Cost of Raising Big-Box Retail Wages: 30 Cent Tip from Each Shopper

I don't make a lot of money teaching in South Dakota. But at least I'm not working for big retail. According to the 2011 Wage Study by the Governor's Office of Economic Development, the average annual wage for a cashier in South Dakota is $18,366, less than half what I make for my classroom ministrations. Retail salespersons average $21,507.

Both of those South Dakota averages are within $500 of the national averages for those jobs; neither is enough to support a family. This Demos analysis considers what would happen if Walmart and other big retailers employing more than 1,000 people raised their lowest-paid workers' salaries to a measly $25,000 a year:

1. 734,000 people would get out of poverty.
2. The extra money those workers would have to spend (and, as we know from the stimulatory effect of unemployment benefits, lower-income people spend their money) would create 100,000 to 132,000 new jobs.
3. That spending would goose the economy by $11.8 billion to $15.2 billion.

That wage increase would cost $20.8 billion. Could retailers afford that?

1. Big retailer sales total $2.17 trillion each year. $20.8 billion is 1% of total sales.
2. The retailers boosting employee pay would see their own sales bounce $4 billion to $5 billion. That's 20% to 25% of the raise right there.
3. The ten largest retailers spent $24.8 billion on stock buybacks in 2011. Stock buybacks don't boost productivity or economic growth; wage increases do.
4. Retailers could pass the entire cost on to shoppers. Each of us would pay 30 cents more on each trip to Walmart, or about $35 a year.

So imagine: if each of us tipped one Walmart worker a quarter and a nickel each time we dropped by the big box, we'd get 734,000 people out of poverty. For a lot of shoppers, that's one penny on each item in the basket.

Walmart, we can afford that. Raise those wages!