The Fight for $15 movement advocates for a $15-an-hour minimum wage for workers — but is that enough to live on in the U.S. today?
Pulitzer Prize-winning business journalist and author Rick Wartzman took a deep dive into the nation’s biggest employer: Wal-Mart. He says wages need a big boost.
Roughly one-third of the country lives in precarious financial circumstances, Wartzman says. In his new book, “Still Broke: Walmart’s Remarkable Transformation and the Limits of Socially Conscious Capitalism,” Wartzman argues that the government needs to step in and mandate a $20 minimum wage.
In the early 2000s, former employees across the country sued Wal-Mart for cheating them out of millions of dollars in overtime pay. In Texas, the company failed to pay out an estimated $150 million in wages.
Back then, Wartzman served as business editor at the Los Angeles Times when a team of journalists reported a Pulitzer Prize-winning deep dive into “the high human cost of low prices.”
“Those workers [were] really struggling to make ends meet and couldn’t certainly support a family,” he says.
In 2015, Wal-Mart started raising wages after facing pressure from unions, politicians, journalists, faith leaders and city councils, who denied the company expansion into certain urban areas. But the main reason, Wartzman says, was the impact of cutting labor costs to the bone from 2011 to 2013.
“Stores were dirty. Shelves were bare. Turnover was so high. The churn was so high: people just coming in the door and then quitting in a hurry,” he says. “Investing in workers became a business priority.”
Back in 2015 when the company started raising wages, Wal-Mart paid workers an average of $7.65 an hour. That’s slightly more than the federal minimum wage of $7.25, which hasn’t been raised since 2009.
Now, Wal-Mart pays its workers an average wage of $17.50 an hour. Corporations can potentially serve as a lever for social change because they control a large piece of the economy, Wartzman writes, but Wal-Mart isn’t going far enough.
An hourly wage of $17.50 an hour adds up to $33,000 a year — which isn’t a living wage anywhere in the U.S., Wartzman says.
“If you look at Wal-Mart — the biggest employer in the country — it’s both a source of this problem and a symbol of something bigger,” he says. “Corporate America will never move far enough or fast enough on its own.”
At $20 an hour, a full-time worker earns a little more than $40,000 a year — it’s not a lavish lifestyle, but enough to support a family, Wartzman says. And higher wages are not unheard of: In Denmark, McDonald’s workers earn $20 an hour, which is working well for management and the corporation.
But with the federal minimum wage at $7.25, between 25% and 40% of the American labor force struggles to make ends meet.
“They are one blown carburetor, one missing day at work and falling behind on their bills from really spiraling into crisis,” he says.
The U.S. economy has exploded over the past 50 years — but the gains go to the top 1% while tens of millions of Americans go to work every day and still struggle to make ends meet, Wartzman says.
“Most people have been left behind. They’re not getting their fair share of putting in that labor,” Wartzman says. “If you look at other societies, there is more broadly shared prosperity. Their shareholders get less. Corporations take lower profits. It doesn’t mean they’re not profitable, but there is less of an expectation that profit will be maximized, if you will, really at all costs.”
After 50 years of corporations failing to share their prosperity with workers, incremental changes to wages aren’t enough to fix the problem, Wartzman says. He believes the government should step in to fix the wage crisis by mandating a $20 minimum wage, though he acknowledges this change would come with consequences like job loss and wage compression.
“The measure of good public policy is not, ‘is it perfect? It’s, ‘will this benefit a lot more people than it harms?’” he says. “I believe that going to a true, genuine living wage in this country would be a huge benefit for way more people than would be hurt.”
Shirley Jahad produced and edited this interview for broadcast with Catherine Welch. Allison Hagan adapted it for the web.
Book excerpt: ‘Still Broke’
By Rick Wartzman
In 2016, as Walmart raised its starting wage to $10 an hour, Fortune named the company to its annual “Change the World” list.
“No issue is more central to this year’s contentious US presidential election than the anxiety of the average American worker about stagnating wages,” the magazine said. “But while Hillary Clinton and Donald Trump attempt to woo voters with their plans, Walmart is taking action.”
It is tempting to cling to the belief that companies like Walmart can change the world, especially at a time when government is so polarized and dysfunctional. “When the government is absent,” the PR firm Edelman has said, “people clearly expect business to step in and fill the void, and the high expectations of business to address and solve today’s challenges has never been more apparent.” Marc Benioff, the CEO of Salesforce, titled a section of his book Trailblazer to position the private sector as our savior: “Business Is the Greatest Platform for Change.”
