Season’s Greetings to Wal-Mart from the University of California/Berkeley Center for Labor Research and Education. The UC Berkeley Labor Center has been producing research since 1964, but this week the research team released not one — but two — studies, neither of which you will find under Wal-Mart’s Christmas Tree. According to the first report, “A Downward Push: The Impact of Wal-Mart Stores on Retail Wage and Benefits,” researchers found that employees at Wal-Mart earn lower average wages and receive less generous benefits than workers employed by many other large retailers. “Our research finds that Wal-Mart store openings lead to the replacement of better paying jobs with jobs that pay less,” the Labor Center reports. “Wal-Mart’s entry also drives wages down for workers in competing industry segments such as grocery stores.” The study examined Wal-Mart store openings for the 8 year period 1992 to 2000, and found that the opening of a single Wal-Mart store in a county lowered average retail wages in that county by between 0.5 and 0.9 percent. “In the general merchandise sector, wages fell by 1% for each new Wal-Mart. And for grocery store employees, the effect of a single new Wal-Mart was a 1.5% reduction in earnings,” the study concludes. With an average of 50 Wal-Mart stores per state, the average wages for retail workers were 10% lower, and their job-based health coverage rate was 5 percentage points less than they would have been without Wal-Mart’s presence. “Nationally, the retail wage bill in 2000 was estimated to be $4.5 billion less in nominal terms due to Wal-Mart’s presence.” This suggests that workers in 2000 would have taken home $4.5 billion more in their total paycheck if Wal-Mart had not been around. “Overall,” the researchers say, “the results strongly support the hypothesis that Wal-Mart entry lowers wages and benefits of retail workers.” With more than 1.3 million American workers, Wal-Mart accounts for 55% of all general merchandise workers. In the area of large general merchandise companies with more than 1,000 employees, Wal-Mart workers earned 25% less than workers at competitor stores. Wal-Mart’s impact on grocery store workers is especially dramatic. Wages of unionized supermarket workers are 27% higher than their non-union counterparts. The UC study also found no evidence of job gains when a Wal-Mart opens. “Our study demonstrates that the opening of new Wal-Mart stores produces a decline not just in average wages,” researchers explain, “but in the total wage bill of a county.” As for health care benefits, the new study reports that 10 new Wal-Mart stores in a state caused a 1 percentage point drop in the proportion of retail workers getting health insurance from their workers. The second study, “Living Wage Policies and Wal-Mart: How a Higher Wage Standard Would Impact Wal-Mart Workers and Shoppers,” concludes that Wal-Mart could increase its minimum wage to $10 per hour and greatly boost the well-being of its low-income workers with little financial impact on most shoppers. Even if Wal-Mart passed on to consumers the entire cost of raising its wage floor to $10 per hour, the average impact on a Wal-Mart shopper would be higher product prices of less than 1% (0.9%). On the other hand, almost half (46.3%) of the wage income gain would go to workers living below 200% of the federal poverty level. Less than 1 in 3 (29.3%) of shoppers with incomes below 200% of the poverty level would be impacted by the small price increase from raising wages. Giving Wal-Mart workers a more livable wage, it turns out, would literally be a ‘small price to pay’ for consumers. The study estimates that the average Wal-Mart shopper would have to pay an extra 36 cents per shopping trip, or less than $10 a year. Wal-Mart workers would gain $2.38 billion more in wages — a 9.3% increase in Wal-Mart’s current payroll. For the lowest income Wal-Mart workers, a $10 minimum wage at Wal-Mart would translate into $1,020 to $4,640 more a year in pre-tax income. The Wal-Mart workers would notice the increase in their paycheck, but the average Wal-Mart shopper wouldn’t even notice a change.
Wal-Mart claims that its average hourly wage is $10.11 an hour. But payroll data suggests that what workers get depends on their gender, race and job title. According to the wage study, 769,666 Wal-Mart workers are earning $9.02 or less per hour. There are 376,061 Wal-Mart full and part-time workers making less than $8 an hour. If all these workers were from the same city, they would equal the population of Minneapolis or Honolulu. If Wal-Mart raised the wages of its 238,872 full-time workers earning less than 8 an hour to $10, the average worker would take home an annual increase of $4,640. That’s the definition of “live better” to the retailer’s workforce. According to the new wage report, as of January, 2007, Wal-Mart had sales exceeding $731 million every day, with around 18.1 million shoppers per day, and 127 million customers every week. The average shopper would pay $9.70 a year to give Wal-Mart workers a $6.52 million raise per day, or a total wage hike of $2.38 billion annually. This assumes that Wal-Mart absorbs none of this wage cost itself. One of the best things Wal-Mart as a corporation could do to help low income families would be to provide its own “associates” with a decent wage hike. These two studies, seen in tandem, suggest that Wal-Mart currently is depressing wage rates in its industry, at a time when it could easily afford to give its workers a greater share of the pie. Wal-Mart could help hundreds of thousands of its own people to “live better,” but instead has deliberately chosen to “save more” for the corporation — at the expense of the people who have helped the company make billions in profits. That qualifies Wal-Mart as perhaps the greatest Scrooge in corporate America today. To view copies of the two reports released this week by the UC Labor Center, go to: http://laborcenter.berkeley.edu/