Get a union and demand $15 per hour, other local businesses will have to pay comparable wages to compete or loose employees to WalMart. More cash spent in the community by workers means more hiring and profits and taxes paid to the cities so they hire and on an on. More pay means more for many instead of a few at the top.

Now that is a tide that raises all boats, not just yachts.

[getsgarth]

08:21 AM on 04/20/2011

From each according to his ability, to each according to his need.

[Mark Colwell]

10:56 AM on 04/20/2011

Most Americans conservatives seem to prefer "take what you can, give nothing back." Surely there is a balance point between that statement and "from each according to his ability, to each according to his need." A balance point that allows us to reward the smartest and hardest working while also insuring opportunity really exists for all.

[Ioan Lightoller]

08:31 AM on 04/20/2011

I hope you can explain how to get a union in at Wal-Mart. People have tried and gotten fired for their pains. Workers need government backing to be able to hold free elections and then to make it clear to Wal-Mart that the days of paying workers crap wages are over.

Given that our government ususally caves to the corporation, I don't see this happening.

[getsgarth]

08:43 AM on 04/20/2011

Agreed. Workers would need free elections if they want to unionize. That must include a secret ballot, not an open ballet.

Realize the "Employee Free Choice Act"—better known as the Card Check bill, allows for open ballet. An employee would have his vote known by people and could be bullied to vote either for or against the movement to unionize. That is wrong.

[nomoredead]

07:57 AM on 04/20/2011

Realize too that most of these employees would turn around and spend any additional pay raise at Wal Mart.

[The-right-is-wrong]

07:07 AM on 04/20/2011

Gee..........how could a study by "University of California, Berkeley’s Center for Labor Research and Education" have any bias whatsoever?...LOLOLOLOLOLOLOLO

[INDIVIDUALTERRY]

12:46 PM on 04/20/2011

That was my first response.
Those libbers love spending other peoples money. And now they have courses in it!

[Skeptical Patriot]

05:24 AM on 04/20/2011

I believe that the researchers would find that a 20% reduction in professor salaries would only benefit society and students through more accessible access to higher education, that a 50% reduction of Congressional salaries would not effect the quality of our laws, that increasing the salary of domestic help for all university employees by 25% would have no competitive impact on higher ed and arbitrary changes in the cost structure of any business will have no deleterious effect on their profits.

Would be nice if a professor actually ever had to run a business, work in a competitive industry (unlike a tenure system), have to make payroll and actually build anything of value that actually employs people. I am sure that from Target to Big lots, they would love the chance to see Walmart make the suggested move.

[Ioan Lightoller]

08:36 AM on 04/20/2011

Get over yourself. Wal-Mart is making BILLIONS. Much of that is earned for them by those who work at Wal-Mart. Wal-Mart screws its workers over however it likes, because the labour laws in place (assuming that they're still on the books) are not being enforced. I know you and your ilk would like us all working people in this country to be making Third World wages. But it is the workers at Wal-Mart who earn the corporation BILLIONS OF DOLLARS each year. I'm far more concerned for their welfare rather than that of the Waltons and the others who live off the fruit of the workers.

[mdsman]

09:51 AM on 04/20/2011

So they are paid between 2 and 5 dollars more than their peers in competitor stores and they are being scr3wed over?
Interesting point of view.
There are so many other reasons to bash wal-mart and this is what is chosen?
very bad example

[TedEjr]

08:53 AM on 04/20/2011

1---Big Lots is struggling now to remain above bankruptcy. The price differential would have no impact.

2---Target currently has on the average, lower prices than WalMart. It isn't helping their market share currently. The change would not significantly impact them.

Was there a point to your post? Or were you simply Op-Eding?

[getsgarth]

09:05 AM on 04/20/2011

study to show Target is lower prices?

The times I have done comparisons, Walmart was always cheaper on the same item. However, on comparable items, Target would be slightly more expensive and the quality seemed slightly better.

[Tom95134]

05:18 AM on 04/20/2011

$12.00 an hour? WOW! The next thing you'll want Wal-Mart to do is provide a reasonable cost health care plan, a 401k plan with employer contributions, and vacation time.

[Ioan Lightoller]

09:42 AM on 04/20/2011

F&F. Government should be intervening in this because of Wal-Mart's corruption and greed. When my husband worked for WM he had a nice chunk taken out of his pay every two weeks for a policy that had a thousand dollar deductible. What Wal-Mart worker can afford to be paying a ridiciulous deductible like that?! Then when he was sick and had to be hospitalised, the insurance refused to pay a penny of the care that he needed.

Wal-Mart also contributes to the welfare problem--in every Wal-Mart I have ever worked in, notices are up in the break room and Human Resources telling workers where to apply for things such as food stamps, Medicaid, etc. Wal-Mart is slime in my book.

[Kai-HK]

04:25 AM on 04/20/2011

Mr. Jamieson:

I have always loved the idea of wage and price controls. They have worked so well in past….not!

However, I am less concerned with Wal-Mart which in general has been bringing prices down and was an early supporter of the Min Wage laws last years, since it helps them drive out mom and pop stores which usually pay less than they do. I am more concerned with the spiraling cost of education, specifically at the University of California, Berkeley. If we could reduce the salaries of college professors at this university, specifically the professors that worked on this report, to $12/hour, I think we would see a great improvement in consumption equality if school tuition was lowered and it was made more accessible. Again, I am a big fan of wage-fixing.

The best thing about this report, is that professors at Berkeley with their bloated salaries, never shop at Wal-Mart and as such are not penalized when the price of goods go up. Given that an average family of four would have to pay an additional US$50 year, or approximately one weeks worth of food for an impoverished family, these professors sipping their wine at the faculty campaign must be chuckling at the thought of this family going without food one week a year as they struggle to make the rent-seeking transfer payments that these researchers have committed to on their behalf.

Kai

[Ron Shook]

12:45 AM on 04/20/2011

Wallmart knows that its comparative advantage and market share will be eroding for long into the forseeable future and the way to hold that back for as long as possible is to continue to brutalize its workers as long as it can get away with it. That will happen from a combination of the increased cost of shipping products from half a globe away and the increased cost of those products as Chinese inflation kicks in. It's even possible, even probable, that China's bubbles will burst throwing the Wallmart supply chain and the world economy into disarray. Some Chinese manufacturers are already refusing the Wallmart "price." No one rules forever and what was innovative a few years ago can turn on a dime.

Anyone's guess is as good as mine as to what that will mean for Wallmart or the neighborhood hardware, apparel or grocery store, but one way or another it'll likely mean that a lot of manufacture will come home but not a lot of jobs because of automation and robotics. Industry in terms of manufacturing will soon be on an opposite course from the last 30 years. We'll see what retail outlets react best to the change, but it's seldom the old guard.

[Ioan Lightoller]

09:45 AM on 04/20/2011

Fanned and faved. Something needs to be done about the ways in which they exploit their employees...the sooner the better. Except for the poor people who would be thrown out of work should Wal-Mart go under, I wouldn't shed a tear if they went out of business tomorrow.