The Not So Fuzzy Math on Walmart

November 23, 2012

The Not So Fuzzy Math on Walmart

I posted last week on the plight of workers at Walmart. In that post, I threw out some rough numbers to suggest how painless it would be for Walmart and other retailers to reduce dramatically the financial pain they're inflicting on their workers:

And it would take so little to improve their lives. Assume those Walmart workers average 1500 hours per year. That's 1.5 billion hours. It would cost $3 Billion to give each of them a $2 per hour raise, and $3 Billion is less than one percent of Walmart's annual sales, an amount it easily could pass on to customers. Does anyone stop to think of this trade-off -- a three quarters of a percentage point savings to customers, versus a 20% pay increase to poverty level workers?

Frankly, I thought that my rough math may have overlooked something. But it turns out I'd gotten it just about right. Here's Robert Reich at Truthdig:

Most new jobs in America are in personal services like retail, with low pay and bad hours. According to the Bureau of Labor and Statistics, the average full-time retail worker earns between $18,000 and $21,000 per year.

But if retail workers got a raise, would consumers have to pay higher prices to make up for it? A new study by the think tank Demos reports that raising the salary of all full-time workers at large retailers to $25,000 per year would lift more than 700,000 people out of poverty, at a cost of only a 1 percent price increase for customers.

If there ever was an area where progressives should be demanding change this is it. Raise the minimum wage and pay goes up at Walmart and other retailers immediately, bringing hundreds of thousands out of poverty. And the cost will be miniscule. This should be top priority in the 2014 mid-terms. Either it's a winning issue, or it's time for revolution in America.