This piece was co-written with Amy Traub, a senior policy analyst at Demos.
Wal-Mart recently made headlines for increasing the starting salary of workers from $9 to $10 an hour, which would boost the wages of 500,000 employees, along with other boosts in specialized sections. While this step is a positive one, a new Demos brief argues that despite this new policy, Wal-Mart wages and schedules still aren’t livable. Demos finds that the new $10 an hour wage “still does not provide enough income to support the basic needs of a single adult working Walmart’s full-time schedule of 34 hours per week in any state in the country.”
To determine the impact of Wal-Mart’s wage increase, Demos used the Living Wage Calculator, developed by Professor Amy K. Glasmeier of the Massachusetts Institute of Technology, to examine whether the wage would constitute a living wage across the United States. Demos ran a few different calculations. Demos examined three family types: single adult, one adult and one child, and two adults (both working) with two children. Demos also examined three schedules: a full 40-hour week, a 34-hour week (the standard at Wal-Mart) and a 20-hour week. It’s also important to note that this wage still won’t affect all Wal-Mart workers — only those who have completed a six-month training program. That means many workers will not benefit from the policy.
Demos finds that for workers who are working the Wal-Mart standard of 34 hours, there are no states where $10 an hour is a living wage. Even in low-cost states such as Nebraska, Oklahoma, Ohio, South Dakota and Wal-Mart’s home state of Arkansas, this wage provides only about 90 percent of what a single employee needs for a basic standard of living. In the median state, it provides just 81 percent of the income needed to support a single adult. If a worker managed to get 40 hours, they would be making a living wage in 17 states.
Yet a single adult working full time doesn’t accurately convey reality for many Wal-Mart workers. In a recent earnings call, Wal-Mart disclosed that approximately half of its U.S. workforce is employed part time. OUR Walmart, a worker’s group, has called for more hours, because many of the workers who are working part time are doing so involuntarily. On a schedule of 20 hours a week, a $10 an hour wage is equivalent to only $10,400 a year – less than half of the income needed to afford a basic standard of living for a single adult in 33 states. Many Wal-Mart workers also have children, yet in the median U.S. state, a Wal-Mart worker paid $10 an hour and working the company’s full-time schedule of 34 hours a week would earn just 39 percent of the income needed to support an adult with a single child. Working families will also struggle at $10 an hour. A family of four with two working adults who managed to work 80 hours combined would make $41,600 a year before taxes, only 68% of a living wage in the median state. If they worked the Wal-Mart standard of 34 hours each, they would make only 58% of the living wage in the median state.
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Many people argue that paying a living wage would force Wal-Mart and other retailers out of business. But the mythology that higher wages would destroy companies is exactly that: a myth. Zeeshan Aleem recently reported for Mic about Moo Cluck Moo, a company that raised its wage to $15 an hour. Rather than going under, “They’re turning a profit and expect to open up new locations as early as next year.” Studies suggest that minimum wage increases don’t have massive impacts on employment. In a major 2013 survey of the research, economist John Schmitt explained why companies see “reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners” rather than cutting jobs.