Why we know Walmart isn’t paying $12.40/hour

Here’s how we know that Walmart’s claim to be paying an “average” wage of $12.40/hour is hogwash: The retail giant is not lobbying aggressively in support of a minimum-wage increase.

If you’re a retailer with millions of employees all making several dollars more than the minimum wage, then seeing that wage raised from $7.25/hour to, say, $9.50/hour doesn’t cost you anything when it comes to your own payroll. But it would mean a great deal to the people your company can’t live without: your customers. About 74 million Americans are paid minimum wage — with nearly half of those being adult women. If those 74 million Americans were to get a raise of  another $2.25/hour, they would spend that money. And they wouldn’t spend it at Macy’s. They would spend it at Walmart. A minimum-wage increase would be a huge revenue windfall, a sales bonanza for Walmart.

Granted, it gets more complicated when you factor in Walmart’s supply chain. Many of the goods they sell are cheaper because they’re made by companies paying the lowest legal wages possible, so a minimum-wage increase wouldn’t be entirely cost-free for the chain. (Calculating stuff like this is another reason businesses need to hire economists, not just accountants.)

But if Walmart were honestly paying an average wage of $12.40/hour, then they ought to support a minimum-wage increase. They do not support such an increase, and so I have to conclude they are not honest when they claim to be paying that.

  • FearlessSon

    Walmart can get away with paying so little because the government safety net programs like SNAP can keep their workers from starving at the wages they are paid.

    And yet, the people who complain of the high cost of safety net programs always blame the people collecting them, and never the big companies who pay their workers so little that these workers have no choice but to depend on them.

    We do have something of an entitlement problem and perpetually dependent society, but the blame lies not with its victims but its bottom-line driven abusers…

  • Lori

    If you’re already paying above the minimum wage an increase in the minimum wage not only doesn’t cost you anything and gives your costumers more money, it hurts the profitability of any of your competitors who are not already paying more than the proposed increase.

    So yeah, if Walmart’s pay was actually what they want people to believe when they say that they pay an average of $12.40/hour they’d be all for raising the minimum wage.

  • lljktechnogeek

    Alternate interpretation: they are telling the truth that the average wage is $12.40. The catch is that they’re using the mean and not the median, thus allowing the wages of the executives to skew the result upward by a few dollars.

  • Lori

    I have no doubt that’s exactly what they mean by “average”, but that doesn’t change Fred’s point. They’re pulling a classic move straight out of How To Lie With Statistics and they’re doing it on purpose to create an impression that it’s true.

  • lljktechnogeek

    True enough; it’s certainly an important thing to keep in mind whenever you see someone talking about the average of anything.

  • http://theoprudence.com/ Matt

    Not only that, but it would also stand to make things more difficult on their competition, forcing the competition into the same wage bracket.

  • Baby_Raptor

    I have some insight here.

    The roommate, whose worked at Wal-Mart for almost 3 years, and has “some seniority” (his manager’s words) in the cell phone center, makes 8.65 an hour.

  • Lori

    I was assigned How To Lie With Statistics in one of my classes my first semester of college. It was the most useful thing I was given that whole semester.

  • lljktechnogeek

    I can certainly think of worse additions to the Big List of Must-Read Books.

  • J_Enigma32

    “We pretend to work, and they pretend to pay us” – Soviet adage.

    We defined ourselves as “not-Soviet” for nearly 50 years. From 1946 to 1991. Isn’t it terribly ironic then, that as of 2013, it should be a Soviet adage the best describes the state of the “not-Soviet” United States of America?

  • smrnda

    Perfect diagnosis. Perhaps all the whining and griping about ‘entitlement’ from the affluent is either just projection, or the trick of accusing everyone else of your own crimes to divert suspicion.

    It would be nice if the government could draw up some figures on workers collecting government aid, and could send a bill for that amount to their employers. I try to avoid shopping at Wal-Mart, but indirectly, as a taxpayer, they’re costing me money by increasing the need for public aid, so I am unwillingly subsidizing their poorly paying jobs.

  • FearlessSon

    As Mark Twain popularized, “There are three kinds of lies: lies, damned lies, and statistics.”

  • http://anonsam.wordpress.com/ AnonymousSam

    I kind of don’t want to contribute. The only two jobs I’ve ever held paid $100 a month and $500 a month. I’m pretty sure both are miserably below minimum wage — and both companies eventually relocated those positions to people they could pay even less. Both have been contributing factors in why I have such a hard time doing much of anything today. Even if minimum wage goes up, I’ll never trust corporations not to treat their employees like this.

