Letter to Walmart President and CEO

Michael Terry Duke
President and CEO, Walmart Stores, Inc.
Walmart Home Office
702 SW 8^th Street
Bentonville, Arkansas 72716-8611

July 15, 2013

Dear Mr. Duke,

In early June, the Wall Street Journal reported that Walmart had announced at its annual shareholder meeting a plan to buy back $15 billion of its stock. Bloomberg reported recently that in the previous four fiscal years, Walmart has bought back $36 billion of its stock.

Assuming Walmart buys back its stock at a similar pace as what it has done over the past four years, you will have bought back a total of $51 billion in 5 years and 8 months. That is an average of $9 billion of stock bought back per year. By the time the current buyback plan is completed, will this really have been the best use of about $51 billion?

According to your website, Walmart employs about 1.3 million ‘associates’ in the United States alone. Instead of spending this huge amount of money on buying back stock, had you chosen to use this money to pay your low-wage hourly workers a more respectable wage, you could have given each one of your 1.3 million U.S. associates an annual raise of nearly $7,000. Assuming, conservatively¹, that each of these associates work 52 40-hour work weeks per year, this would amount to a raise of over $3.30 per hour. This would give each and every one of your employees a raise to the minimum wage floor of $10.50 per hour I have asked you in previous letters to consider for your workers.

Instead of focusing these billions of dollars solely on a buyback program to enrich your shareholders, including the immensely wealthy Walton family which owns over 50 % of company stock, you should give your associates being paid poverty wages a raise to $10.50 per hour. This would not only provide a benefit to your employees, but also the company – and its shareholders. I have detailed in previous letters how Walmart stands to gain from paying its employees higher hourly wages, but to quickly reiterate a few:

• Higher wages lead to improved employee satisfaction, and thus, less employee turnover. Less employee turnover means less money spent on recruitment, hiring, and retention.
• Studies have shown that every dollar increase in the wage of a minimum wage worker results in $2,800 more spending from that consumer’s household over a year; some of which would be spent in Walmart’s stores.
• Studies have shown that increasing the federal minimum wage above $10 per hour would increase consumer spending by as much as $30 billion in the first year. The Economic Policy Institute has estimated that raising the minimum wage would add 140,000 net jobs. By raising your stores’ minimum wages, Walmart can lead the way in this effort. Stimulating the economy is good not just for Walmart, but for the country as a whole.
• In previous letters, I have emphasized how little impact raising your employees’ wages could have on your prices. A study from UC Berkeley’s Center for Labor Research and Education has shown that raising your wage floor to $10 per hour would add just $0.11 per trip for your average customer. But if you used the money you have been, and will use on your share buyback program on increasing your employees’ wages, you needn’t even consider increasing your prices.

In other countries where Walmart operates, like Canada and the United Kingdom, you provide your employees with far greater benefits than you do in the United States. In Canada, Walmart pays minimum wages above $10 per hour in every province except Alberta. In the United Kingdom as of October of this year, Walmart will pay a minimum wage above $9.50 per hour.

On top of these higher wages, Walmart’s operations in these countries are required to provide greater benefits than in the United States. Workers in Canada are guaranteed two weeks of paid vacation. In the United Kingdom, workers are guaranteed 28 days of paid leave, or five and a half weeks. Even part-time workers are guaranteed paid leave in the U.K. (5.6 times the number of days per week they work). The United Kingdom also requires maternity leave and pay as well as paid sick leave. Not to mention both countries provide their citizens with universal healthcare. These higher wages and required employee benefits aren’t stopping you from operating in these countries and bringing in profits; so what is stopping you from doing just one of these things in the U.S. and raising your American employees’ wages to $10.50 per hour?

What do you have against your associates in the United States? Hard-working Americans across the country who are working for shamefully low wages in your stores are struggling to pay for basic necessities like housing, food, transportation, and healthcare. If you are able to operate in other countries while providing your employees with these higher minimum wages and greater benefits, you can do the same here. Do your employees in the United Kingdom or Canada work any harder than your workers in the United States? Are 1.3 million workers here worth less than they are in other countries? What is stopping you from treating your employees in the U.S. with the same level of respect? After all the Walmart Board of Directors gives you $11,000 an hour (plus benefits) of “respect.”

Sincerely,

Ralph Nader
P.O. Box 19367
Washington, D.C. 20036