Could Walmart Pay a Living Wage?

Walmart is well known for both its low prices and its low wages. The drive to keep prices is down is offered as explanation for the company’s substandard wages and benefits. New findings show that Walmart can keep those prices low and pay its workers a living wage.

My colleagues and I at UC Berkeley’s Center for Labor Research & Education released a study earlier this week, “Living Wage Policies and Big-Box Retail: How a Higher Wage Standard Would Impact Walmart Workers and Shoppers,” which found that Walmart could help its largely low-income employees by increasing the minimum wage it pays to $12. This would significantly improve incomes for many Walmart workers, with only the slightest impact on customers.

The move would cost Walmart $3.2 billion if applied to all workers in the U.S. – which amounts to about 1 percent of the company’s annual sales. Even if Walmart passed the entire cost of the wage increase on to consumers, we estimate shoppers would pay about $12.50 more per year, or 46 cents per shopping trip–less than the cost of a pack of Tic Tacs at the check-out stand. 

The benefits for Walmart’s lowest-paid workers far outweigh the small costs distributed among its many shoppers. Increasing minimum wages to $12 per hour would mean average annual pay increases of $3,250 to $6,500 for workers making less than $9 an hour, and $1,675 to $2,930 for workers now earning between $9 and $12 an hour.

We found that more than 41 percent of the pay increase would go to workers in families with total incomes less than two times the federal poverty level ($21,660 a year for a single worker and $44,100 a year for a family of four). These workers represent the low-income populations that Walmart often courts as its customers. 

Low-income shoppers wouldn't foot the whole bill, though. Higher- income shoppers simply have more dollars to spend, and we found that 72 percent of the costs of an increased minimum wage would be borne by families earning more than 2 times the federal poverty level.

Would implementing a pay raise really make a difference to these workers? Well, yes. Walmart employs more than 1.4 million workers in the United States—almost 1 percent of the U.S. workforce—and pays them an estimated 12 percent less than retail workers as a whole and 14 percent less than workers in large retail in general. 

Lower relative wages have led to opposition to the company's expansion in Washington DC, New York City, Boston, Los Angeles and San Francisco – all cities where it hopes to expand this year. Labor officials, policymakers, and other concerned citizens in those areas rightfully worried about Walmart’s impact on retail wages. My colleagues covered that impact in an earlier study which found that Walmart’s entry into a market drives down local retail wages and benefits.  

Efforts in New York are focusing on keeping the retailer out altogether. Washington, D.C. has an activeLiving Wages Healthy Communities Coalition which yesterday presented Walmart with a community benefits agreement requiring a $12.50 per hour starting wage and a host of other provisions

In Boston, Mayor Thomas Menino told the Boston Herald that just any job isn’t good enough for his city. “I’m very concerned about how they treat their employees,” he said, adding that if Walmart starts hiring, “I want to make sure they are good jobs.”

As it tries to enter urban markets, the company is spending heavily on PR campaigns and lobbyists to sway public opinion. They might have more success in gaining the public’s support by bringing their wages and benefits up to community standards.