I have always been a both/and guy, someone who has thought that both government and business have a vital role to play in making sure that American workers earn a decent living. But my last book, The End of Loyalty: The Rise and Fall of Good Jobs in America, was more in Benioff’s camp—premised on the idea that government was mainly there to set the guardrails and provide a safety net when someone really needed help; it was up to business to carve up the pie broadly and fairly, as it had after World War II. “Washington’s prod can’t alone turn things around,” I wrote. “Corporate executives must step up…. It is their companies that must reinstitute a sturdier social con- tract with their workers.”
My two-year dive into Walmart has caused me to reconsider. Yes, business can and should do more. Much more. But unless there is a government mandate, Walmart—and most every other company in America—will never move far enough or fast enough to provide people with a genuine living wage. Washington’s prod is the only way to get there.
There is no mystery as to the policies we need to help workers regain their rightful share of the nation’s prosperity. I’d start with these: rewriting labor law to expand collective bargaining, as well as to foster new avenues for employees’ voices to be heard, including seats on corporate boards; making “full employment”—the point at which most everyone who wants a job can find one and a catalyst for rising wages—a primary goal of government; restoring overtime pay so that the majority of salaried workers qualify as they did in the 1970s, not just the 15 percent who do now; buttressing worker protections so that it’s harder to pilfer people’s wages or misclassify employees as con- tractors; and devising a health system that gives every American affordable access to good medical care, untethered to the workplace.
More than anything, though, we should require that companies pay their workers enough to live on. What this looks like is also not a mystery.
Ninety percent of Americans reside in a county where, to make a family living wage, they need to earn at least $20 an hour. The thought of requiring companies by law to pay $20 an hour may seem crazy when Congress can’t get past $7.25. But what alternative do we have?
As big a leap as it would take, a federal minimum of $20 an hour is where we need to get—and as swiftly as possible—if we want Americans who work hard to not merely eke out an existence. In some larger metropolitan areas, local officials should raise the lowest legal wage far higher than that. This rate should then be automatically adjusted upward as the median wage increases so that we don’t have to relitigate a new living wage year in and year out. In the meantime, we should also expand anti- poverty programs such as the Earned Income Tax Credit as a complement to a higher minimum wage.
It is sensible to pay teenagers, who are getting their first work experience, something less than adults. And phasing in a living wage, especially for smaller businesses so that they have more time to digest the cost, is appropriate. Ultimately, though, people’s pay must reach what Republican Teddy Roosevelt said was “more than sufficient to cover the bare cost of living” and Democrat Franklin D. Roosevelt likewise said would be “more than a bare subsistence level.”
At Walmart, executives talk a lot about how tight their profit margins already are. But Paul Polman, the former Unilever CEO, says that’s a red herring. At a large retailer, he told me, return on invested capital or cash flow is usually “a better measure” to look at, adding that Walmart’s free cash flow—the amount of money generated that is clear of all internal or exter- nal obligations—“is very healthy.” Over the past five years, it has averaged more than $17.4 billion annually. The Motley Fool, which provides investment advice, has called Walmart a “cash cow.” “Why do you think the Waltons are so wealthy?” Polman asked. “It’s cash flow.” Does that mean that Walmart can afford to pay its workers $20 an hour? In Polman’s view, the answer is “overwhelmingly yes.” “In a tight US job market,” he said, “others will likely follow, attrition will go down and engagement up. It might be the best thing Walmart has ever done.”
For a full-time worker, $20 an hour comes out to just under $42,000 a year—a rate of pay that is not lavish no matter where you live in the United States but that would allow for a little dignity. That the state should make this so is not a new notion. “A law requiring employers to pay a living wage” is perfectly in step with government’s obligation “to safeguard individuals against violence and injustice,” John Ryan, a priest and social reformer, wrote in 1906. “To compel a man to work for less than a living wage is as truly an act of injustice as to pick his pocket.” More than a century later, David Autor and Elisabeth Reynolds of MIT’s Task Force on the Work of the Future said it this way: “Countries have a choice about the level of economic inequality that they tolerate.” As a society, we must ask ourselves, why have we left it to corporations like Walmart to make that choice on our behalf?
Twenty dollars is bound to come across as too radical to many, but we are without other options. As with climate change, we have put ourselves in a hole so deep, we will never get out of it if we think small. “The luxury of a leisurely approach to urgent solutions—the ease of gradualism—was forfeited by ignoring the issues for too long,” as Martin Luther King Jr. once said. It is well past the time for those we elect to public office to force the matter.
If they don’t, we already know what will happen: tens of millions around us will continue to struggle while Walmart, along with much of the rest of corporate America, is cloaked in the mantle of social responsibility.
Adapted from “Still Broke: Walmart’s Remarkable Transformation and the Limits of Socially Conscious Capitalism” by Rick Wartzman. Available from PublicAffairs, an imprint of Hachette Book Group, Inc.
This article was originally published on WBUR.org.
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