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Wal-Mart's giant wage lie: Why big retailers can and must pay their workers more

Raising wages for workers in the retail sector is a moral and economic no-brainer, expert tells Salon

Elias Isquith
June 5, 2014 4:30PM (UTC)

You've probably heard by now that a stunning 95 percent of the gains the United States economy has made in the years since the Great Recession have gone to the top 1 percent. What you may not know — but which plays no small role in explaining that phenomenon — is that most of the jobs created in the same time period have been low-wage, service sector gigs (or McJobs, as some people call them). In fact, according to a 2012 study from the National Employment Law Project, McJobs make up a full 58 percent of employment growth we've seen during the recovery.

While there's no one, single answer for the trend, globalization and technological progress are no doubt major factors. Neither of these are reversible (and it's highly debatable as to whether we'd want to arrest these processes, even if we could). To put it simply, Bruce Springsteen was right: "These jobs are goin', boys, and they ain't comin' back." The McJob economy is real, and it's only going to get worse.


Unless, that is, business leaders and policymakers pay attention to the new report from the left-wing think tank Demos. Titled "Retail's Choice: How Raising Wages and Improving Schedules for Women in the Retail Industry Would Benefit America," Demos' latest is a comprehensive look at whether our nation's most wealthy and powerful retail corporations could afford to pay their workers a real living wage. To find out more about the study as well as why it's so important that we turn former McJobs into stable, middle-class careers, Salon spoke with the author of the study, Amy Traub. Our interview is below and has been edited for clarity and length.

What inspired you to take a look at the retail sector and, specifically, women workers within it?

Well, we hear a lot these days about economic advancement for professional women but the most common job in America today isn’t a high-flying professional or executive job, it’s work as a retail salesperson; and the number 2 job in the country is work as a cashier. So I feel like we need a conversation about how to advance the economic security of women who work in these jobs, not just talking about how they can move up the ladder, which is important, but also how we can improve the jobs that we have now, which are projected to only grow into the future.


Can you give just a brief overview of the most relevant numbers here? How many people are we talking about, how many of them have family members, and so on?

Sure. One big issue to people’s standard of living is their wages. Today, we see that 1.3 million who work in the retail industry live in or near poverty, and if trends continue we’re going to see another hundred thousand women working in retail who are poor or near-poor, and that’s going to affect women, many of whom support families. There’ll be about 2.5 million family members who are supported by retail wages who will be in poverty or near poverty in 2022. Now, if retailers were to raise their wages to the equivalent of $25,000 per-year for full-time work, those trends would reverse, and we would see 437,000 women's earnings lift them above the level of poverty or near poverty, which would affect families and communities as well.

Another thing we look at is the pay gap that’s in retail today. Today, the pay gap costs women an estimated $40.8 billion per year in lost wages, and that’s a drag on the economy. It reduces consumer demand, and it costs us jobs. If that is to continue through 2022, cumulatively, women will have lost $381 billion in wages. But raising wages to the equivalent of $25,000 per year would narrow the wage gap significantly, even if the same raise went to both men and women — because women are disproportionately concentrated into these lower-wage jobs. So if everybody who made less than $25,000 per-year in retail had their salaries raised to $25,000 per-year, it would benefit more women than men. But it would also benefit our economy overall: GDP would grow an estimated $6.9-8.9 billion, just from the women’s portion of the raise. Overall, it would be about $12.1 billion from both women and men and that would lead to the creation of more than 100,000 new jobs.


What would you say to those who would resist your proposal by saying that these kind of retail jobs are not intended to be true middle-class jobs but rather stepping-stones to something else? This is a common criticism on the right of the fast food workers' movement for higher wages and I imagine they'd say the same thing in this context, too.

A growing portion of our economy is these jobs. The number one retailer, the number one employer in the country right now, that employs more Americans than any other private company is a retailer — it’s Wal-Mart. So to say, "Hey, the biggest private sector source of jobs in the United States, you shouldn’t actually take those seriously as jobs" [is wrong]. To a growing extent, that’s what our economy is — retail jobs and jobs in industries like retail, you mentioned fast food, restaurant work; those are the jobs that increasingly make up our economy, so it’s important to take those seriously as jobs, and take seriously that people are raising families and trying to live on that work.


Turning to the issue of the pay gap, what about the argument, made by some Republicans, that women don't care so much about money and that what really matters to them is flexibility in terms of their schedule? 

It does not need to be an either/or. It is the case that one reason why women make less than men — one of the factors that certainly doesn’t account for all of it — is that women are more likely to be part-time workers, and part-time workers tend to be paid less. At the same time, we know that nearly one in every three women who does work part-time in the retail industry wants to be employed full-time; and even those that are working full-time are not always getting enough hours. Full-timers and part-timers alike have to deal with scheduling practices that both limit their take-home pay and also make it very difficult for them to juggle anything else they may have going on in their lives (maybe childcare or elder care, which are still disproportionally seen as women’s responsibilities). It’s also about balancing a class schedule, if you are trying to get a different type of job. It’s about any other different type of responsibility you have in your life. These scheduling practices make it very difficult to meet that, even as they also limit people's take-home pay.

Another popular argument conservatives make against proposals like yours is to say, "There's no such thing as a free lunch." Since we've heard the benefits of raising retail workers' pay, what are the costs?


What we find is that low-wage retailers can afford to improve women’s jobs and they can do it without big price increases. The additional payroll costs we find would represent just a small portion of total sales, really just a fraction — less than 1 percent of the $4.3 trillion in total annual retail sales and additional costs. At the same time, retailers would see a lot of benefits from higher wages and better schedules and hours. There’s been a lot of research into the retail industry finding that, when wages and schedules are improved, there’s less employee turnover, there’s less absenteeism, employees are more productive, and retail sales go up. Sales increase quite a bit when employees are paid more because people are more invested in their work, they’re more experienced, they stick around longer, they form relationships with customers, they know where something is stuck on the shelves, they become more familiar with the products they’re selling. A wage increase itself puts money in the pockets of the employees who are going to turn around and spend it; and where are they going to spend the money? They’re going to spend it at retailers, often at the same stores that employ them. We project that retailers would actually see $4-to-5 billion in additional sales, just from their own retail employees turning around and spending money at retailers.

I do want to say that we have a projection for a cost increase as well, with the assumption that yes, companies might pass on some of the cost to customers. It’s reasonable to think there would be some cost increase. In our projections, the average household would pay just 15 cents more per shopping trip. It’s about $17.73 per-year.

That’s not a lot.


No, it’s not a lot. And we look at it a bit more carefully and find it would be even less than that for low-income households which tend to spend less money and do less shopping.

Elias Isquith

Elias Isquith is a former Salon staff writer.

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1 Percent Amy Traub Demos Great Recession Inequality Mcjob Mcjobs Walmart

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