Mike Duke, CEO
Dear Mr. Duke,
Walmart, your gigantic company, is increasingly being challenged by your workers, government prosecutors, civil lawsuits, communities (that do not want a Walmart), taxpayers learning about your drain on government services and corporate welfare, and small businesses and groups working with unions such as SEIU and UFCW. Thus far, Walmart is successfully playing rope-a-dope, conceding little while expecting to wear down its opposition.
But you and your Board of Directors know what most shoppers and other people do not know – namely that these pressures are only going to increase. There is one policy announcement by your company that can “roll back” many of these pressures and relieve adverse public relations.
Walmart has about one million workers, give or take, in the U.S. who are making less per hour, adjusted for inflation, than workers made in 1968. This is remarkable for another reason – today’s Walmart worker, due to automation and other efficiencies, does the work of two Walmart workers from 40 years ago. A federal minimum wage, inflation-adjusted from 1968, would be $10.50 today. The present federal minimum wage is $7.25 – the lowest in major Western countries. In Western Europe and Ontario, where you have operations, you must currently adhere to minimum wages of $10.50 or more.
If you were to announce that Walmart is raising the wages of your one million laborers to $10.50, you would have a decisive impact on the momentum that is building this year for Congress to lift 30 million American workers to the level of workers in 1968, inflation adjusted. Imagine 30 million workers trying to pay their bills with wages below those of 1968, inflation adjusted, when, back then, overall worker productivity was half what it is today.
Raising your workers’ wages to a $10.50 minimum would cost your company less than $2 billion (deductible) on U.S. sales of more than $313 billion. Fewer Walmart workers would have to go on varieties of government relief. Some of that $2 billion would go to social security, and Medicare with more going back into purchases at Walmart. Employee turnover would diminish. If Walmart joins with many civic, charitable groups and unions to press Congress for legislation to catch up with 1968 for 30 million American workers, good things will happen. You and your fellow executives will feel better. Your public relations will improve. So will our economy.
Members of Congress, economists, workers and reporters know you can do this. After all, Walmart has to meet numerous safety nets in countries of Western Europe beyond a higher minimum wage, such as weeks of paid vacation and paid sick leave. Also, your top executives in Europe are paid far less than your $11,000 an hour plus benefits and perks.
Walmart watchers know that Walmart officials are worried about damaging disclosures, about Walmart problems such as foreign bribery in Mexico, which may become more numerous. Last year, during the Black Friday demonstrations, some of your workers and their supporters, raised the civil rights issue of Walmart’s retaliation for workers publically complaining about workplace harassment – pay, fair schedules and affordable health care. Such protests are only going to intensify in the future.
At a productive meeting with your government relations people in Washington, D.C. last year, I told them that Walmart was one billionaire away from a serious unionization drive, and I referred them to my political fiction book “Only the Super-Rich Can Save Us!” for a detailed step-by-step strategy that only awaits funding from one or two very rich, people.
You need to do something authentic that people can relate to – seventy percent of the people in polls support an inflation-adjusted minimum wage. So did Rick Santorum and even Mitt Romney, until he waffled during the primaries.
Your announcements this week about hiring 100,000 veterans in the next five years is less than what meets the eye. Twenty-thousand veterans hired each year is a tiny fraction of your workforce and if you are not doing that already, given your huge number of employees (1.4 million) and large annual turnovers, you should be ashamed.
Veterans would have to take a 50 percent or more pay cut from their military salaries – housing and food allowances, health care and other benefits – to work for Walmart. Indeed, the Congressional Budget Office recently estimated that the average active-duty service member receives Army benefits and compensation worth $99,000, which is much more than the prospect of a Walmart job paying less than $20,000 coupled with very limited health insurance.
Should you wish to discuss Walmart taking the lead in raising the minimum wage for its workers to catch up with 1968, please call me. It is better to anticipate than have to react to the looming dark clouds on Walmart’s horizon. Thank you for your considered response.
The impoverishment of politics in the Age of Obama has been nothing short of amazing. This president has so suppressed every vestigial remnant of progressivism in the political discourse, that the most fundamental bread and butter issues have become taboo. I’m talking about raising the federal minimum wage, which has been stuck at $7.25 an hour since 2007, the year before the bottom fell out of the economy.
A new study shows that the Great Recession was most destructive of decent-paying jobs, the middle tier where working people earned between about $14 and $21 an hour. That’s where sixty percent of job losses occurred between 2008 and 2010, and most of those jobs have not come back. Instead, the greatest increase in jobs has come in the low-wage sector, with a median pay from $7.69 – just above the federal minimum – to $13.83 an hour. The lowest wage sector now accounts for almost 60 percent of job growth, with traditionally bad-paying jobs in food preparation and retail sales leading the way.
