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Center for Labor Research and Education

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Livable wage at Walmart would have huge impact on associates, while leaving low prices intact

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American Rights at Work

Walmart is well known for both its low prices and its low wages, and the drive to keep prices down is offered as a ready rationale for the company’s substandard wages and benefits. New findings show that Walmart can still keep those prices low and pay its workers a living wage.

In a recent study I completed with my colleagues Dave Graham-Squire and Stephanie Luce, we found that Walmart could raise its starting wage to $12, a significant improvement for many Walmart workers, with only the slightest impact on customers. The report, released Monday by the University of California, Berkeley Center for Labor Research and Education, revealed that such a pay raise would translate to an additional $1,670 to $6,500 a year in income for each Walmart employee in the family. More than 40 percent of the pay increase would go to the employees who need it most, those in families with total incomes less than two times the federal poverty level ($21,660 a year for a single worker and $44,100 a year for a family of four).

What’s more, giving Walmart employees a living wage would barely impact consumers. We found that even if Walmart passed the entire cost of the wage increases directly to consumers, the store’s bargain shoppers would pay less than $12.50 more per year, about 46 cents per shopping trip. That’s less than half the cost of a pack of gum per shopping trip, or a pack of socks each year — even at Walmart prices. If the company took on the cost directly, raising the hourly wage would cost about one percent of its annual sales of $305 billion.

There is strong evidence that Walmart expansion leads to a decline in retail earnings and a reduction in benefits, with little impact on total retail employment. As Walmart continues its efforts to expand into previously untapped urban markets, cities across the country are considering steps to ensure that labor standards are not eroded. For example, community advocates in Washington, DC are demanding Walmart pay its D.C. associates an average $12.50 per hour wage, while also offering training programs and hiring 75 percent of workers from the area.

Conventional wisdom has told us that Walmart can’t raise wages without hurting consumers. But our research shows that Walmart can use its power to benefit low income families by providing good paying jobs alongside famously low prices. They should do so.