Sep 2 9:00 PM

Best of the Web: Walmart and the living wage debate

George Boakye, seen here in November, stocks products at a Walmart store in Alexandria, Va.
Andrew Harrer/Bloomberg via Getty Images

On this evening's Labor Day broadcast of America Tonight, Chris Bury reports on a closely watched battle involving the Washington, D.C. City Council, the city's mayor and Walmart over whether giant retailers must pay a living wage to their employees in the nation's capital.

Weeks ago, the city council voted to mandate a living wage for big-box retailers, and the bill was sent Friday to Mayor Vincent Gray for his signature or veto. Walmart has indicated that it might scale back its plans to expand inside D.C. if the wage requirement takes effect.

We've compiled some interesting reads on the living wage issue and how mega-retailers and customers could be affected:

Employees and supporters demonstrate outside of Wendy's and Burger King restaurants to demand higher pay and the right to form a union on Aug. 29 in New York City.
Spencer Platt/Getty Images

What is a living wage in D.C.?

Should the bill be signed by Mayor Vincent C. Gray and pass a congressional review period, retailers with corporate sales of $1 billion or more and operating in spaces 75,000 square feet or larger would be required to pay employees no less than $12.50 an hour. The city’s minimum wage is $8.25.

Source: The Washington Post

Columnist Petula Dvorak: Why Vincent Gray should veto the living wage bill

"At this point, the people of this city need Wal-Mart more than Wal-Mart needs us. ... It’s a multimillion-dollar game of chicken."

source: The Washington Post

Mike Duke, CEO of Wal-Mart Stores Inc., center, gestures while speaking at the company's annual shareholders meeting on June 7 in Fayetteville, Ark.
Sarah Bentham/Bloomberg via Getty Images

Walmart CEO Mike Duke Pushes Back Against Company's Minimum Wage Reputation

“I think less than one percent of our associates make the minimum wage,” Walmart CEO Mike Duke said in an interview with CNBC's Maria Bartiromo. "The vast majority of our associates are paid more than that.”

More specifically, less than one half of one percent of Walmart's hourly associates make their state or federal minimum wage, according to a Walmart spokesman.

The company claims that full-time Walmart workers make $12.78 per hour on average, much more than the federal minimum wage of $7.25. Yet that figure excludes part-time workers, a group that likely makes up a substantial share of Walmart's workforce, thought not its majority, according to the company.

Some argue that Walmart -- with its $17 billion profit last year -- can afford to pay its workers more and is costing taxpayers by not doing so. According to a study released by Congressional Democrats earlier this year, the low wages at one Walmart store costs taxpayers $900,000 per year, because workers are forced to rely on safety net programslike food stamps and Medicaid to get by.

sources: The Huffington Post / CNBC

Wal-Mart Snubs D.C.’s Living Wage Bill, But Will the Trend Spread?

Michael Strain, resident scholar and economist at the American Enterprise Institute, agrees the bill unfairly targets Wal-Mart, and says Washington’s mayor will likely be under pressure to veto it. The move could be great for workers, but it’s unlikely the trend will spread, because it’s too hard to pass such measures.

“Wal-Mart has a very thin profit margin,” Strain says. “Everyone’s pay just can’t be raised by 50%, and still have the company be profitable. It’s not some tech company with a massive profit margin.”

source: Fox Business

A pedestrian passes a Toronto mural with protest messages directed at Walmart, which is considering an urban retail location there.
Lucas Oleniuk/Toronto Star via Getty Images

Minimum wage workers accounted for just 4.7 percent of all hourly paid workers last year

Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less. Among employed teenagers paid by the hour, about 21 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over.

The industry with the highest proportion of workers with hourly wages at or below the federal minimum wage was leisure and hospitality (about 19 percent). About half of all workers paid at or below the federal minimum wage were employed in this industry, the vast majority in restaurants and other food services. For many of these workers, tips and commissions supplement the hourly wages received.

source: Bureau of Labor Statistics

Living wage policies and big-box retail: How a higher wage standard would impact Walmart workers and shoppers

(From a study assuming that Walmart raised its minimum wage to $12 per hour)

Even if Walmart were to pass 100 percent of the wage increase on to consumers, the average impact on a Walmart shopper would be quite small: 1.1 percent of prices, well below Walmart's estimated savings to consumers. This works out to $0.46 per shopping trip, or $12.49 per year, for the average consumer who spends approximately $1,187 per year at Walmart. This is the most extreme estimate, as portions of the raise could be absorbed through other mechanisms, including increased productivity or lower profit margins.


In summary, we find that a Big Box Ordinance or similar legislation that raises wages would provide significant, concentrated benefits to workers, almost half of them in poor or near-poor families, while the costs would be dispersed in small amounts among many consumers across the income spectrum. In net, a wage increase for Walmart workers represents a transfer of income to poor and low-income families. Low-income Walmart workers would see a raise of $1,670 to $6,500 per year, while the average Walmart shopper would spend an additional $12.49 per year. Both the benefits to workers and the costs to consumers would be smaller in higher wage states and metropolitan areas.

source: University of California, Berkeley Center for Labor Research and Education


Find Al Jazeera America on your TV

Get email updates from Al Jazeera America

Sign up for our weekly newsletter

Get email updates from Al Jazeera America

Sign up for our weekly newsletter