Fast Company

Walmart Could Easily Pay Its Workers $12 An Hour

Walmart shopping cart

Ethonomic Indicator of the Day: $12 - The minimum wage Walmart could pay its workers without affecting prices.

Walmart is plowing through its global responsibility goals, cutting down on plastic waste, improving energy efficiency in factories, and reshaping the crop diversity of entire U.S. regions. But it's doing a less-than-stellar job when it comes to doing right by its workers. According to a new report (PDF) from the University of California, Berkeley, Walmart could significantly raise the wages of its employees without affecting its low prices. Chronically underpaid people around the country could benefit.

When Walmart inevitably moves into cities like New York City, Boston, Los Angeles, and San Francisco (all places where it wants to expand this year), its cheapskate policies could actually lower the local average wages. And since the costs of living a comfortable life march inexorably upward (especially in big cities), this is a problem for all of us.

According to UC Berkeley's report, Walmart employees earn 14.5 percent less than other workers in large retail companies. Depressing stuff, but there is any easy enough fix: If Walmart implemented a $12 per hour minimum wage for all employees, it would cost the company $3.2 billion. That is a lot of money, unless you're Walmart, in which case it's just 1% of your overall annual $305 billion in sales. Even if Walmart passed on the entire burden of the wage increase to customers, it would only average out to a cost increase of 46 cents per shopping trip. That's surely something that most Walmart shoppers can afford.

But they wouldn't even have to. Remember Walmart's exceptional energy-saving plans? Perhaps it could take some of the money it will inevitably save from energy and materials efficiency and pass it on to workers.

There is reason for Walmart to consider this. If the company raises wages, it might garner more community acceptance in the cities where it is trying to expand. Because who doesn't like the idea of a relatively well-paying employer coming to town? It's an especially big deal when that well-paying employer has 1.4 million members in its workforce.

So come on, Walmart: It's time to believe that being good to your workers is as important as making clean energy. We want to stop having to wince when we champion your excellent environmental record.

[Photo by Flickr user Keo 101]

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25 Comments

  • Gkirk49ers

    Organize and get a union that represents the employees so that wages, benefits, and job security are on the table, that is the only way employees will get their fair share.

  • flying2space

    I just want to point out a small number disparity in this article.  You're saying that the raise would be 1% of the total sales.  But ultimately, raising the wages would affect the company's net income, which is only $15B for 2011.  The costs of doing this is a whole 20% of their income.  All personal feelings about the wages aside, convincing a company and its shareholders to take a 20% revenue cut in order to raise employee wages is a considerable task.

  • E H

    Please think this through. Although that's only 1% of Walmart's sales, Walmart's profit margin is less than 4%, therefore, the amount suggested here would actually be 25% of profit.

    http://finance.yahoo.com/q/ks?... indicates profit margin of 3.89% as well as a higher revenue figure, but even so, this proposal still amounts to around 10% of Walmart's profits.

  • MsAlwaysRight1

    Will we get better customer service if a minimum wage employee is given more money? I don't understand why people think that a minimum wage employee should be given more money if they don't earn it.

  • yougov

    So I could pile on with some of the other commenters and address this article's economic naivete, but I think most readers already get that.

    Am I the only one who's tried clicking through to the PDF? If you click the link you're taken to a Mansueto Ventures corporate intranet login. It seems that Ariel copied/pasted the link from her webmail, not realizing that she was pasting a webmail redirect URL. The Berkeley report is here: http://laborcenter.berkeley.ed... .

    Note also that the report was not produced by UC Berkeley, but by the UC Berkeley Labor Center, a subtle but important distinction.

  • Hew

    Thanks for you wonderful comments Ashley...

    Many of the comments among these disappoint and on occasion disgust me. Rather than making blind and ridiculous emotional, READ THE ARTICLE: Wal-Mart could offer $12/hr WITHOUT affecting prices. That is Econ.101.

    Last I checked, UC Berkley is among the finest and prestigious MBA and Economics universities in America.

    In regard to just quit, well, with unemployment as high as it is most people don't just have a choice to go out and get another job.

    When you comment on articles please, draw on respect and common sense.

  • Peter Sharma III

    Fools, all. A living wage paid workers creates a viable, capable consumer base thus supporting those paying the higher wage. That is how capital economy thrives. Cutting wages and staff to the bone destroys the consumer base and while providing short-term gain, creates long-term devastation to the economy and the companies so-doing. This is ECON101 @BarbaraAnn.

  • midwest norwegian

    Ha! This "study" was done at Berkeley?

