THE BLOG
12/07/2007 12:27 pm ET Updated May 25, 2011

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