Do Wal-Mart’s wages stack up?
Wal-Mart claims that they pay “competitive” wages compared to their retail competitors. But what is the reality? Let’s look at some real data to find out.
A. Some caveats about Wal-Mart’s self-proclaimed average wage
Wal-Mart claims that their “average, full-time hourly wage” is $11.75/hour[1]. Before comparing with other numbers, it is worth making some observations about this number.
· First, this is an obvious point but it is worth reiterating – this number is an average. The starting wage is obviously well below $11.75/hour.
· The average is for full-time workers only, it does not include part-timers. It is reasonable to believe that the exclusion of part-time workers from the Wal-Mart average drives up the average since part-time workers are also likelier to be younger workers with less seniority and therefore lower hourly wage rates. If they were to calculate the average across their entire workforce, it would be lower than $11.75/hour.
· In retail, some front-line supervisors are hourly wage workers. For example, the statistical analysis of Wal-Mart wages and hours for the Dukes vs. Wal-Mart gender class action lists “department head” as one of the largest hourly job categories at Wal-Mart[2]. Note that Wal-Mart’s average wage of $11.75/hour does not explicitly exclude supervisory employees, from the definition provided in their factsheet. It is reasonable to believe that these hourly wage supervisory employees are included in the average, and the inclusion of these employees drives up the average. The average wage for all non-supervisory hourly employees at Wal-Mart (both full-time and part-time) is therefore considerably lower than $11.75/hour.
· Wal-Mart does not state if their average wage includes pay categories such as overtime, Sunday and holiday premiums, etc.
· Wal-Mart does not disclose how they calculate the average. It is not clear if the average is the total wages paid divided by total hours worked, or total wages paid divided by total hours paid (which would include vacation hours, sick leave hours, etc. in the denominator), or a simple arithmetic average of all the wages in their wage scale. The method of calculation is critically important, because the different methods can yield very different magnitudes of the average wage. For example, total wages per hour worked is always greater than total wages per hour paid. Also, if the company systematically lowers payroll expenses by reducing hours for relatively higher-paid workers and increasing hours for their lowest paid workers, use of a simple arithmetic average of the wage scale would significantly inflate the average wage as compared to either method of hours-weighting the average.
B. Comparison of Wal-Mart’s wages with typical retail wages
The Bureau of Labor Statistics (BLS ) reports wages by occupation for the U.S.
· The entire U.S. U.S.
· The BLS OES average wage by occupation includes both full-time and part-time workers[6]. As explained earlier, the average wage disclosed by Wal-Mart specifically excludes part-timers, and if part-timers were included, the reported average for Wal-Mart would be lower. Therefore, the discrepancy between Wal-Mart’s average wage and the BLS -reported average for Retail Salespersons would be greater.
· The BLS OES average wage by occupation is calculated based on “straight-time, gross pay, exclusive of premium pay”; it specifically excludes pay categories such as overtime and shift differentials[7]. We do not know if Wal-Mart includes these pay categories in their average, but they need to be up-front and disclose if they do. (And if they do include those pay categories, the true difference between Wal-Mart’s average and the BLS -reported Retail Salespersons average would be still greater!)
· BLS OES data use a separate occupational code for hourly wage supervisors (First-Line Supervisors/Managers of Retail Sales Workers, SOC Code 41-1011). Excluding hourly wage managers from the Wal-Mart average for a true like-to-like comparison would make Wal-Mart’s average wage look worse.
· Finally, the BLS OES survey includes businesses of all sizes[8]; the Retail Salespersons average wage therefore includes wages of workers in small independent corner stores, which probably for the most part do not pay very high wages. (This is not a value judgment; most of these stores probably cannot afford to pay high wages.) If these employers were excluded, the Retail Salespersons average wage would be greater.
The conclusion: a true apples to apples comparison of average straight-time wage of non-supervisory full-time and part-time Wal-Mart workers with an ex-Wal-Mart, ex-small business average wage for retail workers would show Wal-Mart’s wages to be distinctly inferior. When Wal-Mart claims that their pay rates are competitive – don’t believe the hype!
[1] “Corporate Facts: Wal-Mart by the Numbers,” company fact sheet, March 2010, available at: http://walmartstores.com/pressroom/factsheets/#CorporateFacts
[2] Drogin, Richard, “Statistical Analysis of Gender Patterns in Wal-Mart Workforce,” Table 10, February 2003, submitted as evidence for plaintiffs in Dukes vs. Wal-Mart, Case No. CV-01-02252-MJJ.
[3] U.S. Department of Labor, Bureau of Labor Statistics, May 2009 National Occupational Employment and Wage Estimates, available at: http://www.bls.gov/oes/current/oes_nat.htm
[4] Ibid.
[5] “Corporate Facts: Wal-Mart by the Numbers,” company fact sheet, March 2010, available at: http://walmartstores.com/pressroom/factsheets/#CorporateFacts
[6] See definition of occupational employment in U.S. Department of Labor, Bureau of Labor Statistics, Technical Notes for May 2009 OES Estimates, available at: http://www.bls.gov/oes/current/oes_tec.htm
[7] See definition of wages in Ibid.
[8] See description of scope of the survey in Ibid.
