Don't be soothed by Walmart pay hike

Story highlights

  • Yannet Lathrop: Walmart announced it's raising base wage to $10/hour for its 500,000 workers -- a good step, but not enough
  • She says workers wanted $15 and full-time opportunities. Other companies do this; workers must keep pushing Walmart

Yannet Lathrop is a policy analyst and researcher at the National Employment Law Project, a nonprofit organization that tackles issues affecting low-wage and unemployed workers and advocates for more economic opportunities.

(CNN)It may have seemed a herculean task, but retail workers have just scored an unprecedented win against a retail giant.

Walmart, the nation's largest private employer, announced last week that it will raise the wages of approximately 500,000 of its employees by lifting its base wage to $10 by 2016 for current workers (and to the same rate for new hires after six months training).
It's a step in the right direction, but not enough.
    To be sure, Walmart's announcement is an impressive development in the fight for better wages, not only because the retail powerhouse has earned a reputation for paying some of the lowest wages in the industry, but most importantly, because it was forced to make the change by its own workers.
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    Over the past several years, Walmart employees -- united under the banner of OUR Walmart -- have engaged in protests and advocacy to press the retailer to improve compensation and working conditions in its more than 5,100 stores nationwide. These workers have held rallies, demanded to speak at shareholders meetings, and reached out to elected leaders and the general public. Their efforts are now starting to pay off, and no doubt, Walmart workers' success will serve as an inspiration to millions of other low-wage workers nationwide, making similar demands in the retail, restaurant and health care industries.
    But the fight is not quite over.
    Walmart's announcement falls short of what its workers are demanding: a minimum base wage of $15 per hour, the opportunity to work full-time for those who want it, predictability in their work schedules, and respect and dignity in workplaces.
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    Walmart can afford to do much better than an increase to a meager $10 per hour. In fiscal years 2014 and 2015, the company posted $16 billion or more in profits and returned between $7 billion and $13 billion to its shareholders. The Waltons, owners of Walmart, are worth $150 billion, which is more than the wealth of the entire bottom 40% of Americans.
    Walmart's owners, shareholders and executives have the hard work of its 1.3 million employees to thank for their incredible fortune.
    The company's announcement hardly qualifies the retailer as a leader among its peers. A leading retail competitor, Costco, pays its employees a starting wage closer to $12 and an average wage of $21. Amazon also has a starting wage between $10 and $12, up to 20% higher than Walmart's newly increased wage.
    Insurance giant, Aetna, recently announced it will increase its base wage to $16 this April. A strong majority of small business owners support raising the minimum wage, and some already pay their employees substantially more than Walmart's new offer -- such as Detroit's Moo Cluck Moo, a burger restaurant chain whose workers earn $15 an hour.
    Walmart's new wages also fall significantly short of what the general public demands. According to a January 2015 poll conducted by Hart Research Associates for the National Employment Law Project, in a representative national sample of 1,002 adults, three in four Americans, including 53% of Republicans, support raising the federal minimum wage to $12.50, and 63% want the minimum wage increased to $15 per hour by 2020.
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    This is because Americans understand that every additional penny that goes into the pockets of low-wage workers is invested back into the economy right away to pay for basic necessities, such as groceries, medicine, gas and transportation costs, resulting in a ripple effect that benefits the economy, boosts consumer demand and creates new jobs.
    In its announcement, Walmart's executives seemed to acknowledge as much, crediting the public's increased spending power for the company's success in fiscal year 2015 and stating that more work remains to be done to grow its business and bottom line.
    Walmart would be wise to include a substantially higher pay raise for its workers as a key part of its growth plans for the next few years. Until they do, Walmart workers will keep up their fight -- emboldened by a major breakthrough that few thought was possible.