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“Hold Your Applause”: Walmart’s Wage Hike Still About Greed

With much fanfare and platitudes like “Our people make the difference,” WalMart has achieved a public relations coup by granting quite meager raises to its employees. The headlines make the $277 billion (market cap) company look quite generous as it has raised its starting hourly wage immediately to $9 an hour, which is 19 percent higher than the prevailing federal minimum wage.

It sounds like great news from the world’s largest private employer, but the news is nowhere near as good as headlines suggest.

The New York Times estimates that there are only about 6,000 retail workers among WalMart’s 1.4 million employees that are paid the federal minimum wage. This shouldn’t be too surprising, since 28 states already mandate higher minimum wages than the federal standard and, says the law, the highest required wage wins. Only seven states have minimum wages set at $9 or higher. So WalMart workers in 43 states are getting some sort of raise.

But in the vast majority of cases, it’s nothing like the 19 percent number you’re seeing thrown around.

For those getting the largest bump from the federal minimum wage to $9, it’s important to put this all in perspective. The federal minimum wage has not been raised since 2009. It would take a wage of $8.55 an hour to equal the purchasing power of $7.25 six years ago.

So, in a real sense, WalMart’s lowest paid employees are getting a 45-cent-per-hour raise—a 6.2 percent increase. Meanwhile, workers in California, Massachusetts and Rhode Island will see no increase (the state hourly minimum is already $9) while minimum wage workers in Washington, Oregon, Connecticut and Washington, D.C., already make more than $9 an hour.

In its release to workers and the public, WalMart says that the wage increase scheduled to go into effect in April will raise the average part-time worker’s wage to $10 an hour across the company. Back in 2010, IBISWorld, a market research firm, estimated that WalMart cashiers made about $8.81 an hour. That 2010 wage inflations adjusts to a $9.56 wage in today’s dollars. According to WalMart’s release, part-time workers will see their wages rise from $9.48.

That means, until now, WalMart’s part-time workers were losing ground against inflation. While nice, this isn’t the saintly endeavor WalMart is making it out to be. The current bumps gets those employees just a few coins ahead of the rise in the cost of living since the end of the Financial Crisis.

For its full-time workers, WalMart says that the average wage is rising from $12.85 an hour to $13. In 2013, WalMart said that its average full-time wage was $12.83. So WalMart’s full-time associates got a 2-cent raise between 2013 and 2014 and now get a 17-cent bump. Adjusted for inflation, you’d need $13.04 cents today to buy what you could with $12.83 in 2013. WalMart’s full-time employees are coming out of this 4 cents short of inflation.

WalMart’s workforce is split about evenly between full- and part-timers. Part-timers will make $17,500 a year if they work 35 hours a week for 50 weeks a year. Full-timers will make $26,000 working 40 hours a week for 50 weeks.

For a two-person household, the federal poverty line is $15,930. For a four-person household it is $24,250.

Even after the raises, WalMart will continue to employ people who will be living below, at or barely above our various, imperfect measures of poverty.

These workers will continue to depend on public subsidies to get by, whether they need help with health care, buying food, or lunches for their school-aged children. It’s hard to see, even, how these wage increases will do enough so that WalMart employees don’t have to hold holiday food drives for each other.

WalMart has wanted to open a store in New York City for years and has been rebuffed at every turn by coalitions of labor and local retailers. The chain most recently failed to infiltrate East Brooklyn. It faces community opposition in cities and towns around the country.

The retailer is clearly tired of being seen as an unwelcome neighbor—and that’s likely a big consideration for why they’re upping their wages just enough.

The company would also like to buy itself a new labor history. For years, WalMart used contractors to clean and maintain its stores, putting a buffer between the companies and the often abused workers—especially when those workers were very often not authorized to work in the U.S. Since the middle of the last decade the company has also been hit with scores of class action lawsuits, some relating to the treatment of women workers and some alleging wage theft through various means.

In 1914, Henry Ford paid his workers $5 a day. It was a move that truly helped create the middle class.  Five dollars in 1914 is $118 today, although that would only add up to a $35,000-a-year salary for a six-day workweek, which is well below our current medium income.

What some forget about Ford is that he had ulterior motives: He wanted to mold his workers into what he considered model Americans. WalMart has ulterior motives as well: It wants to mold your perception of it until you see a model American corporation.

If WalMart is a model corporation, the model is broken.

 

By: Michael Maiello, The Daily Beast, February 20, 2015

February 21, 2015 Posted by | Poverty, Wage Theft, Walmart | , , , , , , | 2 Comments

“Nickel And Dimed”: The Very Real Scourge Of Wage Theft

Last week, the owner of a chain of Papa John’s was ordered to pay $800,000 in back pay to workers he’d shortchanged by rounding down to the nearest hour on their time cards and failing to pay overtime properly. “I didn’t realize if you work 10 hours per day, you are supposed to pay overtime for two hours,” the owner, Emmanuel Onuaguluchi, told the New York Post.

