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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.

SocialFunds.com -- 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 states.

“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.

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.”

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 NLRB stated.

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 full-time work.”

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.

“Simply 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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