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Would You Pay 46 Cents More for Workers to Earn $12 per Hour?

wage disputeWalmart recently decided to turn down a project that would have constructed three new stores in Washington D.C. after the city passed a bill requiring big-box retailers to pay their employees a “living wage” of $12.50 per hour. Such rates, Walmart argued, would increase its famously low prices.

But much would prices go up? An almost insignificant increase, according to a 2011 study conducted by researchers at the City University of New York and UC Berkeley (Stephanie Luce, Ken Jacobs and Dave Graham-Squire). Finding were published in the report “Living Wage Policies and Wal-Mart: How a Higher Wage Standard Would Impact Wal-Mart Workers and Shoppers”; the data indicate that increasing pay to D.C. standards for all Walmart employees who now earn less than $12 per hour would increase the bill of average Walmart shoppers only 46 cents per trip.

When calculated throughout a full year of shopping, this wage increase would cost customers about $12.50 annually (for perspective, the average Walmart customer drops around $1,200 per year at the store).

The raise to $12 would also mean a bigger payroll for Walmart, increasing it by $3.21 billion per year, according to the study.  Yet even if Walmart wanted to pass 100% of that cost onto its customers, prices on Walmart goods would still only go up by 1.1%.

Steven Restivo, the retail giant’s Senior Director of Communications, emailed The Huffington Post to say that any such claims about a marginal change to Walmart prices from a wage increase show a “limited understanding of how a business operates.”

Walmart claims that its full-time store workers currently earn $12.78 per hour on average, but reporters have previously shown that this figure does not include part-time workers (who make up a considerable portion of the retailer’s massive workforce), while it does include many department managers who get much higher compensation than entry-level counterparts out on the floors.

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Emery Reddy