A couple hours of overtime there may not seem like a lot of money, but those amounts could mean everything to workers struggling to get by on minimum wage and, as the judgment shows, it all adds up over the years. This latest judgment is part of a big push by New York’s attorney general, Eric Schneiderman, who has also sued local McDonald’s and Domino’s franchises.

Cases of wage theft—or, at least, the cases officials are pursuing—have been up in California and across the country, too, according to The New York Times. Business interests told the Times that politicians like Schneider are just pursuing these cases to curry favor with unions, but the unions aren’t really behind the legal actions.

If restaurants and other companies in the service industry—where workers are paid by the hour, have hours that change from week-to-week, and are especially vulnerable to wage theft—are complaining that the wage theft cases are coming from people who, in general, want to be paid more, they’re right. The fight for higher minimum wages across the country has highlighted the problems low-wage workers face in their workplaces, and wage theft is one of the most common ways they’re denied even the measly current minimum wage of $7.25 an hour.

Wage theft is old, but before now workers might have been too scared to complain or go to an attorney on their own. “I think one reason why it’s coming up more now is that it’s tied to a real organizing campaign where fast food workers are demanding and protesting,” says Tsedeye Gebreselassie, a senior staff attorney for the National Employment Law Project, which is not directly involved in any of these cases.

By law, companies have to pay their employees minimum wage, and overtime pay should kick in once an employee works past an eight-hour shift in a day. Five years ago, in a survey funded by the Russell Sage Foundation and conducted by researchers from the National Employment Law Project, UCLA, Cornell University, and the University of Illinois, Chicago, a quarter of low-wage employees reported they hadn’t been paid the minimum wage in the prior week, and three-quarters said they were denied overtime.

As someone who has spent the past three years reporting from low-income communities across the country and grew up in working-class family in a poor part of Arkansas, I hear stories of wage theft all the time. Onuaguluchi’s view about overtime is common—I’ve known people who have worked in fast-food restaurants and routinely pulled several double shifts in a week, but as long as their hours did not total more than 80 in a two-week pay period their bosses did not pay overtime.

I’ve also heard of bosses who don’t pay correctly, and paychecks come with hours missing. Those mistakes are harder for workers to figure out than you would think because they need to keep records on exactly when they worked and how many hours it was, and compare it to what their paychecks say when they arrive a week or two later. But at the end of the day, these cases are relatively easy to prove because records of time sheets will show how many hours each employee worked and whether they were paid properly. Rounding down, as Onuaguluchi did, would be evident.

Many stories about wage theft, though, offer more insidious examples that are harder to fight. I know of people who’ve had to run errands on behalf of their workplaces before they even show up for work, and are expected to arrive every morning with said errand completed. I know people who’ve had to clock out for breaks they can’t take. Sometimes, workers are expected to have a certain amount of work done before they clock in at the official start of their shifts, or are asked to or expected to finish a task once they’re already gone, according to their time sheets. It would be harder to tackle cases like that in court because these practices might not be codified or routine, but the basic idea is that bosses at companies like this don’t rank their employees’ time as valuable.

In fairness, the direct bosses like Onuaguluchi are often squeezed themselves. While three-quarters of these kinds of stores are owned by franchisees who own multiple units and are often making quite a profit, their profits rely on running their operations as cheaply as possible. The small-business man or woman who owns one or two might struggle to pay their employees properly, although I have little sympathy for those who break the law. That’s because franchise fees are expensive: even a franchise fee considered relatively affordable, like 7/11, takes $31,000 to start up. McDonald’s requires $45,000 and that the owners have $300,000 in cash or other funds available to them.

Companies like these also require other licensing fees to be paid, and sometimes franchisees even pay rent because the parent company owns the physical location of the store.

So, people like Schneiderman have promised to go after Papa John’s, and other big companies that franchise stores as well. What Papa John’s and their ilk say is that they’re not responsible for the ways their franchisees pay people. Yet they intensely manage their brands, which often includes monitoring time sheets that franchisees send in, quality control tests that could influence hiring and firing decisions, and other fine-grained aspects of their operations. Even more directly, attorneys could argue that these companies charge their franchisees so much in fees that they know, or should know, that the only way for them to make a profit is to shortchange their employees.

In July, the National Labor Relations Board ruled McDonald’s was a joint employer in a similar case, and that pay complaints could be made against them. If suits against the parent companies succeed, it might actually start to end the practice of robbing low-income workers of the little money they have. “At the end of the day, you want to recover the unpaid wages, but you also want to correct the behavior,” Gebreselassie says. “One of the best ways to do that is to reach to the corporate parent.”

 

By: Monica Potts, The Daily Beast, February 15, 2015

February 16, 2015 Posted by | Corporations, Economic Inequality, Wage Theft | , , , , , , , , , | Leave a comment

   

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