Reuters

The retail behemoth might not feel much pain from a hike, but some of its competitors would.

Walmart, the bête noire of American labor unions, the king of all low-pay retail, might be kosher with the idea of a minimum wage hike. At least, management says it won't try to block one.

Company spokesman Tovar tells The New York Times that the company has "decided not to take a position on minimum wage proposals any minimum wage proposals," so-long as they didn't single out specific employers, like the bill it opposed in Washington, DC that would have only raised pay at big box stores.* 

If you assume that Walmart is hell-bent on paying its associates as little as possible, its casual attitude here might seem surprising. But it's not really. The company previously backed a minimum wage increase in 2007 and has good reasons to be at ease with the idea today.

First, while most of Walmart's associates don't earn much, the do generally make more than the minimum. Walmart's official figures bounce around a bit, but in November Tovar told me the average hourly worker, not including supervisors, earns $11.83 an hour. In 2011, meanwhile, the Center for Labor Research and Education at the University of California, Berkeley, estimated that almost 80 percent of their hires earned more than $9.00 per hour.

That's one reason why, as Lydia Depillis notes, "Walmart is much better able to absorb a minimum wage increase than its smaller competitors," which are more likely to rely on bonafide minimum wage, opposed to merely low-wage, employees. So long as the cost of labor rises for everybody, at least within certain limits, Walmart doesn't have much reason to sweat. Now, if the minimum suddenly shot up so everybody had to pay on a Costco wage scale, that might be a problem for its business model. But the Berkeley paper estimated that if the behemoth from Bentonville were to raise its pay all the way to $12 an hour, it could pass the entire cost onto consumers while raising prices just 1.1 percent for its average shopper. 

Which most of those shoppers probably aren't going to notice, especially if a minimum wage hike puts extra money in their pockets. This week's CBO report calculated that, even accounting for job losses, real incomes would rise by about $35.5 billion for families earning less than six-times the federal poverty line, or about $141,000 a year for a family of four. Much of that money would likely go straight back to Walmart, whose sales have overwhelmingly come from families earning less than six figures (chart from the Berkeley paper, based on Nielsen data).

So to recap, a minimum wage hike would likely hurt Walmart's competition more than Walmart, and much of what it lost in higher payroll it would stand to gain back in higher sales. If anything, the surprising part is that the company isn't more excited about the idea. 

*Asked by Bloomberg whether the company would support a national increase, Tovar reportedly said: "That’s something we’re looking at. Whenever there’s debates, it’s not like we look once and make a decision. We look a few times from other angles.” I checked with Tovar, who clarified that the company had only decided not to oppose an increase, and said he was "not sure how or why Bloomberg made such a leap to say we are 'looking' at supporting a minimum wage increase."

This post originally appeared on The Atlantic.

About the Author

Most Popular

  1. photo: A lone tourist in Barcelona, one of several global cities that have seen a massive crash in Airbnb bookings.
    Coronavirus

    Can Airbnb Survive Coronavirus?

    The short-term rental market is reeling from the coronavirus-driven tourism collapse. Can the industry’s dominant player stage a comeback after lockdowns lift?

  2. Illustration: two roommates share a couch with a Covid-19 virus.
    Coronavirus

    For Roommates Under Coronavirus Lockdown, There Are a Lot of New Rules

    Renters in apartments and houses share more than just germs with their roommates: Life under coronavirus lockdown means negotiating new social rules.

  3. A pedestrian wearing a protective face mask walks past a boarded up building in San Francisco, California, U.S., on Tuesday, March 24, 2020. Governors from coast to coast Friday told Americans not to leave home except for dire circumstances and ordered nonessential business to shut their doors.
    Equity

    The Geography of Coronavirus

    What do we know so far about the types of places that are more susceptible to the spread of Covid-19? In the U.S., density is just the beginning of the story.

  4. Equity

    The Problem With a Coronavirus Rent Strike

    Because of coronavirus, millions of tenants won’t be able to write rent checks. But calls for a rent holiday often ignore the longer-term economic effects.

  5. Traffic-free Times Square in New York City
    Maps

    Mapping How Cities Are Reclaiming Street Space

    To help get essential workers around, cities are revising traffic patterns, suspending public transit fares, and making more room for bikes and pedestrians.

×