  • P J Evans

    I heard that as ‘As long as they pretend to pay us, we will pretend to work’.

  • Dan Hetrick

    Gods, what Walmart is saying is such bullshit. Not only do they pay crap for wages, they’ve been driving wages down.

    I grew up in Michigan. I worked at Meijer’s, a local store kind of like Walmart (groceries and clothes and other stuff), before Walmart came to the state. When I was working there, in 1993-1994, cashiers made $15/hr ($24.93/hr in 2013 dollars). I was a midnight bagger, I made $8/hr ($13.01/hr in 2013 dollars). Minimum wage, at the time, was $4.25/hr ($6.91/hr in 2013 dollars). During a lot of our training at Meijer’s, we were warned about how Walmart was going to crush our marketshare, that our entire company was going to be in danger as soon as Walmart came to the state.

    The last time I was in Michigan, I hung out with a friend of mine who worked at Meijer’s, as a cashier. I asked her what Meijer’s was paying, and she told me that pretty much everyone makes minimum wage, $7.25/hr. Walmart’s been in Michigan since 1995.

  • http://anonsam.wordpress.com/ AnonymousSam

    *Snirk* When I left Michigan and moved to Washington, I tripped very badly over discovering that there’s a chain here with the same pronunciation, but a different spelling: Meyer, or its full name, Fred Meyer. Someone would say “Let’s go to Meyer’s!” and I’d be picturing one of the big Meijer stores and get a little grocery store instead.

    Given the time frame and the hours we used to visit, it’s quite possible you’ve bagged my groceries (and how). That feels oddly bizarre. I went to the Greenville and Mount Pleasant stores, if either rings a bell.

  • http://thatbeerguy.blogspot.com Chris Doggett

    And then there’s this.

    As if being paid minimum wage wasn’t bad enough.

  • Dan Hetrick

    Wow, I was working in the Northville store, southeast Michigan, but I’ve been to both the Greenville (damn! that’s up in the boonies) and Mt. Pleasant stores. As far as I remember, the Greenville store was the very first Meijer’s, also started by a guy named Fred Meijer. What a weird coincidence :-)

  • http://anonsam.wordpress.com/ AnonymousSam

    That’s me, middle of nowhere half my life. Well, closer to two thirds of it. :D

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    It’s really fun when I see a graph whose axes are stretched or aren’t even labelled which purports to show some kind of alarming trend.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    That’s what always makes me scratch my head. How can companies have managers who only make a dollar or two an hour more than the people they nominally have authority over?

    There is the Russian word uravnilovka, but even the Soviets never quite got to levelling wages out THAT much.

  • Space Marine Becka

    I thought that was Disraeli.

  • FearlessSon

    I have noticed that there is an inverse relationship between pay and job security, and how easy the company thinks you are to replace.

    If you are in a lower down position, you are hardly considered an employee, and almost not considered human. You are simply an asset to be used and, they do not care if they have to let you go because ten other people are lined up behind you to take your place.

    And they like it that way. Makes things so much more predictable, so much easier to control.

  • FearlessSon

    Sort of. He was quoted by Twain, but that was not verified. At least according to Wikipedia. Hence why I said “popularized”.

  • FearlessSon

    I have never heard anyone describe it as “Meyer’s”, I always heard people use the full name “Fred Meyer”. Usually without the possessive on the end though.

  • Space Marine Becka

    I wonder what the mode is. I’m not saying this to be flippant the hourly wage that turns up most often would be even more interesting than than the median.

  • http://anonsam.wordpress.com/ AnonymousSam

    It only happened a few times, just after I moved here. You know, as if specifically to confuse me. :p

  • flat

    those bastards.

  • reynard61

    According to this chart, we *are* working and they’re only pretending to pay us.

  • The_L1985

    If you have to pay to do anything with your minimum-wage check, then you are earning a net wage that is way less than minimum wage.

    Those cards and fees ought to be illegal–which is, of course, why they’re not.

  • J_Enigma32

    That’s probably closer to what I intended.

    I was also referencing this study; the two seem to go together.

    http://www.nydailynews.com/news/national/70-u-s-workers-hate-job-poll-article-1.1381297

  • http://checkpoint-telstar.blogspot.com/ Tim Lehnerer

    I forget who told me this, but it’s a great way to deflate Walmart’s claims (or any other time someone says the “average” pay rate is actually pretty good at an exploitative company): Bill Gates walks into a homeless shelter. The average worth of everyone in there is now 300 million dollars.

