Walmart Pays Central Massachusetts Workers Less Than Costco

Tuesday, September 10, 2013

Steven Jones-D'Agostino, GoLocalWorcester Contributor

Wal-Mart employees get paid much less than they do at Costco.

When you think of low-paying jobs, you might think of Walmart and Costco. But in Massachusetts – and elsewhere across America – Costco beats Walmart hands down in what it pays to employees.

According to Payscale, the $470-billion Walmart – with 49 stores in Mass., including six in Worcester County - typically pays its U.S. workers 2 percent below the retail-store market average. The $97-billion Costco, on the other hand, typically pays its American employees 10 percent above that average. When it comes to health insurance, Walmart covers 70 percent of its American workers. At Costco, it’s 90 percent.

As CNBC reported last year, the average Costco wage nationwide is $20 per hour. As a result, CNBC noted at the time, Costco “has among the highest pay scales in the industry. … In reward, Costco has some of the lowest turnover rates in retail.” (Costco, which once had a Worcester location, has three Mass. stores. The one in Waltham is the closest to Worcester.)

In the Bay State, according to Walmart’s website, the average hourly wage for its 11,000 “regular, full-time hourly associates” is just above the low end of the living-wage range: $13.89, as of this July 31. The figure is for 30 discount stores and 17 supercenters in Mass. – including the supercenter along Route 146 in Worcester - and does not include the state’s two Sam’s Club stores.

Both locally and nationally, the “living wage” movement is fighting back - but to little avail. On September 6, 100 Walmart workers and activists in 11 U.S. cities were arrested as part of a national protest against the retail giant. Thousands of Walmart employees and labor activists in 15 U.S. cities participated in the protests. It was the largest action against Walmart since last November’s Black Friday's protests.

Both Walmart and a Clark University labor-relations expert contend that Walmart jobs – especially, entry-level ones – are good stepping stones for America’s unskilled and less-skilled workers. But that’s not stopping the living-wage movement. This November 29 - the day after Thanksgiving and the busiest shopping day of the year – they plan to mount what they call the biggest-ever U.S. strike against Walmart stores, including ones in Central Mass.

A living wage

The living-wage movement is seeking a 107 percent increase in the federal minimum wage - from $7.25 to $15 per hour. The last raise was in 2009.

Protesters have taken a stand against Walmart in Central Massachusetts... but what's changed?

By “living wage,” movement organizers mean $13.50 to $15 an hour. That’s the amount they say is required to enable one parent to earn enough money from a single 40-hour-per-week job to feed, cloth, educate, transport a family of four.

A recent Forbes article pulled no punches: Walmart Pays Workers Poorly And Sinks While Costco Pays Workers Well And Sails - Proof That You Get What You Pay For. “Here’s a crazy thought,” the article states. “Might it have something to do with the fact that Costco pays nearly all of its employees a decent living (well in excess of the minimum wage) while Wal-Mart continues to pay its workers as if their employees don’t actually need to eat more than once a week, live in an enclosed space and, on occasion, take their kids to see a doctor?”

Walmart has yet to respond to a GoLocalWorcester interview request. Last December, though, Walmart CEO Mike Duke defended the wages his company pays its workforce - which numbers 2.2 million worldwide and 1.4 million in the U.S.

Duke, according to Business Insider, pointed out that that retail is a lower-margin industry in general, and that Walmart's wages are competitive. "Retailing is the most competitive industry out there, and we do pay competitive wages," he said. "Last year, we promoted 165,000 people from entry-level to managerial positions."

Gary Chaison, professor of industrial relations at Clark University, points out that the protest numbers are quite small compared with Walmart’s global workforce. "You're not seeing two million workers joining the movement,” he tells GoLocalWorcester. “Many are just happy to have their job."

The protests, according to Chaison, show that unions ‘‘still can appeal to and speak for workers who are on the fringes of the workforce — the less skilled, the part-timers, and the immigrant workers.” Much of this labor force comprises the 11.5 million – officially, at least - people who are unemployed nationwide, which is nearly double the number prior to the Great Recession.

The pay that Walmart’s Mass. workers receive is quite comparable to the rest of the country, according to Chaison. “The argument that’s been made against Walmart in terms of low pay doesn’t really stand up very well because Walmart tends to have very low pay for entry-level workers,” he says. “But those workers quickly advance to more moderate levels of pay.”