High unemployment, on top of the disappearance of living wage jobs. You would think that in an election year, the party that is most identified with working people and folks that need to find work would be screaming at the top of their lungs: Raise the minimum wage! But, you will hear little or nothing of that from the Democratic convention festivities in Charlotte.
It’s not that the delegates are unaware of the crying need for a higher minimum wage. The Democratic platform – for what its worth – declares that “we will raise the minimum wage, and index it to inflation.” However, it doesn’t say how much, or when. And that’s in deference to the party’s standard bearer, who has not said anything meaningful about the minimum wage since he was campaigning for president in 2008. Back then, Obama promised to work to raise the minimum to $9.50 by 2011. Then he got elected, and we heard nothing more about it.
When the president is mum on an issue, then the party faithful put themselves on mute. There are bills in the House and the Senate to raise the minimum wage – the best one is sponsored by Chicago Congressman Jesse Jackson, Jr., calling for an immediate $10 an hour minimum, tied to inflation. But, there’s no chance of these bills going anywhere without the cooperation of Democratic leadership. Ralph Nader and others have beseeched party leaders to break the silence, but they don’t dare raise the issue for fear of embarrassing their President.
Apologists for Obama will claim that pushing for a $10 minimum wage indexed to inflation – or any significant raise – would hurt his chances for re-election. But the poll numbers show differently, with huge public support for an increase, including among lots of Republicans. Even Mitt Romney says he supports linking the minimum wage to inflation – just not right now. Obama has effectively been saying “no, not now” to underpaid workers for almost four years. So, why in the hell is labor getting ready to spend tens of millions of dollars to re-elect him, instead of building a movement that will force politicians to do the right thing?
BAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.
- A Bold New Labor Call for a ‘Maximum Wage’ (alethonews.wordpress.com)
- STUDY: Raising The Minimum Wage Especially Benefits Women (thinkprogress.org)
There are some policies that are pretty much no-brainers. We all agree that the Food and Drug Administration should keep dangerous drugs off the market. We all agree that the government should provide police and fire protection. And, we pretty much all agree that workers should be able to count on at least some minimal pay for a day’s work.
The minimum wage is non-controversial. The vast majority of people across the political spectrum support the minimum wage. In fact, one of the big accomplishments of the Gingrich Congress in 1996 was a 22 percent increase in the minimum wage. The only real issue is how high it should be. There are good reasons for believing that the minimum wage should be considerably higher than it is today.
At the current rate of $7.25 an hour, a full-time year-round worker would have gross pay of less than $15,000 a year. This is less than half of what the average Fortune 500 CEO makes in a day. It would be hard enough for a single person to survive on this income, imagine trying to support a child or even two on this money. And, close to 40 percent of the workers who would be benefited by a minimum wage increase have kids.
The counter-argument against raising the minimum wage is that it would actually hurt the people we are trying to help by reducing employment. There is little basis for this claim. The impact of the minimum wage on employment is one of the most heavily researched topics in economics.
Most recent research finds that it has no impact on employment. Even the research that finds job loss shows that the effect is small, suggesting that a 20 percent increase in the minimum wage may reduce employment of young people by around 2 to 3 percent.
While it’s not desirable to see anyone lose their job, it is important to remember the character of these jobs. They tend to be high turnover jobs that people leave after working relatively short periods of time. Job loss in this context is not likely to mean people being fired, rather it means that firms might be somewhat slower to hire. This would cause a typical low-wage worker to spend somewhat longer between jobs.
The dollars and cents might mean, for example, that a typical low wage worker ends up working 2 percent fewer hours in a year, but they take home 20 percent more pay for each hour that they work. This nets out to an increase in pay of 18 percent, a deal that most workers would likely consider pretty good.
In terms of whether we can afford a higher minimum wage, it is worth remembering that the minimum wage in 1968 would be almost $9.22 an hour in today’s dollars. In spite of the high minimum wage in the late 1960s, the job creators of that period pushed the unemployment rate down to 3.0 percent.
And, the country has not gotten poorer in the last four and a half decades. We have policy wonks running around Washington who seem to think that cell phones, computers, the Internet, and all other innovations of the past four decades that we now take for granted have reduced our standard of living.
This is of course nonsense. Productivity has increased by more than 120 percent since the late 1960s. If the minimum wage had kept step with productivity growth and inflation it would be over $20 an hour today.
The real problem in our economy today is not a lack of productivity. The problem is that the gains from productivity growth have not been broadly shared. The wealthy have used their power to rig the deck so that most of the benefits of growth have gone those at the top. They have used their control of trade policy, the Federal Reserve Board, and more recently the Wall Street bailout, to ensure that those at the top have gained at the expense of everyone else.
