Recently the American people have stood up to congress and demanded a new minimum wage increase. If you’ve been paying attention at all, you would see that this has gained a lot of traction with the support of several Democrats and President Obama. Studies have shown that if the minimum wage had kept pace with inflation since its high in the late 1960s, it would now be above $10.
Last week, Wal-Mart experienced the largest protest in its history, with hundreds of people outside of a Los Angeles store to demand higher wages for full-time employees. This resulted in over 50 arrests, but it also helped in spreading the word of unfair wages to employees.
A Wal-Mart executive bragged that 475,000 of the company’s U.S. store associates receive more than $25,000 a year. This means that 1.4 million workers in the U.S. are making less than livable wages. Last year, Wal-Mart CEO Mike Duke’s 2012 pay of $23.2 million was 1,034 times more than the company’s average worker.
So, what should Wal-Mart be paying their full time employees? According to Stephen Gandel of Fortune, Wal-Mart workers should receive a 50% increase in pay, not only would they not negatively affect Wall Street at all by doing so, but increasing wages will result in better workers, as well as stimulate the economy. More money for workers equals more money for workers to spend at Wal-Mart.
Gandel’s calculation is a long one, but it’s worth taking a look at. He goes into some interesting perspectives on how Wal-Mart has to split profits between 3 groups: bondholders, stockholders, and employees.
In short, Gandel says
“Wal-Mart paid its top executives and board members $66.7 million last year. The rest of the money has to be split among Wal-Mart’s remaining roughly 2.2 million employees. Of those, about 1.4 million work in the U.S. Assume that Wal-Mart spends about 2/3 of that on the salaries of its U.S. employees, because salaries are generally higher here. That leaves $66.6 billion for the U.S. workers, or $47,593. The Bureau of Labor Statistics estimates that 30% of the average U.S. workers’ total compensation is spent on benefits. That means the average Wal-Mart employee’s take home pay should be $33,315. Wal-Mart doesn’t say what its actual average salary is. But Payscale estimated it to be just over $22,000 at the end of last year.”
I appreciate the effort and strong calculations that Stephen Gandel put forth in attempt to put the wages and increases into perspective. Unfortunately, in our Capitalistic state of America, if Wal-Mart can subsidize employee’s salaries by forcing them to require government assistance due to low wages, then Wal-Mart will never increase the wages to livable amount.