December 03, 2013
How Walmart Can Pay Employees a Living Wage
by Robert Kropp
Just in time for the holiday season, Demos explains that wage increases instead of stock buybacks
can provide living wages for Walmart’s employees without resorting to price increases.
In compliance with a directive of the Dodd-Frank Wall Street Reform and Consumer Protection Act,
the Securities and Exchange Commission (SEC) has proposed amendments to rules governing corporate
disclosure of executive compensation. “Section 953(b) directs the Commission to amend Item 402 of
Regulation S-K to require disclosure of the median of the annual total compensation of all
employees of an issuer (excluding the chief executive officer), the annual total compensation of
that issuer's chief executive officer and the ratio of the median of the annual total compensation
of all employees to the annual total compensation of the chief executive officer,” the Commission
And in a letter to the
Commission, Executive Director Laura Berry of the Interfaith Center on Corporate Responsibility
(ICCR) wrote, “Our members have introduced pay ratio disclosure as a shareholder proposal on the
proxy statement of dozens of corporations in which we invest…The ratio of CEO-to-worker pay at
individual companies is material information for investors.”
“Shareholders and other stakeholders must know how their company’s internal pay
comparisons could impact employee morale, productivity, planning and a range of labor related
issues,” Lisa Woll, CEO of US SIF: The Forum for Sustainable and
Responsible Investment, said.
One major corporation that is
finding out how unjust pay comparisons can affect employee morale is Walmart, whose CEO, Michael
Duke, ranked third on Fortune's list of top CEO pay in 2012 with compensation totaling $20.7
million. At the same time, a study released by Congressional Democrats earlier this year estimates
that Walmart employees are paid so little that a single superstore could cost taxpayers $900,000 in
food stamps and other government assistance programs.
On Black Friday this year, thousands
gathered at Walmart locations to protest the company's low wages, leading to reported arrests of
more than 100 protestors. And the National Labor Relations Board (NLRB) announced recently that it had “found merit to alleged violations of
the National Labor Relations Act against Walmart.”
“The Office of the General Counsel has
authorized complaints on alleged violations of the National Labor Relations Act” by Walmart, the
According to a recent report from the respected think tank Demos, Walmart can
afford to pay its full-time employees a reasonable annual salary of $25,000 without raising prices.
Entitled A Higher
Wage Is Possible, the report states, “Walmart is a leader in promoting an employment model in
which workers earn too little to generate the consumer demand that supports hiring and would lead
to economic recovery.”
“This research brief considers one way Walmart could meet the wage
target its employees are calling for—without raising prices,” the report continues. “We find that
if Walmart redirected the $7.6 billion it spends annually on repurchases of its own company stock,
these funds could be used to give Walmart’s low-paid workers a raise of $5.83 an hour, more than
enough to ensure that all Walmart workers are paid a wage equivalent to at least $25,000 a year for
Walmart’s stock repurchases have “consolidated ownership of the company
in the hands of the heirs to company founder Sam Walton, increasing the Walton family stake in the
corporation to above 50 percent,” Demos pointed out. According to the Forbes 400 list of America’s
richest people, four of those in the top ten are heirs of the Walmart founder.
reinvesting the funds used for share buybacks from Walmart’s richest stakeholders to its poorest
would bring low-paid Walmart workers the raise they are calling for, improve worker productivity
and sales, and not cost the company or its customers one additional dime,” the report concludes.
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