Walmart’s wage increase mediocre against living costs

Walmart, the multinational retail corporation popularly credited with the degradation of American culture and infamous for its pitifully low wages, announced on Feb. 19 that it would implement an entry-level wage increase from $7.25 to $9 an hour. Throughout the past decade, America’s largest private employer has become the target of pro-labor activist campaigns, and while the company’s latest efforts to placate calls for reform are noteworthy, fast food workers and groups such as OUR Walmart, which advocate a $15 per hour wage hike, denounce the move as unsubstantial. Demands for livable wages address the deep-rooted complications that post-recession America has yet to mend–rising wealth inequality has set upper-income households at a median net worth almost seven times higher than that of middle-income households, the most profound disparity in the Federal Reserve’s recorded data. With a $9 minimum wage only racking up to a sub-$19,000 annual salary, one that would drag a family of four below the poverty line, the $1.25 bump is hardly a solution.

The U.S. is complicating the task of correcting income inequality first by using an outdated poverty level measurement as a tool for determining living standards. Currently, poverty is based on data from the 1960s that miscalculates healthcare, transportation and housing costs, while neglecting to include child care and other expenses too. In order to maintain an income above the “poverty wage” as dictated by this outdated benchmark, an individual would have to earn at least $9.55 an hour, about $3 an hour below the current approximated value for a poverty wage adjusted to recent data on living costs, and half of what would be considered a living wage.

How can the country be striving for, and still failing to instate, a $9.55 per hour minimum wage—a number meanwhile proven to be unsustainable for the average household, not indexed for inflation and that reverts low-wage workers to the living standards of the 20th, rather than 21st, century?

Meanwhile, President Obama declared in his 2014 State of the Union Address that until Congress can reform existing regulations, small businesses, state and local governments, and larger corporations must take the initiative and boost the wage floor. “Say yes. Give America a raise,” he urged. Soon after the State of the Union, Obama also issued an executive order to raise the national minimum wage to $10.10 for those working on new federal service contracts, a move that affects less than half a million individuals but might, as the president hopes, incite Congress to act. Fortunately, in 2015, 20 states—Alaska, Arizona, Arkansas, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Missouri, Montana, Nebraska, New Jersey, Ohio, Oregon, Rhode Island, South Dakota, Vermont, Washington and West Virginia—will pass legislation to raise their individual minimum wage floors, benefiting an estimated 3.1 million workers in these areas (Economic Policy Institute, “20 States Raise Their Minimum Wages While the Federal Minimum Continues to Erode,” 12.18.14).

It’s glaringly obvious that the country is collectively lagging in its efforts to keep families afloat. The news of Walmart’s pay increase seems to be a step towards progress, yet the alignment of the timing of the corporation’s announcement with the president’s appeal is questionable; could the discount chain retailer be undermining pro-labor reforms by manipulating the market before federal policies can take hold? As the most influential employer in the private sector, Walmart is poised to set precedents for the remainder of America’s low-wage businesses, including employers in the fast food, dollar store, home health care, hotel and food service industries. While it can be argued that a widespread shift towards higher wages is beneficial, a shift towards mediocre wages is not. A recent study by professors at the Massachusetts Institute of Technology shows that, based on country, wages that can support the basic cost of living in a given area range from at least $12 to even $25 per hour, a significant leap even from the $10.10 minimum to which Congress has yet to agree.

Instituting a pattern of payment that remains insufficient in improving the lives of millions of workers is, essentially, a cheap form of pacification. Furthermore, in the case of Walmart’s new policies, the company is also undergoing scheduling changes that will compromise employees’ ability to pick up extra hours or even attain a guaranteed number of weekly hours; currently, only 40 percent of Walmart workers report that they have an ensured set of hours each week.

So what was the immediate cause for the policy change? Can this small victory for the workforce even be called that, or is the company’s sudden altruism simply an act of catch-up? The repercussions of the raise are already problematic, but the true motives behind the decision may prove dubious as well. With the post-recession economic recovery finally ushering in a period of GDP growth and increased job creation, the lag in wage increases is incentivizing workers to seek employment elsewhere; when unemployment rates reached 10 percent in 2008 and 2009, the workforce scrambled to take jobs no matter the pay, but now unemployment has fallen nearly by half, and in order to maintain a regular source of labor, employers must start sweetening the deal to retain their staff.

Yes, this is a natural reaction to the changing market and Walmart can’t be demonized for adapting to the economy, but in the same vein Walmart can’t be praised as a magnanimous forerunner in corporate humanitarian efforts when its aims are not necessarily, or at least not singularly, geared towards the betterment of its employees’ lives. CEO Doug McMillon recently said of the change, “Our people make the difference. 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.” Is it really plausible that the company is for the first time realizing the value of its many associates? If McMillon and Walmart truly believed in this statement, why is this the first time that the protests of millions are being acknowledged? (Walmart, “In Letter to Associates, Walmart CEO Doug McMillon Announces Higher Pay,” 02.19.15)

Though we can appreciate Walmart’s long-awaited, extremely delayed recognition of the crisis endured by its labor force, it’s imperative that the national demand for better wages not be satiated by the employer’s meager concession. Income disparity is generating socioeconomic divides too drastic to be repaired by a mere $1.25 an hour solution, and until legislators and retailers alike can start to give credence to the protests of groups like OUR Walmart, the position of American households will remain stagnant at best.
—Emily Sayer ’18 is a student at Vassar College.

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