THE BLOG
12/08/2013 11:52 am ET Updated Feb 07, 2014

# Doing the Math on Walmart: Average Take-Home Pay Barely Covers the Basics

The past week has seen nationwide protests against low wages paid by Walmart, the nation's largest retailer and by fast-food chains. In an effort to counter the rising tide of criticism as demonstrations were staged at stores all across the country on the retailer's biggest shopping day of the year, Walmart's press releases said the company's wages are "on the higher end of retail" and that its employees make, on average "close to" \$12 an hour.

As protests were taking place in Chicago, Dallas, Sacramento, Seattle, St. Paul, Secaucus, NJ, Washington, DC and in communities in southern California, the San Francisco Bay Area, Massachusetts and Virginia, I began to wonder: In which of these communities can one live on \$12.00 an hour, let alone anything less? So I decided to do some back-of-the-envelope math to pencil out what it would be like to try to get by on what Walmart says is its average wage.

As Walmart spokesperson Kory Lundberg explained in a phone call, typical hours for a full-time Walmart employee are 37 to 38 hours per week, 52 weeks a year. At \$12/hour that comes to a an annual salary of \$23,088 to \$23,712. From a monthly perspective, which is how many of us budget expenses, we're looking at between \$1,924 and \$1,976. (Remember if \$12 is being the "average" wages that means there are also people making less than that.) But working with the average offers some perspective on how much one might have at the end of the month to contribute to the 401K plan that Lundberg said "many" employees participate in (Walmart matches worker contributions up to 6 percent) or to put toward the company health insurance that begins at \$18 per pay period (Walmart covers the first \$250 in medical costs).

With the federal poverty level for a two-person household at \$15,510 for 2013, a single parent of one child earning an average Walmart wage would be well above that poverty level and expect to pay federal taxes. Using the IRS withholding calculator and the Tax Policy Center's payroll tax calculator, we can see that head of household with one dependent who earns an annual salary of \$23,088 can expect to pay somewhere between \$2300 and about \$2400 or so in taxes each year, which works out to about \$200 per month. That would drop a \$1,924-per-month paycheck to \$1,724. (An actual budget would, of course, have to be refined to factor in any local taxes and tax credits.)

Looking at rents around the country where the Walmart "Black Friday" protests took place, an average one-bedroom within 10 miles of Chicago now goes for about \$1500 or more a month (\$950 if you're further out), in the DC area for \$1375, while the average one-bedroom rents for \$1005/month in Dallas, \$760 in Sacramento, \$890 in Ontario, CA, between \$810 and \$1060 in Seattle, and \$975 in St. Paul. Clearly if you live within 10 miles of central Chicago (or another high-rent community) you're going to have to have a rent paying roommate, partner or family member but on the low end, let's look at Sacramento. If your monthly after-tax pay is \$1724 (at the \$12/hours for 37 hours a week rate) after paying the rent, you have \$964 left for the month. It is from this sum you'll be paying an average utility bill of about \$150/month, and if in Sacramento a transit pass of about \$100. (A Chicago monthly pass will also cost \$100 while in DC a month of bus passes costs \$64 but a monthly Metrorail pass \$230.) If you have opted to go without a landline telephone and manage to find a \$50/month cell phone plan after paying rent and these utilities, you're left with \$664 to cover the rest of your monthly expenses, including food.

Using US Department of Agriculture (USDA) figures for monthly groceries, you might spend between about \$165 if you are on the USDA "thrifty plan" to about \$300 on the "liberal plan" for a single person. Split the difference and estimate \$232.50 for a single person. If you are also feeding a six-year-old child, add in another \$202.40 and remaining spending money for the month drops to \$229.10. (Without a child to feed you'd have \$431.50 left to work with.) Add a child's monthly bus pass to your budget at \$50 and you're at \$179.10. If you take advantage of Walmart's health insurance plan and pay \$18 twice a month your remaining spending money for the month is \$143.10 If you need to pay for a preschooler's daycare at going commercial rates, you're out of luck, as that's going to cost you at least \$550 a month.

So in a lower cost-of-living city like Sacramento, a single person would be spending about \$1,292.50 and a parent and child about \$1,545.90, for bare-bones expenses each month. Shift this to a higher-cost community, like Chicago, while utilities, food and public transportation costs will be similar, housing costs will mean you almost certainly need to be sharing rent.

So after paying for housing, utilities, transportation, food -- and Walmart's most basic health insurance -- a single person living in a relatively low-cost community would have about \$395.50 to cover the rest of the month's expenses; a parent with a 6-year-old, about \$143.10. For the parent and child household this works out to about \$36 a week, or about \$5 a day -- and this budget includes no toiletries, clothing or other household purchases. It also does not include any kind of savings to build up any financial cushion, money to take classes at a community college or take other steps that can improve an individual's longer-term financial outlook.

If you'd managed to save up for a home computer or other Internet-enabled device, you might want to try and cover a basic service of about \$40 a month that would reduce your monthly available spending money to \$103.10 and weekly spare cash to about \$26. Not much room for emergencies or education costs, let alone savings or a 401K contribution. Sure, you could put yourself on the "thrifty" USDA food budget and put more spending money back in the budget but spending less than \$70 a week to feed mom and a six-year-old, will take some serious budgeting, planning, and figuring out what to do without, at current food prices.

This is the kind of challenge facing at least half of Walmart's 1.3 million US employees. So while Walmart said the company would be providing its "associates" with "holiday pay equal to an additional day's work" and "a 25 percent discount on an entire basket of goods for their extraordinary efforts" on Thanksgiving and Black Friday, that's unlikely to make up for the chronic penny-pinching necessary to meet basic household needs.

At the same time, other numbers released by Walmart aimed to cast doubt on the involvement of company workers in the protests. Walmart spokesperson Lundberg said that fewer than 20 "associates" were involved in the November 29 protests and no more than six of these Black Friday protests included any Walmart employees. Protest organizers say this assessment isn't accurate. "It's not a fair argument to make given the high level of risk for employees who protest," noted Alex Barrios, spokesperson for California State Senator Norma Torres' who attended a November 29 Walmart protest in Ontario, California. What Barrios was referring to is the retaliatory action Walmart took against workers who joined similar protests in 2012, action that included threatening, disciplining, firing and having employees "surveilled," all of which the said last week was not legal.

"Across the country, there are countless Walmart workers who are paid poverty wages, cannot get enough hours, and have erratic work schedules that make it difficult to survive," said US Senators Sherrod Brown (D-OH) and Ed Markey (D-MA), and Representatives Jan Schakowsky (D-IL), Judy Chu (D-CA), William Lacy Clay (D-MO), Gwen Moore (D-WI), and Jim McDermott (D-WA), in a statement released to coincide with the Black Friday protests. "We stand with the courageous Walmart workers who are demanding better wages and an end to illegal retaliation," they said. "Walmart, the largest private employer in the United States, has a responsibility to their employees and our country to respect workers and their rights. No one should have to fear losing their jobs just for speaking up."

"The company can do better," said Rep. Schakowsky's spokesperson in a phone call.

"Of course, we have entry-level jobs and we always will. The real issue isn't where you start. It's where you can go once you've started," wrote Walmart on "Black Friday," touting its advancement and promotion records. Right now, however, more than half a million employees of the United States' largest retailer, with net sales of more than \$450 billion, can't get very far. Their current wages will barely cover one extra Chicago round-trip transit fare and a dollar cup of coffee to warm their hands while waiting for the bus.

An earlier version of this post appeared on The Pump Handle.