UC Berkeley Center for Labor Research: Living Wage Policies and Wal-Mart

The labor center study, “Living Wage Policies and Wal-Mart: How a Higher Wage Standard Would Impact Wal-Mart Workers and Shoppers,” concludes that if Wal-Mart hiked its minimum wage to $10 per hour and in the extreme case, passed on costs fully to consumers, the average impact on a Wal-Mart shopper would be higher product prices of  0.9 percent. 

The study finds that close to half of the wage income gain, some 46.3 percent, would accrue to workers living below 200 percent of the federal poverty level. Less than one-third, or 29.3 percent, of the impact of the price increase would be borne by shoppers with incomes below 200 percent of the federal poverty level.

“Big box living wage laws can serve to mitigate the negative impacts on workers of the Wal-Mart model, at only a small cost to consumers,” said Ken Jacobs, chair of the labor center.

Other key findings include:

• Increasing Wal-Mart’s minimum wage wages to $10 per hour would contribute to a payroll of $2.38 billion a year, a 9.3 percent increase over the retailers’ current payroll.
• Poor and low-income Wal-Mart workers could expect to earn an additional $1,020 to $4,640 a year in pre-tax income, depending on what they earn now and whether they work part-time or full-time.
• If Wal-Mart shoppers were asked to absorb all of the wage increase, the average impact would be a price increase equivalent to 36 cents per shopping trip or $9.70 per year, for the store’s average consumer, who spends $1,088 per year at Wal-Mart.
• High-spending Wal-Mart shoppers, (the 12.5 percent of store customers who account for 54 percent of all Wal-Mart sales and average expenditures of $9,775 per year) would see an additional cost of $1.47 per shopping trip, or up to $87.98 a year. The study estimates that 3.4 percent of Wal-Mart shoppers are both high-spending and low-income.

The study uses data from statistician Richard Drogin’s analysis of Wal-Mart payroll data, the March 2005 U.S. Current Population Survey, ACNielsen’s U.S. Homescan Consumer Panel data about consumer attitudes and loyalty, and Wal-Mart’s own data on U.S. sales and customers.