    Why not just skip ahead and like in "Atlas Shrugged" have an "equalization" law enacted?

    "Fast Company" has quickly become a complete Bolshevik wrag.

  • Midwest thinker

     Having actually studied the issue and publishing in peer-reviewed journals does not make you less qualified to speak to it.  Assuming it's wrong because it came out of Berkley just means you don't actually care about reality, but just want to be angry at the other side.  Read the study and then see what you think. 

  • MMason

    I worked for a progressive outdoor retailer in San Carlos (SF Bay Area) and I was paid under 11 dollars an hour. This company is lauded for being a paragon for employees. No one writes reports on them because they are so "progressive".

  • sally cartwright

    They SHOULD pay their workers a decent wage. My son has been with them for over two years, does his job well and they rely on him time & time again because he is 6.5" to "bounce" people who steal (a dangerous job!!) along with all the other things he does for them, cashiering, custumer service (boy are some people RUDE) and collecting carts in the rain, snow cold, heat.
    Pay him, promote him or he WILL move on. Reward him. like I do for my RE agents when they work hard making me money!! Share the wealth, as I do and I am a conservative!!

  • Todd Hilehoffer

    You can't be serious? If your son has held a job for two years, then he can find something better. Help him to write a resume, get references and look for better work. Look on job websites such as careerbuilder.com and monster.com. Try to find openings that he may be qualified for, or look for positions that one can acquire skills for. Nobody gives you anything in this world, you have bring yourself up. I make close to 100K per year, but I'm not waiting for my company to give me a raise, I'm going on a job interview tomorrow. I have never gone more than one year without interviewing for a job. Even when I'm happy at work, I'm always looking for something better. Retail is one of lowest paying things you can do in America. 

  • midwest norwegian

    You're not conservative, or you wouldn't have posted such rubbish. Your son is free to find work elsewhere. It's a free country. A lot of opportunity out there. Tell your son to quit today!

  • Ashley Holt

    The underlying smugness of many (not all) of these comments is astounding to me. The belief that America is a capitalist meritocracy, and that you will somehow be monetarily rewarded how you 'deserve', also, astounding to me. WalMart is full of senior workers who had fast-track careers at Fortune 500s, were let go due to age, and literally cannot find anything else. And they are the best off - at least they can pad their low wages with their pensions or 401Ks. Think if someone in your family was forced into working at WalMart, because they were older or lived in an area where jobs were slim. Your facts re: the free market are all true, but try to look beyond blind faith in capitalism at the larger facts of society. $12 an hour (barely a living wage) is hardly socialism.

  • midwest norwegian

    I have never visited a Walmart that is ostensibly being stocked, cleaned and cash registers run by "fast-track Fortune 500" former employees. What are you smoking?

  • Elmas Fregon

    Fast Company could easily pay workers $200 an hour. Wait, who am I to tell you how much you can or cannot pay YOUR employees?

  • Daniel Francis

    I'm confused... was this written by a seventh grader or something? Did somebody win an essay contest?

    First off, the implication that wages fall once Walmart moves in is incredibly misleading. "Average wages" may fall if the average before did not calculate unemployed people. However, what you imply is that Walmart moves into, say, San Francisco, where average wages are $12 an hour (just for speculation). Upon arriving, Walmart announces that it will pay its workers $8 an hour. And suddenly everybody who was earning $12 an hour... agrees to work for $8? Or are they physically enslaved by the evil corporation and forced to do so?

    Clearly in a metropolitan environment Walmart would be forced to pay more. Unless there is heavy unemployment, in which case the workers who work there for less would be making a voluntary exchange (some money vs. none).

    Furthermore, your tone seems to imply that Walmart has a moral duty. It seems subversive of any school of moral thought to imply that executives at Walmart have a duty to do anything more than provide profits for their shareholders. These executives and managers are hired by their shareholders to do a job, and saying they should violate that contract or complicate their moral stance is wrong. You are putting these individuals in impossible situations.

    Walmart owes to its employees what it agrees to pay them. If the work sucks (and I'm nearly certain it does) and the pay is terrible (we can all agree that is true), then those employees can quit their jobs and find other work, and Walmart will have to deal with that.

  • barbara Ann

    If you guys want WalMart to pay $12 an hour or 25 an hour, just get Congress to pay a new minimum wage and bingo it will happen. Otherwise, why should Walmart risk its business that might go to Target, Dollar General, Family dollar or Dollar Tree that start off at the current minimum wage? Come on guys, this isn't rocket science.==========IT IS CALLED ECON 101.