A $10 Minimum Wage At Wal-Mart? Better Wish For Two Front Teeth

Season's Greetings to Wal-Mart from the University of California/Berkeley Center for Labor Research and Education! The UC Berkeley Labor Center has been producing research since 1964, but this week the research team released not one---but two---studies, neither of which you will find under Wal-Mart's Christmas Tree.

According to the first report, "A Downward Push: The Impact of Wal-Mart Stores on Retail Wage and Benefits," researchers found that employees at Wal-Mart earn lower average wages and receive less generous benefits than workers employed by many other large retailers. "Our research finds that Wal-Mart store openings lead to the replacement of better paying jobs with jobs that pay less," the Labor Center reports. "Wal-Mart's entry also drives wages down for workers in competing industry segments such as grocery stores."

The study examined Wal-Mart store openings for the 8 year period 1992 to 2000, and found that the opening of a single Wal-Mart store in a county lowered average retail wages in that county by between 0.5 and 0.9 percent. "In the general merchandise sector, wages fell by 1% for each new Wal-Mart. And for grocery store employees, the effect of a single new Wal-Mart was a 1.5% reduction in earnings," the study concludes. With an average of 50 Wal-Mart stores per state, the average wages for retail workers were 10% lower, and their job-based health coverage rate was 5 percentage points less than they would have been without Wal-Mart's presence. "Nationally, the retail wage bill in 2000 was estimated to be $4.5 billion less in nominal terms due to Wal-Mart's presence." This suggests that workers in 2000 would have taken home $4.5 billion more in their total paycheck if Wal-Mart had not been around.

"Overall," the researchers say, "the results strongly support the hypothesis that Wal-Mart entry lowers wages and benefits of retail workers." With more than 1.3 million American workers, Wal-Mart accounts for 55% of all general merchandise workers. In the area of large general merchandise companies with more than 1,000 employees, Wal-Mart workers earned 25% less than workers at competitor stores. Wal-Mart's impact on grocery store workers is especially dramatic. Wages of unionized supermarket workers are 27% higher than their non-union counterparts.

The UC study also found no evidence of job gains when a Wal-Mart opens. "Our study demonstrates that the opening of new Wal-Mart stores produces a decline not just in average wages," researchers explain, "but in the total wage bill of a county." As for health care benefits, the new study reports that 10 new Wal-Mart stores in a state caused a 1 percentage point drop in the proportion of retail workers getting health insurance from their workers.

The second study, "Living Wage Policies and Wal-Mart: How a Higher Wage Standard Would Impact Wal-Mart Workers and Shoppers," concludes that Wal-Mart could increase its minimum wage to $10 per hour and greatly boost the well-being of its low-income workers with little financial impact on most shoppers. Even if Wal-Mart passed on to consumers the entire cost of raising its wage floor to $10 per hour, the average impact on a Wal-Mart shopper would be higher product prices of less than 1% (0.9%). On the other hand, almost half (46.3%) of the wage income gain would go to workers living below 200% of the federal poverty level.

Less than 1 in 3 (29.3%) of shoppers with incomes below 200% of the poverty level would be impacted by the small price increase from raising wages. Giving Wal-Mart workers a more livable wage, it turns out, would literally be a 'small price to pay' for consumers. The study estimates that the average Wal-Mart shopper would have to pay an extra 36 cents per shopping trip, or less than $10 a year. Wal-Mart workers would gain $2.38 billion more in wages---a 9.3% increase in Wal-Mart's current payroll. For the lowest income Wal-Mart workers, a $10 minimum wage at Wal-Mart would translate into $1,020 to $4,640 more a year in pre-tax income. The Wal-Mart workers would notice the increase in their paycheck, but the average Wal-Mart shopper wouldn't even notice a change.

Wal-Mart claims that its average hourly wage is $10.11 an hour. But payroll data suggests that what workers get depends on their gender, race and job title. According to the wage study, 769,666 Wal-Mart workers are earning $9.02 or less per hour. There are 376,061 Wal-Mart full and part-time workers making less than $8 an hour. If all these workers were from the same city, they would equal the population of Minneapolis or Honolulu. If Wal-Mart raised the wages of its 238,872 full-time workers earning less than 8 an hour to $10, the average worker would take home an annual increase of $4,640. That's the definition of "live better" to the retailer's workforce.

According to the new wage report, as of January, 2007, Wal-Mart had sales exceeding $731 million every day, with around 18.1 million shoppers per day, and 127 million customers every week. The average shopper would pay $9.70 a year to give Wal-Mart workers a $6.52 million raise per day, or a total wage hike of $2.38 billion annually. This assumes that Wal-Mart absorbs none of this wage cost itself.

One of the best things Wal-Mart as a corporation could do to help low income families would be to provide its own "associates" with a decent wage hike. These two studies, seen in tandem, suggest that Wal-Mart currently is depressing wage rates in its industry, at a time when it could easily afford to give its workers a greater share of the pie. Wal-Mart could help hundreds of thousands of its own people to "live better," but instead has deliberately chosen to "save more" for the corporation---at the expense of the people who have helped the company make billions in profits.

What chance is there that Wal-Mart workers will find a $10 per hour minimum wage in their Xmas stocking? The "Associates" might as well be whistling through their two front teeth.

To view copies of the two reports released this week by the UC Labor Center, go to: http://laborcenter.berkeley.edu/

Al Norman is the founder of Sprawl-Busters.com, and author of the book Slam Dunking Wal-Mart: How You Can Stop Superstore Sprawl In Your Hometown