November 17, 2018; Washington Post and Inc.
Last Thursday, Senator Bernie Sanders (I-VT) and Representative Ro Khanna (D-CA) introduced a bill that, as Jeff Stein details in the Washington Post, encourages large employers to raise worker wages to $15 an hour. The legislation, Stein writes, “would bar big corporations from buying their own stock—a move that rewards shareholders—unless they pay all employees $15 an hour, provide them seven days of sick leave, and prevent CEO compensation from rising more than 150 times above median employee pay.” The full text of the proposed legislation is available here, and the senator’s office also offers a one-page summary.
In case it wasn’t clear who was being targeted, the bill’s “Stop Walmart Act” name kind of gives it away. For those interested in such things—there’s an art in coming up with these acronyms, after all—the bill’s official name is the Stop Welfare for Any Large Monopoly Amassing Revenue from Taxpayers Act. (The earlier Bezos bill similarly had a long-form name of the “Stop Bad Employers by Zeroing Out Subsidies Act.)
In a statement, Sanders points out that the Walton family is the richest in America, with an estimated net worth of about $180 billion. The Walton family still owns roughly half the company’s stock. Meanwhile, the starting wage for a Walmart employee is $11 an hour. Sanders in his statement introducing the bill also mentions that, “Since 1982, the wealth of the Walton family has increased about 10,000 percent, and the family now owns more wealth than the bottom 40 percent of Americans. Meanwhile, 55 percent of Walmart’s associates are food insecure.”
Raising Walmart wages to pay all workers at least $15 an hour would cost the company $3.8 billion, according to Ken Jacobs, chair of the University of California at Berkeley Labor Center. The $3.8 billion, notes Stein, is considerably less than the $10 billion a year Walmart has dedicated to buying back its own stock from shareholders.
“Overall, the cost to Walmart of doing this would be a tiny, tiny fraction of their revenues, while its impact on workers’ lives would be huge,” says Jacobs.
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Roosevelt Institute economist Lenore Palladino makes some additional observations. If $10 billion were distributed to workers in wages, pay could be $5.66 an hour higher per employee. Or, if $10 billion were given to workers in stock, each employee would get 113 shares. Over the past 12 months, Walmart’s stock price has fluctuated between $82 and $110 a share. Even at $90 a share, 113 shares would work out to over $10,000 per employee.
As we have noted at NPQ, worker income today “is more than $700 billion less—i.e., more than $5,000 per worker—than it would be had labor’s share stayed the same as it was a decade ago.” According to Palladino, stock buybacks “driven by relentless pressure from wealthy shareholders to move more and more corporate profits up and out of the firm for themselves” are one mechanism that has enabled this shift to occur:
This extractive behavior is exacerbated by the fact that corporate executives are largely compensated in stock themselves…shareholder primacy has, among other things, resulted in workers being understood by corporate executives as a cost to be cut, rather than being considered as an essential part of the value-creation process and as stakeholders who should be able to bargain for a living wage that is commensurate with the value they create.
For their part, Walmart workers are not blind to the fact that Amazon recently raised wages for its workers. Kristi Branstetter, 54, a Walmart employee for seven years in Kansas City, Missouri, earns $11 an hour. As Branstetter tells Stein, “Hey, if Amazon can do it, Walmart can do it.”
In Inc., contributing editor Bill Murphy suggests that Walmart employees have reason to be optimistic that Walmart may in fact follow Amazon’s lead. Murphy notes that Amazon raised its wages not only due to pressure from Congress, but because Amazon management concluded that higher wages would help Amazon with employee recruitment and retention and force competitors to follow suit. Murphy writes, “If Walmart were to conclude for example that paying its lowest wage workers more would let more of them afford to buy more Walmart products—and similar to Amazon, squeeze some of their competitors on the labor market—maybe they’d decide now to increase wages, too.”—Steve Dubb
