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New Report Proves Walmart Can Afford Higher Wages

Above photo: Protesters gather outside a Walmart Neighborhood Store for a peaceful demonstration Thursday, Sept. 5, 2013, in Chicago. (Credit: AP/Charles Rex Arbogast)

Wal-Mart could afford to hike every U.S. employee’s hourly wage to at least $14.89 an hour just by not repurchasing its own stock, according to a new report from the progressive think tank Demos.

“We find that if Walmart redirected the $7.6 billion it spends annually on repurchases of its own company stock, these funds could be used to give Walmart’s low-paid workers a raise of $5.83 an hour, more than enough to ensure that all Walmart workers are paid a wage equivalent to at least $25,000 a year for full-time work,” authors Catherine Ruetschlin and Amy Traub write in the Demos paper, “A Higher Wage Is Possible: How Walmart Can Invest in Its Workforce Without Costing Customers a Dime.” Demos, whose funders include unions, is releasing the paper Tuesday morning.

Wal-Mart, the world’s largest private employer, did not immediately respond to a request for comment. In an emailed statement yesterday, the company announced that it had “surprised more than 350 associates today with on-the-spot promotions during multi-city, town hall meetings” it called “one way the retailer is listening to, learning from and thanking associates for the hard work they do every day.” That statement did not address the news, announced by labor activists Monday afternoon and confirmed that night by the National Labor Relations Board, that the federal agency was prepared to issue a complaint against the retailer for alleged violations of workers’ legal right to organize and strike.

Wal-Mart announced $15 billion in additional stock repurchases at its June annual shareholder meeting, which was attended by thousands of workers flown in from around the world by Wal-Mart, as well as dozens of striking Wal-Mart worker-activists from the labor group OUR Walmart. Also noting a Bloomberg estimate that Wal-Mart repurchased roughly $36 billion in stock in the four prior fiscal years, Ruetschlin and Traub write that the purchases “further consolidated ownership of the company in the hands of the heirs to company founder Sam Walton,” securing the Walton family a bare majority stake in the company, and “increased the value of ownership among the Waltons and the other remaining shareholders.” But they contend the buybacks “did nothing to boost Walmart’s productivity or bottom line and had no direct benefit for Walmart’s customers or frontline employees.”

In contrast, argue Ruetschlin and Traub, a hefty raise for Wal-Mart employees would aid customers by increasing productivity and decreasing turnover;  and benefit the broader public by improving consumer demand (including for Wal-Mart goods) and thus hastening economic recovery. Ruetschlin is the author of a prior Demos report arguing that Wal-Mart and its fellow top retailers should implement a wage floor equaling $25,000 annually for full-time employees; she told me last year that her research showed “that low wages are a business choice, and they’re not the right business choice.”

As I’ve reported, how much Wal-Mart currently pays U.S. employees is a contentious question. The company pegs its average hourly wage at $12.78, but that figure includes managers and excludes workers who aren’t full-time. Drawing on 2011 IBISworld data and surveys, OUR Walmart activists have pegged the wage at less than $9 per hour. Like Demos, they’ve called for a wage floor of $25,000 a year. OUR Walmart is closely tied to the United Food & Commercial Workers union. After Wal-Mart’s U.S. CEO said in a Goldman Sachs presentation that over 425,000 employees make more than $25,000 annually, OUR Walmart seized on the comment as an implicit admission that the majority make less. Workers have mounted a series of short-term work stoppages in several cities over the past month in the lead-up to a planned “Black Friday” day of strikes and protests next week.

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