New Demos Report Shows a Substantial Raise is Possible for Walmart Workers This Holiday Season

Release Date: 
November 19, 2013

(NEW YORK, NY) – While Walmart workers prepare for nation-wide Black Friday strikes, a new brief by the national public policy organization Demos analyzes one way Walmart can raise worker pay to meet employees’ $25,000 benchmark target. A Higher Wage is Possible: How Walmart Can Invest in Its Workforce Without Costing Customers a Dime details how Walmart can give workers a raise by redirecting the funds spent annually on buying back shares of Walmart’s own company stock. The nation’s largest retailer could instead use the $7.6 billion it spent on repurchasing its stock to invest in their workforce, putting an extra $5.83 an hour into the pockets of its lowest-paid employees.

Share repurchases occur when a company uses its profits to buy back their own public stock, consolidating ownership by reducing the number of shares traded on the market and boosting earnings per share. The Walton family—heirs to the Walmart fortune, with a combined net worth of $144.7 billion—have been major beneficiaries of the practice, growing their ownership stake in the company to more than 50 percent.

Walmart is the nation’s largest private employer. Its size and clout make Walmart uniquely capable of changing the retail climate, pushing the industry toward a higher-wage, higher-sales business model.

“These share repurchases benefit an increasingly narrow group of people, including the six Walton family heirs,” said Catherine Ruetschlin, Demos Policy Analyst and co-author of the brief. “But buybacks do not improve the fundamentals of the firm. If the funds were used to raise the pay of the 825,000 low paid workers, it would not harm Walmart’s competitive ability and would add no cost to the consumer.”

The Demos brief explains how a raise for workers would benefit employees and their families, the company itself, and the economy. Walmart is the nation’s largest private employer. Its size and clout make Walmart uniquely capable of changing the retail climate, pushing the industry toward a higher-wage, higher-sales business model.

“Walmart’s low wage model winds up costing all of us,” said Amy Traub, Demos Senior Policy Analyst and co-author of the brief.  “It imposes costs on the economy as a whole when large and profitable corporations like Walmart don’t pay their employees enough to make ends meet. Workers don’t have money to spend in their communities so we don’t get the economic growth that creates more jobs. And when jobs don’t pay enough to support a family, taxpayers end up subsidizing Walmart’s workforce costs through public benefits like Medicaid and nutrition assistance.”

Walmart’s last three quarters have shown a decline in US comparable sales as shoppers cut back on trips to the retailer. But families earning paychecks at or near the poverty line are likely to spend any additional income they receive just to meet their basic needs. When Walmart raises wages, a portion of that money comes right back to the store as new revenue. And as higher wages help Walmart hold on to its most knowledgeable employees, the raise reduces turnover and training costs, boosts customer satisfaction, and improves the bottom line.

In conjunction with the publication, Demos released an infographic showing one Seattle worker’s struggle to make ends meet on a Walmart paycheck. After 11 years at Walmart, Patricia Locks earns $13.10 an hour and still does not have a dependable full-time schedule. After paying monthly expenses for herself and her 14-year-old daughter, she is left with $432 to budget for groceries, medical expenses, and other critical household needs. Patricia will speak about her experiences at Alt Labor Rising: Organizing Walmart and the Fast Food Industry, an event hosted by Demos to mark the release of the paper and further discuss low-wage employment across the food service and retail industries.

Demos is a public policy organization working for an America where we all have an equal say in our democracy and an equal chance in our economy. A Raise is Possible: How Walmart Can Invest in Its Workforce Without Costing Customers a Dime is part of Demos’ on-going work creating pathways to ensure a strong and diverse middle-class.  Retail’s Hidden Potential: How Raising Wages Would Benefit Workers, the Industry and the Economy Overall, last year’s foundational report, examines the economic benefits of a wage increase for large chain retail workers on consumer experiences, businesses, families and the economy.

To speak with Catherine Ruetschlin or Amy Traub, please contact:

Elektra Gray
Director of Communications
egray@demos.org
212-485-6014