Chaison think Walmart is getting “generally a bad rap.” That, he adds, is because the retail chain “provides something that most people don’t find in alternative types of employment, and that is part-time or temporary jobs. … And the only other alternative is fast-food places. So to some degree, they provide alternative employment for people who might not otherwise be employed.” Walmart also provides affordable shopping outlets, he adds, “for people who can buy things that they would not otherwise be able to pay [for] because Walmart prices tend to be low.” This, he says, enables lower-income consumers, including those who work at Walmart, to make purchases they couldn’t otherwise afford, such as appliances, which “really increases their standard of living.”

Chaison thinks that if a large enough number of Walmart workers felt strongly enough that they were being mistreated, the living-wage protest lines outside Walmart stores “would be much larger.” If Walmart and other big-box retailers are forced to pay living wages to their workers, he notes, either consumers would subsidize the added cost or the chains’ bottom lines would need to shrink. And that latter effect, he says, “might affect their stocks, which are held by a lot of pensioners.”

Still, Chaison says the idea that “no worker in America should be employed and still be below the poverty level makes a lot of sense.” But that needs to be addressed as a national public-policy issue, he acknowledges, instead of beating up on Walmart.

“Walmart is the company that everyone loves to hate,” Chaison says. “The reason that it’s such a convenient punching bag is that the dislike of Walmart is so broadly shared by people who are against globalization for whatever reason, and by people who see [Walmart] as a major non-union employer and think it should be unionized, and by people who believe that Walmart destroys downtowns and small villages.” In the end, Chaison says, “all power lies in the hands of the consumer,” who continue to shop at Walmart.

Grace Ross, a Worcester-based community organizer and founder of The Grace Team, is a former board member of the Mass. chapter of Jobs With Justice. She works closely with that chapter, which is organizing ChangeWalmartMA and has yet to respond to GoLocalWorcester’s requests for an interview.

Ross, a GoLocalWorcester MINDSETTER, welcomes Walmart to join the fight for a national public policy that guarantees a living wage for all working Americans. “I don’t think anybody would oppose Walmart joining forces with the rest of us to create a decent floor for wages in this country,” she says.

That said, Ross doesn’t expect Walmart to take up that challenge any time soon. After the retail chain got a since-expired break on Mass. taxes several years ago, she recalls, it hired lobbyists to kill an expansion of the tax break to other Bay State industries.

“When Walmart’s been approached about making an industry-wide change that would be fairer, they’ve opted to be on the other side,” Ross says. “I think it’s their opportunity to step forward for once and say, ‘Yes, we’re going to work with people to fix an industry- or market-wide problem.'” (See today’s MINDSETTER by Ross on Walmart and one woman's story.)

A thinly spread workforce

Walmart could be paying a price for the way it runs its business. Witness a March article in Bloomberg Businessweek, Walmart Faces the Cost of Cost-Cutting: Empty Shelves.

“Wal-Mart Stores … has been cutting staff since the recession—and pallets of merchandise are piling up in its stockrooms as shelves go unfilled,” the article reported. In the past five years, the article noted, the world’s largest retailer added 455 U.S. Walmart stores, a 13 percent increase, according to company filings last January. In the same period, Walmart’s total U.S. workforce, which includes employees at its Sam’s Club warehouse stores, dropped by about 20,000, or 1.4 percent.

“A thinly spread workforce has other consequences,” the article continued, “including longer checkout lines, less help throughout the store, and disorganization.” In February, the article noted, Walmart placed last among department and discount stores in the annual American Customer Satisfaction Index, the sixth year in a row the company has either tied or taken the last spot. “The dwindling level of customer service,” the article reports, “comes as Walmart has touted its in-store experience to lure financially strained shoppers and to counter the threat from online rivals such as Amazon.com.”

Chaison, of Clark University, agrees that “there’s some level of dissatisfaction among customers at Walmart. I think Walmart’s problem is that they’ve just been expanding so fast that they’ve had trouble controlling the process.” Together, Walmart and Sam’s Club have experienced explosive U.S. growth in recent decades, as depicted in a 2010 FlowingData presentation.

“Let’s face it,” Chaison says, “if Walmart was an operation that had three stores, all of its [stores’ performance] figures would be a lot better.”

Steven Jones-D'Agostino is chief pilot of Best Rate of Climb: Marketing, Public Relations, Social Media and Radio Production. Follow him on Twitter @SteveRDAgostino.