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

Why we know Walmart isn’t paying $12.40/hour July 1, 2013

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.

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