November 19, 2012
Black Friday has heaped new pressure on big box stores to bump up worker pay, with a group of Walmart employees plotting a walkout on the country’s biggest shopping day and the think tank Demos releasing a study Monday that touts the benefits of higher wages.
More than 7.5 million Americans work year-round at large retailers, a substantial and growing chunk of the workforce. The new Demos study rests on setting a baseline salary of $12.25 an hour. That’s $5 an hour more than the current federal minimum wage, but it’s slightly below the average hourly wage paid by “general merchandise stores” that range from high-end department stores to discount chains, according to the Bureau of Labor Statistics.
The low wages enforce a vicious cycle for policymakers. More families depend on government services to get by because of their low incomes, which in turn lead retailers to increasingly compete on price and restrict salary growth.
The Demos study suggests the $12.25 baseline—about $3 dollars an hour above low-end retail wages—would lift 734,075 Americans above the poverty line and increase the incomes of another 769,191 who are barely above that level. If retailers passed the costs of the wage increase directly onto consumers, an average household would spend about $36 more a year, Demos estimates.
But short of an increase in minimum wage, major retailers will have set the higher baseline themselves, something that could put them at a competitive disadvantage. The author of the Demos report noted that Walmart could reshape the entire landscape by agreeing to the baseline.
“If they were to enforce this standard or adopt this standard, they would have significant impact,” said Catherine Ruetschlin, a policy analyst at Demos who wrote the analysis. “They could be the driver that lifts up the rest of the retail workforce.”
Groups of employees at the discount chain store such as OUR Walmart are building on strikes from last month with a planned work stoppage this Friday. Among their goals is a base hourly wage of $13.
But the retail sector is encountering multiple problems this year beyond employee wages. The National Retail Federation warned President Obama and Congress last week that the uncertainty generated by the fiscal cliff could hurt holiday spending that’s expected to top $586 billion this year.
“Rather than setting New Year’s Eve as its deadline, Washington needs to act quickly to set in place a framework for resolving this situation, preferably before Thanksgiving,” Matthew Shay, the federation’s president, wrote in the letter.
But with Obama in Asia and Congress in recess, it’s likely that the uncertainty will linger well past the first serving of turkey and mashed potatoes this Thursday.