With much fanfare and platitudes like “Our people make the difference,” WalMart has achieved a public relations coup by granting quite meager raises to its employees. The headlines make the $277 billion (market cap) company look quite generous as it has raised its starting hourly wage immediately to $9 an hour, which is 19 percent higher than the prevailing federal minimum wage.
It sounds like great news from the world’s largest private employer, but the news is nowhere near as good as headlines suggest.
The New York Times estimates that there are only about 6,000 retail workers among WalMart’s 1.4 million employees that are paid the federal minimum wage. This shouldn’t be too surprising, since 28 states already mandate higher minimum wages than the federal standard and, says the law, the highest required wage wins. Only seven states have minimum wages set at $9 or higher. So WalMart workers in 43 states are getting some sort of raise.
But in the vast majority of cases, it’s nothing like the 19 percent number you’re seeing thrown around.
For those getting the largest bump from the federal minimum wage to $9, it’s important to put this all in perspective. The federal minimum wage has not been raised since 2009. It would take a wage of $8.55 an hour to equal the purchasing power of $7.25 six years ago.
So, in a real sense, WalMart’s lowest paid employees are getting a 45-cent-per-hour raise—a 6.2 percent increase. Meanwhile, workers in California, Massachusetts and Rhode Island will see no increase (the state hourly minimum is already $9) while minimum wage workers in Washington, Oregon, Connecticut and Washington, D.C., already make more than $9 an hour.
In its release to workers and the public, WalMart says that the wage increase scheduled to go into effect in April will raise the average part-time worker’s wage to $10 an hour across the company. Back in 2010, IBISWorld, a market research firm, estimated that WalMart cashiers made about $8.81 an hour. That 2010 wage inflations adjusts to a $9.56 wage in today’s dollars. According to WalMart’s release, part-time workers will see their wages rise from $9.48.
That means, until now, WalMart’s part-time workers were losing ground against inflation. While nice, this isn’t the saintly endeavor WalMart is making it out to be. The current bumps gets those employees just a few coins ahead of the rise in the cost of living since the end of the Financial Crisis.
For its full-time workers, WalMart says that the average wage is rising from $12.85 an hour to $13. In 2013, WalMart said that its average full-time wage was $12.83. So WalMart’s full-time associates got a 2-cent raise between 2013 and 2014 and now get a 17-cent bump. Adjusted for inflation, you’d need $13.04 cents today to buy what you could with $12.83 in 2013. WalMart’s full-time employees are coming out of this 4 cents short of inflation.
WalMart’s workforce is split about evenly between full- and part-timers. Part-timers will make $17,500 a year if they work 35 hours a week for 50 weeks a year. Full-timers will make $26,000 working 40 hours a week for 50 weeks.
For a two-person household, the federal poverty line is $15,930. For a four-person household it is $24,250.
Even after the raises, WalMart will continue to employ people who will be living below, at or barely above our various, imperfect measures of poverty.
These workers will continue to depend on public subsidies to get by, whether they need help with health care, buying food, or lunches for their school-aged children. It’s hard to see, even, how these wage increases will do enough so that WalMart employees don’t have to hold holiday food drives for each other.
WalMart has wanted to open a store in New York City for years and has been rebuffed at every turn by coalitions of labor and local retailers. The chain most recently failed to infiltrate East Brooklyn. It faces community opposition in cities and towns around the country.
The retailer is clearly tired of being seen as an unwelcome neighbor—and that’s likely a big consideration for why they’re upping their wages just enough.
The company would also like to buy itself a new labor history. For years, WalMart used contractors to clean and maintain its stores, putting a buffer between the companies and the often abused workers—especially when those workers were very often in not authorized to work in the U.S. Since the middle of the last decade the company has also been hit with scores of class action lawsuits, some relating to the treatment of women workers and some alleging wage theft through various means.
In 1914, Henry Ford paid his workers $5 a day. It was a move that truly helped create the middle class. Five dollars in 1914 is $118 today, although that would only add up to a $35,000-a-year salary for a six-day workweek, which is well below our current medium income.
What some forget about Ford is that he had ulterior motives: He wanted to mold his workers into what he considered model Americans. WalMart has ulterior motives as well: It wants to mold your perception of it until you see a model American corporation.
If WalMart is a model corporation, the model is broken.