Walmart is set to raise wages for a half million employees nationwide, but experts say the biggest impact will be in states like Ohio, where the job market is dominated by low-wage workers who typically spend any new-found earnings.
“What we know from several studies about consumption among low-wage workers is that every dollar that goes into the pockets of these workers goes back into the economy and that added consumption usually has a positive impact on he economy in terms of consumer demand and job growth,” said Yannet Lathrop, a researcher and policy analyst at the National Employment Law Project.
Walmart last week announced a bump to at least $9 an hour for all of its U.S. workers in April and $10 an hour by next February. The company couldn’t say how many of 46,974 Ohio employees will benefit from the pay raises.
The retailer operates 139 Walmart supercenters, seven discount stores and 29 Sam’s Club warehouse stores in Ohio — making it the biggest single private employer in the state.
Full-time regular employees earn an average of about $13 an hour in Ohio, according to the company, but many earn much less than that and don’t have the capacity to save like higher income workers.
Dayton resident Kelly Sallee, 22, makes $8.15 an hour at the Walmart supercenter on York Commons Boulevard in Butler Twp. She said she lives paycheck-to-paycheck in a small apartment with her fiancee, who also earns minimum wage working at the Dayton Mall.
A pay increase might help the couple put away a little money for a used car, “so we don’t have to take the bus to work,” but their remaining income will go toward paying bills and putting food on the table, Sallee said.
In the future, the couple would like to start a family. But even with an eventual pay raise to $10 an hour, Sallee said she’ll have to keep her maternal instincts in check.
“I do want to start a family, and this will help a little bit, but it’s still not enough to raise a family on,” she said. “In the long run, we have to keep fighting.”
Sallee walked picket lines outside local Walmart stores last November, joining hundreds of employees across the country who held rallies and marches pushing for a pay hike to $15 an hour. She rejects the notion that people in entry level jobs shouldn’t expect a wage they can live on.
“A lot of people say this job isn’t intended to raise a family on, but a lot of people don’t have a choice,” Sallee said. “Not everyone can afford to go to school, or they can’t go to school to get a better job because they already have a family. I still think those people have a right to make enough money so they don’t need help from the government.”
Sallee is not alone: Six in 10 Americans favor a higher minimum wage, according to poll results this week from the Associated Press and GfK Public Affairs.
The survey results carry extra weight in Ohio, which ranked 21st last year among states with the highest percentage of jobs with median annual pay below the federal poverty level, or about $23,283 for a family of four, according to a recent report from the national Committee for Economic Development.
More than a quarter (27.5 percent) of jobs in Ohio are in low-wage occupations, CED found.
Still, 39-year-old Stan Miller, a store manager at the Walmart supercenter in Franklin, said he’s living proof that starting in a low-wage, entry level job can help workers acquire the job skills necessary to advance their careers.
Miller began working for Walmart 17 years ago, earning $5.25 and hour, and now he’s now making a comfortable living with a company that he says makes its employees its top priority, despite widespread criticism of its labor practices.
“I started putting potting soil in people’s cars, that was my first job, but Walmart provided me with the stepping stones to be able to get to where I am today,” he said. Raising the minimum wage “is an example of how our company wants to provide our associates with an opportunity to advance their careers and do more.”
Dennis Sullivan, a Miami University economics professor who teaches classes on poverty and income distribution, said Walmart’s decision to raise wages probably has less to do with its dedication to its employees than labor market forces that compel employers to pay more to attract and retain the best workers.
“What this shows is that the labor market is starting to get tight enough so that the big retailers are starting to ask whether they can hold onto productive employees without raising their wages,” Sullivan said. “In general, you want to pay a wage which sees to it that people are grateful for their jobs and not looking for another one.”
Walmart said its new compensation model ensures that every hourly employee will earn at least $1.75 above the federal minimum wage in April.
“These changes will give our U.S. associates the opportunity to earn higher pay and advance in their careers,” Doug McMillon, Walmart’s president and CEO, said in a news release. “The investment in these initiatives is more than $1 billion for this fiscal year.”
But while Walmart may have sweetened the pot for some workers, not everyone will reap the same reward, Sullivan said.
“Earnings are wages times hours, not just wages, and Walmart, like a number of other employers, are really starting to rethink their hours policies,” he said, noting that Walmart and other retailers have become more reliant on part-time workers.
“If you used to get $8 an hour for 40 hours, making $320 a week, and now you get $9 an hour for 30 hours, making making $270 a week, you’ll have to remind me how that’s a pay increase,” Sullivan said.
Still, Walmart has taken a step in the right direction, according to Lathrop, who said the company has added more pressure on Congress to raise the federal minimum wage, which hasn’t increased since 2009.
President Barack Obama’s call to raise the minimum to $10.10 an hour has been stalled in Congress for more than a year. Republican lawmakers and certain business associations have opposed a federal wage hike, which they say would lead employers to cut workers and reduce hours.
But 29 states and the District of Columbia have already boosted their minimum wages above the $7.25 federal standard. In Ohio, the minimum hourly wage increased by 15 cents to $8.10 this year.
“What Walmart has done means that lawmakers and the U.S. Congress may have to go bolder and ask for an even higher wage (than President Obama has proposed), if there’s going to be another minimum wage bill introduced in Congress,” Lathrop said.