Wal-Mart Wages Don't Support Wal-Mart Workers

By Stan Cox, AlterNet
June 10, 2003

On June 6, Wal-Mart's shareholders converged on Fayetteville, Arkansas for their annual meeting. According to Arkansas Business Online, "The famously colorful event often takes on the feeling of a high school pep rally, as shareholders and company executives perform the 'Wal-Mart cheer.'"

And why shouldn't they cheer? Their company chalked up a record $56.7 billion worth of sales in the first quarter of 2003.

Wal-Mart is the nation's biggest employer, the low-price champion, and a seller of just about everything. A healthy family with a roof over its head could supply virtually all of its other basic monthly needs with one stop at a Wal-Mart Supercenter like the one here in Salina, Kansas. To me, that raised a question: Can a family whose breadwinner works at Wal-Mart afford to supply its minimum needs by shopping there?

Last Sunday, my adult son and daughter joined me for a visit to the Wal-Mart Supercenter in Salina. We spent an hour and a half wandering among the hundreds of red, blue and yellow "Always Low Prices" signs. We checked many of those prices and then went home to do some calculating.

Our conclusion: A single parent employed full-time at Salina's Wal-Mart and raising two children aged 4 and 12 does not earn enough money to supply the family's basic needs by shopping at that same Wal-Mart.

According to the personnel manager at Salina's Supercenter, a cashier earns a starting hourly wage of $6.25. After Social Security and Medicare taxes, the paychecks for a month would total $1,016 for a full-time 176 hours. (That's 40 hours a week, which would put this cashier in a better financial position than the many employees who work 32 or fewer hours a week. Of course, hourly pay rises eventually, but the 2001 PBS report "Store Wars" found that most employees have left by the end of their first year.)

We calculated the amount that our hypothetical three-member family would spend each month if as many of its essential needs as possible were supplied by our local Supercenter. The bottom line: They would need an absolute minimum of $1,136 per month to cover housing, food, transportation, health care and miscellaneous expenses. Despite our best efforts, we exceeded our cashier's monthly income by $120. We couldn't have come even that close had our cashier's family not been eligible for a State of Kansas child-care allowance that covers all but $22 per month in child-care costs for such a family living on so low a wage.

To determine needs, we used published studies on an "adequate but austere" budget for a family with one adult, one preschooler and one school-age child living in Salina. But we slashed some of the published budget items by as much as 38 percent, based on the "Always Low Prices" we found at the Supercenter. And we completely eliminated anything we could do without.

Take a look at the details of our budget and try to decide if you could find a way to cut it and make ends meet.

Living wage campaigns across the country have attempted to determine and advocate for a wage level that can provide a decent life for working families. Living wages are designed to sustain a family over time. Our goal was much more modest. All we asked of our Wal-Mart wage was to get our cashier's family to the end of the month in a central Kansas city of 50,000, assuming they were already settled in a rented apartment or mobile home and had a paid-for car, furniture and appliances. The Wal-Mart wage failed – even at Wal-Mart prices, even with the 10 percent employee discount, and even with employer-assisted health insurance.

Our monthly budget allowed for a USDA-recommended "low-cost food plan" on which we economized further by selecting the cheapest foods in each category. It made for an unappealing and not especially healthful diet. Gas, oil, and repairs for the car – which was used for little more than getting the cashier to work and home – all came from Wal-Mart.

Our cost-cutting left no room for "luxuries": no travel outside Salina County, no cable TV, no home telephone service, no movies, no newspaper or magazine subscriptions, no fees for community sports or classes, no saving at Wal-Mart's in-store bank in case the car had to be replaced, no eating out (except for one meal a month at the McDonald's located in the Supercenter). Most of what's available at the Supercenter was off-limits to us: videos, haircuts, Christmas presents, eye care, tanning sessions, family portraits, bats and balls, small appliances, furniture, bicycles, film and developing.

There is a fundamental and inevitable conflict between the interests of corporations, to whom wages are a cost, and most human beings, to whom wages are a means of survival. Nowhere in this society is that conflict better illustrated than at your local Wal-Mart. Most of its employees and most of its customers depend on their paychecks to pay the bills. But to keep its shareholders in the money, the company depends on hyper-consumption.

Wal-Mart could not survive in a town with good public transportation, where families all grow their own vegetables, cut one another's hair, sew their own clothes, and borrow and lend tools. Like all retailers, it has to move vast quantities of merchandise at an ever-increasing pace. It does it, as the sign in the store says, by "Daring to Save You Even More." And to drive prices to rock-bottom, they have to drive down the wages they pay.

Of course, the wages Wal-Mart pays in Kansas seem princely when compared with those paid by many of its suppliers around the world. Try going to your local Supercenter with the monthly paycheck of a Bangladeshi factory worker who makes shirts for Wal-Mart. You won't make it to the end of Aisle 1.

Here in America, the government implicitly recognizes the insufficiency of Wal-Mart wages. Our cashier's family would be eligible for an Earned Income Tax Credit (EITC) of $4,140 in 2002. That would close the gap between the cashier's wage and bare survival, and provide enough additional income to lift the family just above the poverty line.

EITC, food stamps, Medicaid and state programs like Kansas' childcare allowance are needed because corporations like Wal-Mart refuse to pay their employees a sufficient wage for the work they do. Wal-Mart would not be able to "Rollback" prices the way it does, or pile up its gargantuan profits, without this government subsidy.

In February, Fortune Magazine emphasized the unchallenged dominance of the world's largest corporation: "Wal-Mart in 2003 is, in short, a lot like America in 2003: a sole superpower with a down-home twang."

Well, if Wal-Mart represents both the future of employment and the future of marketing in America, a lot more down-home folks are going to be tumbling into that gap between Always Low Prices and Always Low Wages.