My eagle-eyed editor spotted an article in the December issue of The Atlantic entitled The Walmart Effect. Having written three blogs on Walmart early in the life of The Quixotic Deacon, I was naturally interested in the article. If you’d like to read it before reading my reaction, here’s the link.

 

https://www.theatlantic.com/ideas/archive/2024/12/walmart-prices-poverty-economy/681122/

 

The blogs I wrote in August, September, and October of 2017* focused on the role Walmart plays in the scourge of income inequality, rampant in America. I wrote about Walmart’s split corporate personality. On the one hand, there’s Walmart the retail juggernaut, which has created fabulous wealth for its owners and top managers. On the other, there’s Walmart the tight-fisted employer that pays its laborers wages best described as miserly. 

 

Walmart exemplifies how some mega-corporations have generated enormous profits in an era of “unrestrained capitalism,” a term for the sickness afflicting many of the world’s so-called “advanced” economies, including America’s. A simpler word is greed.

 

One of my 2017 blogs mentioned the late Peter John Gomes, a renowned theologian at Harvard Divinity School. Years ago Gomes declared that unrestrained capitalism was causing acute suffering for the laborers whose hard work created huge wealth for fat cats who ran big corporations. Gomes was neither a revolutionary nor a bleeding-heart liberal. In fact, he was a Republican for much of his life. But he believed and preached that unrestrained capitalism was incompatible with the Gospel of Jesus Christ. 

 

Gomes’ teachings prompted me to pose a question in one of my 2017 blogs: What would Jesus say about unrestrained capitalism? What would He say to the 15 men and women  who are members of Walmart’s board and its 5 highest paid officers. They collectively earned $56,377,000 back in 2016 while their 1.2 million workers lived on subsistence wages? 

 

I also asked what Jesus might say to Walmart’s then-plutocrat in chief, CEO Douglas McMillon, and suggested it might be something like this:  Mr. McMillon, in the year ended Jan. 31, 2017, you earned more than $22,000,000 while the average pay for a Walmart full-time hourly employee was $27,830. Is it fair for you to make 790 times what your average full-time employee earns in the same time period? Is an hour of your time worth 790 times as much as the man or woman stacking shelves in a Walmart store? 

 

I wondered too what Jesus would say to S. Robson Walton, son of Walmart founder Sam Walton and a former board chairman. Maybe this: Rob, Forbes magazine has reported that your personal net worth is about $38.3 billion. Your family owns about half of all Walmart shares and receives some $5 billion a year in dividends. Your family is the richest family in the U.S. and one of the richest in the world. On top of your income from Walmart dividends, your seat on the board paid you $268,978 in fiscal 2017. Have you ever considered sacrificing some of your Walmart dividends or your board fees to increase wages for Walmart workers? 

 

Finally, I commented on a $20 billion stock buyback McMillon announced in a conference call with stock analysts. Yes, $20 BILLION. It meant that Walmart planned to buy blocks of its own stock on the open market until it had $20 billion worth. Doing so would reduce the number of outstanding shares, thereby increasing earnings per share for remaining shareholders. Who benefits? Shareholders do, because higher earnings per share mean higher dividends, apart from the increase in the price of Walmart stock that the buyback will cause. Since the Walton family owns half the company’s shares, it is the biggest beneficiary of a buyback. 

 

That was the picture I painted 7 years ago when I criticized Walmart’s top management, its board, and its controlling shareholders — the Walton family. What’s changed since then? The Atlantic article prompted me to find out. 

 

Overall in the US, the Covid pandemic had forced wages up for many companies’ hourly workers. Companies were short-staffed so they had to offer better pay and benefits to attract replacement workers. Also, income inequality was getting more coverage in the press and more attention from progressive politicians. I thought those developments might lead to improved pay and benefits for Walmart employees. 

 

Here’s what I found: 

 

• The average full-time Walmart employee earns about $36,400 annually, pre-tax.
• However, half of Walmart’s employees work part-time. They earn roughly between $17,000 and $20,000 annually. Full-time is defined as 32 hours per week.
• Both of those averages are higher than in 2017, when workers’ earnings averaged $27,830 and $13,225, respectively. So Walmart has raised wages measurably since 2017.
• But today’s wages still keep the average family of four living from hand to mouth.

         

Sources: Walmart corporate reports that hourly associates now average 17.50 per hour. According to Payscale.com on December 4, 2024, the average was 14.93 per hour. I have chosen to use Walmart’s number to give them the benefit of the doubt since I cannot explain why the two reports are so different. 

 

By contrast, Walmart’s board members, top executives, and major shareholders are doing quite well: 

• The top 6 highest-paid executives earned a total of $96.7 million in fiscal year 2024. On average, they earned 492 times what Walmart’s average wage earner earned..
• McMillon, the CEO, earned $27 million, 830 times what the average wage earner got. 
• Members of Walmart’s board of directors, whose part-time work might include 4 to 6 meetings a year, earned between $300,000 and $525,000. That’s 10 to 16 times what the average wage earner was paid for a fraction of hours worked.
• Meanwhile, the Walton family reaped a windfall of more than $150 billion, mostly resulting from the stock’s increased value and higher dividends that followed a second stock buyback  — this time a $20 billion buyback announced in 2022. Walmart workers got zilch from the bonanza unless they happened to be Walmart shareholders. 

 

Let me sum it up. In the last 7 years wages for the average Walmart employee have increased. Yes, Walmart has kept up with national trends in post-Covid wages. But Walmart’s non-management employees still don’t make enough money to save, take vacations or retire at 65. They have to keep working and living close to the bone while the company’s leaders pile up fantastic wealth. 

 

It’s been said that Walmart’s low-wage policy enables the company to pass on savings to its customers, who like its employees, are often the working poor. The rationale is that the greater good is served by giving everyone low prices while holding down wages for its employees. The article from The Atlantic punches holes in this argument..

 

It references two studies whose authors concluded that in the 10 years following the opening of a Walmart Supercenter in a given community, the average household in that community experienced a 6 percent drop in yearly income. Savings from lower prices were dwarfed by the loss of income to the average household. Having Walmart as the dominant employer in a town drives down incomes by more than the savings from its low prices, according to the study. 

 

The Atlantic article explains why the findings are plausible. Among the reasons: Walmart sources between 60 and 80 percent of the goods it sells from China. As a survivor of the demise of the US textile industry, I can testify that Walmart effectively put an end to US textile manufacturing early in this century. It put all of the industry’s important programs out to bid at reverse auctions in Shanghai in early 2005 after textile quotas expired. US textile workers became redundant — tens of thousands of people who lived throughout the South could not, by and large, find new jobs with comparable pay and benefits. Many towns were hollowed out by this phenomenon, usually referred to as globalization. Walmart was not the only retailer who drastically shifted sourcing to China but it led that charge and its owners have reaped mega-billions in rewards as a result. 

 

If you’re a fan of pure, unrestrained capitalism, Walmart may seem to be just another success story — a great American saga of “bootstrapism” (made up word) that describes how Sam Walton and his family grew a single store that opened in 1962 in a small Arkansas town into a sprawling multi-national enterprise providing jobs to over a million people. If you look deeper, though, there’s a different story, one in which Walmart exemplifies a version of capitalism that grossly skews who benefits from a company’s success.

.

* My 2017 blogs are archived in The Quixotic Deacon website – www.thequixoticdeacon.com.

• Top