A higher minimum wage is an important step toward reversing this rigging. It should not be too much to expect that workers today should get at least as much as they did 45 years ago, and perhaps some dividend to allow them to share in the benefits of economic growth over this period. A minimum wage of $10 an hour would be a big step in the right direction.
Dr. Dean Baker is a macroeconomist and Co-Director of the Center for Economic and Policy Research in Washington, D.C.
- Want a Real Recovery? Raise the Minimum Wage (bilerico.com)
- Large, Profitable Companies Employ Most Minimum-Wage Earners (thenation.com)
How inert can the Democratic Party be? Do they really want to defeat the Congressional Republicans in the fall by doing the right thing?
A winning issue is to raise the federal minimum wage, stuck at $7.25 since 2007. If it was adjusted for inflation since 1968, not to mention other erosions of wage levels, the federal minimum would be around $10.
Here are some arguments for raising the minimum wage this year to catch up with 1968 when worker productivity was half of what it is today.
1. Pure fairness for millions of hard-pressed American workers and their families. Over 70 percent of Americans in national polls support a minimum wage that keeps up with inflation.
2. Already eighteen states have enacted higher minimum wages led by Washington state to $9.04 an hour. With the support of Mayor Michael Bloomberg and State Assembly Speaker Sheldon Silver, the New York State legislature is considering a bill to raise the state’s minimum wage. The legislature should pass the long-blocked farm workers wage bill at the same time.
3. Since at least 1968, businesses and their executives have been raising prices and their salaries (note: Walmart’s CEO making over $11,000 an hour!) while they have been getting a profitable windfall from their struggling workers, whose federal minimum is $2.75 lower in purchasing power than it was 44 years ago.
4. The tens of billions of dollars that a $10 minimum will provide to consumers’ buying power will create more sales and more jobs. Aren’t economists all saying the most important way out of the recession and the investment stall is to increase consumer spending?
5. Most independent studies collected by the Economic Policy Institute show no decrease in employment following a minimum wage increase. Most studies show job numbers overall go up. The landmark study rebutting claims of lost jobs was conducted by Professors David Card and Alan Krueger in 1994. Professor Krueger is now chairman of President Obama’s Council of Economic Advisers.
6. Many organizations with millions of members are on the record favoring an inflation-adjusted increase in the federal minimum wage. They include the AFL-CIO and member unions, the NAACP and La Raza, and hundreds of non-profit social service and religious organizations. They need to move from being on the record to being on the ramparts.
7. With many Republicans supporting a higher minimum wage and with Mitt Romney and Rick Santorum on their side, a push in Congress will split the iron unity of the Republicans under Senator Mitch McConnell and Speaker John Boehner and gain some Republican lawmakers for passage. This issue may also encourage some Republican voters to vote for Democrats this fall. A Republican worker in McDonalds or Walmart or a cleaning company still wants a living wage.
8. President Barack Obama declared in 2008 that he wanted a $9.50 federal minimum by year 2011. If lip-service is the first step toward action, he is on board too. There is no better time to enact a higher minimum wage than during an election year. Against millions of dollars in opposition ads in Florida in 2004, over 70 percent of the voters in a statewide referendum went for a minimum wage promoted by a penniless coalition of citizen groups.
9. The Occupy movement can supply the continuing civic jolts around the local offices of 535 members of Congress, a slim majority of whom are not opposed to raising the minimum wage but who need that high profile pressure back home. Winning this issue will give the Occupy activists many new recruits, and much more power for getting something done in an otherwise do-nothing or obstructionist corporate indentured Congress. About 80 percent of the workers affected by a minimum wage increase are over 20 years of age.
Remember there is no need to offset a higher minimum wage with lower taxes on small business. Since Obama took office there have already been 17 tax cuts for small business and no increase in the federal minimum wage.
At the University of Virginia, twelve students have begun a hunger strike to protest the low wages and other injustices inflicted on contract service-sector employees. Students at other universities are likely to follow with their Living Wage Campaigns in this American Spring. They are fed up with millions of dollars for top administrators’ salaries or amenities such as fancy practice facilities for athletes, while the blue collar workers can’t pay for the necessities of life.
Raising the federal wage to 1968 levels, inflation adjusted, is a winning issue. It just needs a few million Americans to rouse themselves for a few months as they do for their favorite sports team and connect with all those large concurring organizations and their powerful legislators, like Senate majority leader Harry Reid, a big supporter, to start the rumble that will make it a reality.
If you are interested in more information on the efforts to raise the minimum wage, send an email to firstname.lastname@example.org.