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Guess how much more mac and cheese would cost at Walmart if they paid their employees a living wage

Apr 7, 2014 By Abraham 9

On average, 40 employees at a Walmart store use food stamps. Then guess where they spend them?

Yep, Walmart.

This video shows how Walmart is “the single biggest beneficiary of the food stamp economy” and then shows how it would cost them virtually nothing to change this and instead pay all their employees enough that none of them qualify for food stamps. In the process, taxpayers would save $300 million every year.

If they did this, taking Mac and Cheese as an example product, guess how much prices would increase for Walmart shoppers…

Will they do this? Of course not. But the number crunching and ensuing indignation is still fascinating…

9 Comments

  1. Devin says:

    Or we could turn this around a little and say that if the government killed its food-stamp program, employers like Walmart would have to raise their prices that 1.4%, unless they wanted their workforce to starve.

    These days, welfare programs like food stamps present a moral hazard more than a safety net, imo.

  2. marguerite cottrell says:

    this is not about the price of goods.

    this example only pushes that single mother up to 23000 a year?!? so now she can’t afford living and she has no food stamps.

    a living wage is the only way to be.

  3. Ted Males says:

    Well with that raise, the woman working the register would lose her free phone, free day care, free housing assistance, free power, and probably even more. SO……. she would quit her higher paying job to get even more in government handouts. Then tell me how this helps the tax payer?

  4. Norm from GA says:

    Guess how much the cost of an iPhone would go up if Apple made them here rather overseas? Probably proportionately less than that box of macaroni. Bring back some industrial jobs and kids (and adults) wouldn’t be stuck in such low-paying retail jobs.

  5. Earl Rodd says:

    Ultimately, the answer to this is that anyone is free to start your OWN business that pays a living wage since you are so certain that it will only raise prices by so little it won’t matter! Or all those who believe this can band together and buy enough WalMart stock to change their policy (of course the stock value will then drop). If WalMart thought it could raise wages without the cost causing price rises that would lose significant business to competitors, they WOULD DO IT because of A) the PR benefits and B) the ability to attract higher quality, more loyal workers. Of course, this is all part of a very large discussion about the huge difference in some perceived value between highly paid people and low paid ones and how we as a culture should cope with it. Generally, simplistic policies based on poor economics serve to make everyone poorer – it is much easier to make everyone poor than well off. This is a very serious question deserving of (and receiving in some quarters) very serious discussion and searching for good ideas.

  6. Timmy says:

    The people who advocate a “livable wage” do not understand markets. If eliminating poverty were as easy as waving a magic wand and arbitrarily saying “$14/hr is now the livable minimum wage,” then we could do it. People are, and should be, paid for the value they add to a company. A cashier does not add $14/hr worth of value to Walmart. I’m sorry, that may be painful to hear. Have you considered that raising the minimum wage to a high value might make automation more attractive? You simultaneously demand a higher wage and for outsourcing to stop. You can’t have it both ways.

  7. Kat says:

    Timmy I truly hope one of those days that “undeserving” Walmart employee smacks you in a head with the next crap you buy. Everyone adds value to the company,from the janitor up to the CEO and those who don’t can simply be fired and replaced. Truth is most retail companies don”t give a crap about their workers. They’d rather keep hiring and letting go of people in 3 months than give more hours to their best staff,because that means giving them what they pride themselves in so much like the benefits. Interesting ,when you read the “about” about certain companies and how great it is to work there for the added dental or other benefit but then they do everything they can to make sure you don’t qualify for it by giving you minimum hours. I have been a #1 employee for 8 yrs,with outstanding job performance, tried numerous times get benefits,they kept making excuses every time until I finally got fed up and left. That’s exactly how this side of the fence works. Raising minimum wage would be beneficial to everyone but the owners…because let’s be honest here,everyone needs that extra large boat docked at their private island.

  8. Timmy says:

    Kat, you say a lot of things that would be useful if they were based in the numbers. First of all, let’s clear up one thing: “Underserving” was never an adjective I used to describe anyone, so typing it as though you are quoting me is inaccurate. If you wrote it that way because you interpreted my post that way, you ought to go back and read what I wrote.

    Going back to your points: You illustrate my point perfectly that advocates of an arbitrarily high minimum wage don’t understand markets. Yes, everyone (theoretically) adds value to a company, but not every employee adds value equally. Let’s look at two cases. 1) Assume that, by being efficient, cheerful, and hard working, a cashier can add roughly $15 to the bottom line of a company for every hour he/she works. This is assuming that replacing that employee with a machine would cost slightly more (it currently does), and assuming there is a reasonably low cap to the value a cashier adds (which there is). If our society decides that $10/hr is “unlivable” and arbitrarily raises the minimum wage to a high number, such as say $18/hr, which is a number I’ve heard thrown around plenty, then for every hour our hard-working employee is on the clock, the company loses $3. The company now has an incentive to replace our hard-working employee either with a harder-working employee, with a machine, or by eliminating the position altogether. If you think a cashier can bring in more than $18 of gross profit per hour, you are kidding yourself.

    Now, for case 2. Let’s look at the CEO, that big bad boss who is screwing the little people for his extra yacht. That’s what he’s doing, right? Wrong. Let’s take a look at the numbers, shall we? Since we all like Walmart so much, let’s stick with that example. Michael Duke, the CEO of Walmart, earns a salary of $20 million. Walmart employs roughly 2.1 million people. If Mr. Duke were to work for free from today on and spread his wage equally among his employees, his salary would contribute a whopping $9.52 per YEAR to the wage of each employee. Now, consider the VALUE that a good CEO adds to a corporation. Don’t be fooled, it is ridiculously hard to run a company the size of Walmart. A good CEO can manage the complexities such a corporation faces and help it grow and stay healthy over time. A bad CEO will run his company into the ground, ala Circuit City, Blockbuster, etc, in which case the wage of our hard-working cashier goes to 0. So, I suppose you can consider that $9.52/year a cheap insurance that you will continue to have a job in the future.

    One more look at the numbers. Sticking with Walmart: The net profit for this company was $15.2 billion in 2012. If you assume that all but the top 10% of employees were earning minimum wage (approximated at $10/hr), and you wanted to bump that wage to $18/hr, as has been suggested, you would increase the wage costs to Walmart by $31.6 billion, and the net profit in 2012 would have been -$16.4 billion. Walmart would be forced to either close its doors or jack up prices, as illustrated in the above video.

    Believe it or not, markets work pretty well. Cashiers are paid what they are worth. If a cashier can be paid more elsewhere, there is nothing stopping them from doing so, as you illustrated so well with your own story. The bad guy here is not the big bad executives, but the jealous employees that would, by their own greed, bankrupt a company with unreasonable demands. Think about that, Kat.

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