Robert Reich cites the weakening of labor unions as a major reason for the decline in the wages of today's workers, who are unable to collectively press for more compensation. He writes that while Walmart made $16 billion last year, its average employee earns $8.81 an hour and one third don't receive benefits since they work less than 28 hours per week. Reich considers the implications of Walmart workers planning a walkout on Black Friday. Since Walmart sets the standard for pay and working conditions among big box retailers, the consequences of labor organizing there could be considerable. Ultimately, the more workers earn, the more they're able to purchase, which also benefits retailers like Walmart. Reich makes a common-sense appeal for demand-side economics:
Consumer spending is 70 percent of economic activity, but consumers are also workers. And as income and wealth continue to concentrate at the top, and the median wage continues to drop – it’s now 8 percent lower than it was in 2000 – a growing portion of the American workforce lacks the purchasing power to get the economy back to speed. Without a vibrant and growing middle class, Walmart itself won’t have the customers it needs.
Most new jobs in America are in personal services like retail, with low pay and bad hours. According to the Bureau of Labor and Statistics, the average full-time retail worker earns between $18,000 and $21,000 per year.
But if retail workers got a raise, would consumers have to pay higher prices to make up for it? A new study by the think tank Demos reports that raising the salary of all full-time workers at large retailers to $25,000 per year would lift more than 700,000 people out of poverty, at a cost of only a 1 percent price increase for customers.
And, in the end, retailers would benefit. According to the study, the cost of the wage increases to major retailers would be $20.8 billion — about one percent of the sector’s $2.17 trillion in total annual sales. But the study also estimates the increased purchasing power of lower-wage workers as a result of the pay raises would generate $4 billion to $5 billion in additional retail sales.
This seems like a good deal all around.