  • Carstonio

    “A minimum-wage increase would be a huge revenue windfall, a sales bonanza for Walmart.” Everyone in an economy benefiting when money moves freely? Gee, imagine that. I thought it was better for the economy when most of the money was hoarded by a tiny elite buying luxury goods from one another.

  • Asha

    Holy shit. That’s disgusting.

  • http://againstjebelallawz.wordpress.com/ Enopoletus Harding

    Agreed, Fred. If the majority of Wal-Mart’s workers did earn over $12.40 an hour, there would be every reason for Wal-Mart to aggressively advocate raising the minimum wage, especially to decrease the profitability of its competitors. In fact, the CEO of Wal-Mart did support raising the minimum wage in 2005 (though whether this was the view of all those running the company isn’t clear).
    http://money.cnn.com/2005/10/25/news/fortune500/walmart_wage/

  • themunck

    I…can’t even see -why- J.P. Morgan and the rest would do that. Why pay in cards rather than cash? The fee’s aren’t being paid to the corporations (which is what they’d probably want), but to banks. Why does the corporations not care that their employers, who are also their own customers, have to funnel that money into the banks, rather than their own pockets? I simply do not see the logic here. Does the banks pay the corporations to pay in pre-paid cards?

  • http://www.aeryllou.tumblr.com/ Aeryl

    In 1999, Meijer started opening stores here in KY. They were union, and a few years ago, the cashier’s negotiated a pay raise to the union max.

    So things have gotten a bit better for Meijer employees.

  • http://accidental-historian.typepad.com/ Geds

    Wow. Nice job digging up an article from 2005 when the minimum wage was $5.15/hour. Got anything more recent?

  • http://www.aeryllou.tumblr.com/ Aeryl

    I’ve seen proposals that everyone should receive a commensurate pay raise with the minimum wage increase, which could cost those corporations money.

    Still not a good enough excuse for not supporting a minimum wage increase, but it could conceivably cost them monet.

  • Elizabeth Coleman

    >>It would be nice if the government could draw up some figures on workers collecting government aid, and could send a bill for that amount to their employers.

    That’s what they’re trying to do in California.

    http://www.forbes.com/sites/rickungar/2013/06/03/california-to-wal-mart-enough-no-more-taxpayer-subsidized-profits-for-you/

  • Lori

    The companies do it because the banks have marketed the cards to them very aggressively and because it lowers their costs. The banks push the cards because they were left out of the legislation placing limits on account and credit card fees. That means that they can still gouge pay card users with highly profitable fees that they’re no longer allowed to charge other customers. Basically, it’s the haves getting more at the expense of the have-nots.

  • Lori

    A law requiring all wages to go up by the same percentage as the increase in the minimum wage would never pass. If it ever even became a serious proposal Walmart’s lobbyists could easily horse trade it away.

  • themunck

    Lowers their costs. So what we in effect have is the companies selling the banks the right to steal the employees’ money. Got it.
    …Is a revolution soon too much to hope for?

  • Cathy W

    I was a cashier at Meijer in 1998-1999. I know I didn’t make close to $15/hour – I want to say about $9-$10 at the time, and the cashiers were the highest paid employees in the store, pretty much.

  • Lori

    Yes, that’s a good way to describe it. And I’m at the point where if the peasants rise up and kill the overlords in their beds I’m not going to have a real problem with it. I have no idea how much worse things need to get before it comes to that. I suspect quite a lot.

  • Cathy W

    I’ve heard that’s a quirk of Michigan speech – we shop at Meijer’s (in fairness, the store used to be Meijer’s Thrifty Acres), Farmer Jack’s (when it existed) and Kroger’s, and Uncle Bob works at the Ford’s plant.

  • Elizabeth Coleman

    My Co-worker would call it “Fred’s”, and that always confused me.

  • Cathy W

    I think Maryland tried that a couple years ago – they defined the category of employers to be charged the fee pretty broadly, but in reality only Walmart fell into it. Walmart lobbied hard enough to make sure the bill didn’t get anywhere near passing.

  • http://tobascodagama.com Tobasco da Gama

    I’m sure they do have an average wage of $12.40/hr… Once you convert all the executive salaries to hourly equivalents and toss those into the pot.

  • Steve Morrison

    It doesn’t seem to have originated with either of them.


CLOSE | X

HIDE | X