Senator Bernie Sanders ran his presidential campaign bus right into Walmart’s shareholders' meeting yesterday to tell the nation’s largest private employer how to run its business. Specifically, Sanders told Walmart they need to pay a $15 minimum wage.
Crashing the meeting was gutsy to be sure. However, the real damage he inflicted was to spread misinformation about minimum wage and to bully Walmart about its pay.
Raising the minimum wage nationally to overcome poverty is an old and flawed idea. The $15 an hour minimum wage campaign has swept the nation, but there’s been no regard for the negative impacts on the workers it’s meant to help.
Raising the minimum wage leads to:
Robots and automation replacing workers (look at self-checkout at grocery stores, meal ordering kiosks at fast food tables)
In essence, minimum wage hikes have the effect of taking away opportunities and locking young and low-skilled workers into poverty.
Just look at New York City’s restaurant industry. According to the NYC Hospitality Alliance, three out of four (76 percent) restaurants cut worker hours (leading to smaller paychecks) and over a third (36 percent) cut jobs.
Raising wages for low-income workers is a noble goal, but a $15 minimum wage is not the answer. Obtaining skills and education will, however, put them on a path to upward mobility.
Let’s take just two of Senator Sanders’ statements at the Walmart shareholders meeting and explain why he’s wrong or lying.
“Walmart pays many of its employees starvation wages, wages that are so low that many of these employees are forced to rely on government programs like food stamps, Medicaid and public housing in order to survive.”
False. According to Walmart’s Environmental, Social and Governance Report, 100 percent of their workers earn more than the current $7.25 federal minimum wage (on average by double). Newly hired associates start at $11 per hour or more, key department manager roles can earn as much as $24.70 per hour, and the average wage of a full-time, hourly field associate is $14.26 per hour.
Adding other forms of compensation such as bonuses and benefits like paid time off, the average total compensation and benefits for a full-time, hourly field associate jump to $19.31 per hour.
“People cannot make it on $11 an hour,” he said. “You can’t pay rent. You can’t get health care. You can’t feed your kids or put gas in the car on $11 an hour.”
Most minimum wage workers are NOT living on minimum wages and raising families, but young people working part-time and looking to build skills.
Over half of minimum-wage workers the ages of 16 and 24 and nearly two out of three of them are working part-time. Of the these younger workers, 62 percent are enrolled in school. Less than a quarter of all minimum-wage workers live at or below poverty.
Minimum wages are set low because they are a starting point for low-skilled workers and reflect the value created when you have little or no experience or skills. Most of these workers are just trying to obtain experience and skills that they can use to obtain better-paying positions, and they do. Two-thirds (66 percent) of minimum wage workers earn a raise within their first 12 months on the job allowing them to rise above the minimum wage.
Raising the minimum wage to $15 an hour would be devastating for these young, inexperienced workers.
Economists estimate that raising the federal minimum wage to $15 per hour would cost the economy 7 million full-time jobs by 2021. It also encourages employers to automate these basic jobs. For example, self check-out has replaced grocery store cashier and bagger jobs while restaurants are implementing self-order kiosks at tables to reduce the need for waitstaff.
Sanders aims to be Robin Hood for the people, but what he’s advocating for will steal opportunity from poor workers. Instead, let’s empower workers to obtain the skills that will open up jobs and careers and inspire them to reach for more.
Learn more: Two Truths & a Lie: Federal Minimum Wage.