Wal-Mart Chief Says Customers Need Increase in Minimum Wage
Wednesday, October 26, 2005
Wal-Mart Stores Inc. chief executive H. Lee Scott Jr. called on Congress to raise the country's minimum wage from $5.15 an hour, saying the company's customers are "struggling to get by."
Scott, head of the world's largest retailer, which has been criticized for paying low wages, providing few health care benefits and causing the demise of small businesses across the country, ticked off a list of changes he said the company plans to make and called for a higher minimum wage in a speech to directors and executives Monday.
"We have seen an increase in spending on the 1st and 15th of each month and less spending at the end of the month, letting us know that our customers simply don't have the money to buy basic necessities between paychecks," Scott said in his speech, a transcript of which was released yesterday. Scott also said the company wants to reduce energy use by its stores by 30 percent.
Some of the proposed initiatives, including a new health care option for employees with lower premiums but high out-of-pocket costs, were met with skepticism.
"It's obviously time to raise the minimum wage. I'm a big advocate of it. I'm always looking for allies. I'm mindful that eventually even the Gingrich Congress got behind the last minimum wage," said Jared Bernstein, senior economist at the Economic Policy Institute. "That said, there is some pretty serious posturing going on here. . . . One can't help but think if they want people to have more money, how about paying your workers more?"
Bernstein noted that Wal-Mart workers on average are paid slightly above minimum wage. But, he said, there are "certainly lots of workers" at the company that remain "in dead-end, minimum-wage jobs."
Scott emphasized that he was calling for the improvement in wages for workers who are his customers and said the company could not change its own wage structure because of tough competition. "Even slight overall adjustments to wages eliminate our thin profit margin," he said. "Because we are so big, people forget that we have to compete." He called on those who criticize the company's pay, saying "we almost always pay better, but that is also often overlooked or ignored in the public debate about Wal-Mart." According to Wal-Mart, full-time workers, who are about three-quarters of the workforce, are paid an average of $9.68 an hour. A spokeswoman said that all of the company's workers start at above the minimum wage.
Some supporters of increasing the minimum wage embraced Scott's statement. Sen. Charles E. Schumer (D-N.Y.), a member of the Senate Finance Committee, released a statement saying, "If Wal-Mart can push for an increased minimum wage, so can the House and Senate leadership."
Sen. Edward M. Kennedy (D-Mass.), said in a statement, "If the CEO of Wal-Mart can call for an increase in the minimum wage, the Republicans should follow suit on behalf of the millions of working men and women living in poverty."