Will Walmart Pay Hike Change Retail in America?

Walmart made headlines on Feb. 19 with a decision to increase its wages and establish more predictable work schedules for employees across the country. New employees will receive a minimum wage of $9 an hour this year and $10 in 2016.

In a letter to Walmart “associates,” Walmart CEO and President Doug McMillion explained the new policy: “We’re always trying to do the right thing and build a stronger business. We frequently get it right but sometimes we don’t. When we don’t, we adjust,” he said.

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“In recent years we’ve had tough economic environments, a rapidly growing company and fundamental shifts in how customers are shopping. We also made a few changes aimed at productivity and efficiency that undermined the feeling of ownership some of you have for your business. When we take a step back, it’s clear to me that one of our highest priorities must be to invest more in our people this year.”

Business analysts say the retail giant’s salary decision is being driven by pressure from other large retailers like the Gap, which similarly adjusted its pay scale up last year. The new wage schedule should help with employee retention, what had become a significant problem for Walmart, and would allow the company to unify wage standards that have become complicated by successful local and statewide campaigns to raise minimum wages around the country.

While he is always ready to welcome positive news, like a wage increase, for U.S. workers, Father Sinclair Oubre of the Catholic Labor Network, cautioned the Walmart decision still leaves a lot of room for improvement and not just on wages. He pointed out that $9 or even $10 an hour remains far from a genuine living wage for retail workers with families to support, as many do.

“Anything that helps workers move closer to a living wage,” said Father Oubre, “we would support.” Though the Walmart minimum is now about 25 percent above the federal minimum wage and about 50 cents to a dollar more an hour that its entry level workers had been receiving, the increase falls far short of the $15 an hour currently sought by labor activists in the retail and fast-food industries as a new national minimum.

The federal minimum wage—$7.25 an hour—has not changed since 2009 and can only be raised by an act of Congress, and no one is holding their breath about the current Congress making any changes to the federal rate anytime soon. Retail workers across the nation at high-revenue, high-profit corporations like Walmart, are eligible for billions each year from taxpayers in the form of government support for low-income families. According to Americans for Tax Fairness, in 2014 Walmart workers received $6.2 billion in public assistance including food stamps, Medicaid and subsidized housing.

Beyond the relatively minimal impact on what Catholic social teaching suggests should be a just wage for workers, Father Oubre points out that the Walmart move will not mean its superstores are likely to become any more welcoming of union organizing efforts. Walmart has been notoriously aggressive in efforts to keep unions out of its stores.

“As Catholics what cannot be lost in this discussion is that for 120 years our church has insisted that it is a natural right of workers to join together in associations [that allow workers to engage] in collective bargaining,” he said. Catholic consumers, Father Oubre said, should treat with concern “retail or even ecclesial institutions which believe they do not need to have collective bargaining because they know what workers need and don’t let workers articulate what those needs are themselves.” He said such paternalism undercuts workers’ human dignity.

“Walmart could pay $20 an hour,” Father Oubre added, “but there would still be a justice issue here because of the natural right of workers to join in associations and represent themselves continues to be virulently denied.”

Father Oubre points out that Walmart is the retail industry’s pace setter and the salary move up should affect other retailers which pay even less than Walmart. “They’ve certainly taken a lot of bad press and maybe they’re saying, ‘We’ve seen the light.’ ” Certainly the new policy, he says, helps Walmart in a number of ways “while doing right by their employees.”

While many perceive such jobs to be low-skilled and such low-wage workers to be easily replaceable, Father Oubre points out that big corporations such as Walmart are finding out that may not be the case. Churning through presumably disposable workers is beginning to cost them where it counts—in real-world profits, he says. “We fail to recognize that even just working the line at McDonalds efficiently [requires specialized knowledge]. You develop a technical skill to get this stuff happening [when a lot of orders are coming in], and if you don’t have it you can slow things down dramatically,” he points out. “If you’re grinding through your employees, you can’t get the efficiencies you need.”

The Walmart move should pressure other low-pay retailers such as Target (which pays even less on average to entry level employees than the oft-demonized Walmart) to follow suit. Walmart’s mammoth scale—with hundreds of U.S.locations it employees more than 1.4 million people,1 percent of the total U.S. workforce—means that it essentially establishes wage and benefit policy for the entire retail sector. For good or ill, Walmart can call the tune.

Father Oubre remembers how Walmart’s arrival on the national retail scene in the 1980s established standards that transformed an industry that once paid full-time, sometimes unionized employees decent wages and benefits into a sector typified by low-wages, little to no benefits and part-time employment.

“This very positive action should not distract [U.S. Catholics] from the larger goal, which is two-fold,” Father Oubre says. “Employers have a responsibility to pay a living wage to employees and we as consumers have a responsibility to be willing to pay a premium so that our fellow workers have a just wage.”

In a statement to the press, Emily Wells, an organizer with the Our Walmart campaign, said, “The company is addressing the very issues that we have been raising about the low pay and erratic scheduling, and acknowledging how many of us are being paid less than $10 an hour, and many workers like me, are not getting the hours we need. As a soon-to-be-mom making only $9.50 an hour, it’s very difficult to make ends meet with my part-time schedule, which gives me only about 26 hours per week.

Wells added, however that “especially without a guarantee of getting regular hours, this announcement still falls short of what American workers need to support our families.” She argues Walmart can do much more. “With $16 billion in profits and $150 billion in wealth for the owners, Walmart can afford to provide the good jobs that Americans need—and that means $15 an hour, full-time, consistent hours and respect for our hard work.”

Comments are automatically closed two weeks after an article's initial publication. See our comments policy for more.
Monica Doyle
2 years 8 months ago
Learned something new today. I did not know Target pays their employees even less than Walmart.
Kevin Clarke
2 years 8 months ago

They pay slightly less but worker satisfaction at Target is generally higher, possibly because of the scheduling issue that has been a plague at Walmart.

From "Job Insecurity":

IBISWorld, a marketing research firm, reports Walmart’s average wage is just under $9 an hour, exceeding the rates paid at Target and Kohl’s but below other big-box retailers like Home Depot and Lowe’s and substantially below the $17 an hour paid at Costco. And Mr. Lundberg may claim union parity, but, according to the U.F.C.W., union retail workers can expect to earn 20 to 30 percent more than their nonunionized peers.

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