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Wal-Mart's Wages Increase in China, Rollback in US

Instead of perpetuating a cycle of poverty among its workers, it's time Wal-Mart consider a meaningful wage increase for its U.S. employees who are struggling to make ends.
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Wal-Mart is raising wages for its employees -- in China, that is. Yes, the labor union representing Wal-Mart's Chinese workforce won yet another fight against Wal-Mart, successfully negotiating for an 8 percent raise for 2008 and 2009 as well as setting terms for paid vacation, social security, and overtime. This comes at a time when China's economy is booming, and demands for higher wages and better benefits are being pushed by none other than the Chinese government. Meanwhile, as the U.S. economy falters and Wal-Mart benefits, Wal-Mart's U.S. hourly workers are experiencing nothing short of a wage "rollback."

Sadly, wages for the average hourly U.S. Wal-Mart employee have actually fallen when adjusted for inflation. In 2004, Wal-Mart reported an average (Wal-Mart refuses to disclose a median wage which would provide a more accurate picture of wages at the company) hourly wage of $9.68. In 2008, the reported wage is $10.86. But in 2004 dollars, the average hourly wage is $9.55, which means workers are worse off today than they were four years ago. So, while the price of gas, food and health care are rising, Wal-Mart employees' wages are falling.

Even when not accounting for inflation, Wal-Mart's "average" disclosed hourly wage puts a family of four below the federal poverty line. In light of the fact that "full-time" work for Wal-Mart employees is often 34 hours a week, this means the "average" hourly worker earns only about $19,200 annually. Plus, starting wages at the company's stores are often much lower than the "average hourly wage."

So, it is no wonder that Wal-Mart employees top the public assistance rolls for Medicaid, SCHIP and other programs. But instead of actually raising wages to help employees lift themselves out of poverty, Wal-Mart chooses to get credit for telling them about how to get more government assistance. Case in point, just a few weeks ago, Wal-Mart came out in support of legislation that would require large employers to notify their employees about the availability of the Earned Income Tax Credit. Wal-Mart would never disclose how many of its employees likely qualify for this poverty-alleviating tax option, but given Wal-Mart's low wages, it is likely to be a sizeable number.

This is all happening in the context of an American economy that continues to decline while Wal-Mart's revenue continues to rise higher than ever. The company was again crowned the largest company in the world by Forbes, and has continued to outperform its retail competitors as shoppers trade down. The Walton family -- who control 43% of Wal-Mart stock through the Helen Walton Family Group -- earned close to $29 billion just on the increase in Wal-Mart stock prices during the previous seven months (November 2007 to June 2008) alone. The relationship between the Walton family and Wal-Mart workers is a stark example of the old adage that while the rich get richer, the poor get poorer.

We don't begrudge Wal-Mart raising wages at its stores in China (the employees there certainly need it) and it's also appropriate for the company to inform its employees about issues such as the Earned Income Tax Credit. But the company's U.S. employees need higher wages now more than ever.

Instead of perpetuating a cycle of poverty among its workers with a low wage, poor benefit business model, it is time Wal-Mart consider a meaningful wage increase for its hourly U.S. employees who are struggling just to make ends meet for their families. Wal-Mart can and should do better for its 1.4 million U.S. workers.

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