Wal-Mart's Wages Increase in China, Rollback in US

Wal-Mart is raising wages for its employees -- in China, that is. Yes, the labor union representing Wal-Mart's Chinese workforce won yet another fight against Wal-Mart, successfully negotiating for an 8 percent raise for 2008 and 2009 as well as setting terms for paid vacation, social security, and overtime. This comes at a time when China's economy is booming, and demands for higher wages and better benefits are being pushed by none other than the Chinese government. Meanwhile, as the U.S. economy falters and Wal-Mart benefits, Wal-Mart's U.S. hourly workers are experiencing nothing short of a wage "rollback."

Sadly, wages for the average hourly U.S. Wal-Mart employee have actually fallen when adjusted for inflation. In 2004, Wal-Mart reported an average (Wal-Mart refuses to disclose a median wage which would provide a more accurate picture of wages at the company) hourly wage of $9.68. In 2008, the reported wage is $10.86. But in 2004 dollars, the average hourly wage is $9.55, which means workers are worse off today than they were four years ago. So, while the price of gas, food and health care are rising, Wal-Mart employees' wages are falling.

Even when not accounting for inflation, Wal-Mart's "average" disclosed hourly wage puts a family of four below the federal poverty line. In light of the fact that "full-time" work for Wal-Mart employees is often 34 hours a week, this means the "average" hourly worker earns only about $19,200 annually. Plus, starting wages at the company's stores are often much lower than the "average hourly wage."

So, it is no wonder that Wal-Mart employees top the public assistance rolls for Medicaid, SCHIP and other programs. But instead of actually raising wages to help employees lift themselves out of poverty, Wal-Mart chooses to get credit for telling them about how to get more government assistance. Case in point, just a few weeks ago, Wal-Mart came out in support of legislation that would require large employers to notify their employees about the availability of the Earned Income Tax Credit. Wal-Mart would never disclose how many of its employees likely qualify for this poverty-alleviating tax option, but given Wal-Mart's low wages, it is likely to be a sizeable number.

This is all happening in the context of an American economy that continues to decline while Wal-Mart's revenue continues to rise higher than ever. The company was again crowned the largest company in the world by Forbes, and has continued to outperform its retail competitors as shoppers trade down. The Walton family -- who control 43% of Wal-Mart stock through the Helen Walton Family Group -- earned close to $29 billion just on the increase in Wal-Mart stock prices during the previous seven months (November 2007 to June 2008) alone. The relationship between the Walton family and Wal-Mart workers is a stark example of the old adage that while the rich get richer, the poor get poorer.

We don't begrudge Wal-Mart raising wages at its stores in China (the employees there certainly need it) and it's also appropriate for the company to inform its employees about issues such as the Earned Income Tax Credit. But the company's U.S. employees need higher wages now more than ever.

Instead of perpetuating a cycle of poverty among its workers with a low wage, poor benefit business model, it is time Wal-Mart consider a meaningful wage increase for its hourly U.S. employees who are struggling just to make ends meet for their families. Wal-Mart can and should do better for its 1.4 million U.S. workers.

Comments

[johnie2xs]

In spite of the fact of having been a fascist and bigot, Henry Ford in the 20's raised workers wages to the unheard of level of five dollars a day thereby allowing them to purchase that which they produced. Altruism was not his reason for doing this, good business sense was. Having done this was a great contributing factor to the creation of the "Middle Class". Fast forward to today and Wal-Mart, and we have the business model whereby Wal-Mart employees cannot afford to buy product anywhere BUT Wal-Mart.
So what you have are two divergent models. They both benefit from the buying power of their employees, but one promoted the "Middle Class", while the other eviscerates it. Any questions?

[therealredstateblues]

I also neglected to mention a few other things about Ford. You claim there was no altruism in his move to pay his workers better, that has been debated and of course one can not for certain know what was in his mind at the time -certainly there was a practical business case to be made that higher wages would help him attract and retain good help one must also concede there was indeed some benevolence as well. Henry Ford gave 1/2 and at times 3/4ths of his income to charity - a feat unmatched even by Bill Gates, (Buffet is the only one that has given as much) and at a time when there were no tax incentives for doing so. And despite a mistrust of the medical profession, he also founded Detroit's hospital system, not to mention the historical preservations of industry, technology and Americana at the Henry Ford Musem and Greenfield Village.

[therealredstateblues]

Reports of bigotry and fascism of Henry Ford have been greatly exaggerated. he was one of the very first to hire blacks in his factories. And nearly every industrialist of the day was doing business with Germany - this was not unique to Ford They were also doing business with Stalin too.

[therealredstateblues]

For most of the post war era we had the Henry Ford model - pay workers a decent enough wage so that they may be able to afford to buy the products they produce. Wage increases were tied to productivity and innovative growth. This is demand side economics and demand for goods and services drives economies

The Walmart model stands the Henry Ford model right on its head - get away with paying workers as little as possible, and force them over to the public dole. Wages are no longer tied to increases in productivity. People work harder and longer for less

For all the whining on the right about socialism, they are creating the conditions for it with the Walmart model

[vippy]

True, if you paid more living wages you would do away with the vast welfare system. However,
I don't understand why no one sees it or does not want to see it. Dont' blame the government for
its welfare system when industry paves the road for it.

[Paul]

Wal-Mart should spend some of their billions in profit buying influence in Washington. Perhaps they could pay for some lobbyists to work for single-payer government insured healthcare.

Think of how that would increase the competitiveness of our workforce.

[therealredstateblues]

health care costs are a disadvantage for US manufacturing, who have to compete with other induistrialized nations who provide national health care

You would think there would be more US based mfrs calling for a national health care system

[Paul]

Exactly.

[KillTheMessenger]

The workforce in China can easily dictate wages. If the corporations don't pay up, workers simply go and get a better paying job somewhere else. It's all about leverage.

:-)

[SCG]

We need a government that is on the side of the workforce. Many have pointed to increasing the minimum wage. But another way to achieve real wage gains, is full employment, which thanks to decades of government number fudging on inflation and unemployment, is elusive.

The Employment Act, of Feb. 20, 1946
http://en.wikipedia.org/wiki/Employment_Act

Then they tinkered with the Act in 1978
http://en.wikipedia.org/wiki/Full_Employment_and_Balanced_Growth_Act

You can guess which period I'd perfer to live in.

[Chavez08]

That would mean an empowered Middle Class and the billionaire elitists who write Washington policy will never go for it.

Until U.S. workers (white and blue collar) organize, strike, protest on a national scale for fair parity and force th establishment to take notice, the wealth gap will continue to grow deeper.