Walmart CEO Pay: More in an Hour Than Workers Get All Year?
By Ed Smith's math, the CEO of Walmart earns more in an hour than his employees will earn in a year.
Smith, an alderman in Chicago, presented posters at a city council meeting showing that Walmart CEO Michael Duke's $35 million salary, when converted to an hourly wage, worked out to $16,826.92. By comparison, at a Walmart store planned for the Windy City's Pullman neighborhood, new employees to be paid $8.75 an hour would gross $13,650 a year.
Smith's numbers could be a bit off. Equilar, an executive compensation research firm, calculates that Duke earned just south of $20 million in 2009 and $28 million in 2008, not counting millions of dollars in potential performance awards. But the alderman argued that there's still a "sad" contrast between Duke's compensation and the wages of his employees.
"How can you go to bed at night and sleep knowing you make this kind of money and the people working for you can hardly buy a package of beans and rice?" he asked in an interview with ABCNews.com.
Walmart, meanwhile, said that its wages across the country are competitive in local markets and that on average, hourly employee pay -- which includes more experienced workers but not managers -- ranges from $10 to more than $12.
The retail giant made no apologies for Duke's salary.
"I don't think Mike Duke needs, as the CEO of a Fortune 1 company, needs me to defend his compensation package," said Walmart director of community affairs Steven Restivo, referring to Walmart's status as the largest company on the planet.
The debate over Walmart wages has been a thorny local issue in Chicago, where city aldermen on Wednesday reluctantly approved plans for a new Walmart store. It also speaks to continued concerns nationwide over the pay gap between top executives and their rank-and-file employees.
A study last fall by the Institute for Policy Studies, a liberal Washington D.C. research group, found that CEOs in the country's S&P 500 companies make, on average, 319 times more than the average American worker.
IPS associate fellow Sam Pizzigati said that in the 1970s, that ratio was 30 to 1.
"We've seen, over the past three decades, a tenfold-plus increase in the gap between top executives and average American workers," Pizzigati said. "That Chicago alderman is putting his finger on a very real problem in American economic life."
Why the Pay Gap Has Grown
Pizzigati said the reasons for the yawning gap are two-fold. Declining top-bracket tax rates over the last half-century, he said, took away a strong disincentive for company boards to keep a lid on CEO pay.
The top marginal tax rate, he said, dropped from 91 percent in the 1960s to 28 percent in 1980s. It stands at 35 percent today.
"If you look at historical record, executive pay really started exploding in early 1980s," he said. "That's when the top rate started precipitously falling."
On the worker side, Pizzigati said, wages have been hurt by the declining power of U.S. organized labor. When it represented more than one-third of the American workforce, unions could influence wages -- and force them higher -- throughout the labor market. With just seven percent of Americans represented by unions today, Pizzigati said, that's no longer the case.
Paul Hodgson, a senior research associate at the executive compensation watchdog group The Corporate Library, attributed the gap to another factor: the use of stock awards in CEO pay. Notwithstanding the recent financial crisis, stocks have seen tremendous gains since the 1980s and that, he said, has been reflected in CEO compensation.
As a result, he said, "CEO pay has been growing exponentially while everyone else's wages have been growing arithmetically."
Companies that shell out blockbuster salaries and benefits maintain that high compensation is necessary to attract the best talent to top positions.
In Chicago, in recent years the compensation issue has centered largely on so-called big box stores like Walmart. In 2006, the city's mayor vetoed a resolution by the city council to raise minimum hourly pay by giant retailers in the city to $10 plus $3 worth of benefits.
Chicago Labor Leaders Wanted Higher Pay at Walmart
This week's approval of the new Walmart store came despite demands by labor organizers that Walmart, a non-union company, should pay at least $11 an hour to new employees. Walmart countered that the $8.75 it plans to pay -- which is 50 cents above Chicago's minimum wage -- is more than the starting hourly wages of unionized grocery store workers in the area.
An organizer for Local 881 United Food and Commercial Workers declined to comment on wages for union members, citing ongoing contract negotiations, but said that, overall, members receive better health insurance and retirement benefits than Walmart employees. (In its defense, Walmart said its health insurance plans offer "a wide range of options" and trumpeted its 401k and profit sharing plans.)
Smith said he ultimately decided to join his fellow aldermen in unanimously voting to allow the Pullman store because of the jobs the store is expected to create and its addition to the city's tax base.
He, too, would have liked to see the retailer pay at least $11 an hour to new employees, but added that he's glad Walmart's $8.75 starting pay is above minimum wage.
"As Kenny Rogers says, 'You gotta know when to hold them and know when to fold 'em,'" Smith said. "So that's what we did."
- Years ago, I worked at a financing company and one afternoon, my coworkers and I had some downtime and we wound up discussing how much money the CEO made, and converted that into what he''d make hourly and it was more than what we made on a yearly basis. This was 15 years ago. \
My point is that most corporations have overpaid CEOs. But it never used to be like that until the 1980s.
- Unbridled capitalism is just as evil as communism, IMO.\
It is morally wrong for these CEOs to be making that sort of money. Garish and disgusting.
- If labor unions represent only 7 percent of US workers, how can Repubs, Libertarians, talk radio hosts, and the MSM get away with the Big Lie about unions killing the economy and controlling the Democratic Party?%0D\
And don''t tell me it''s about how powerful unions USED to be.
- Judging from the posts on the ''Arnie cuts CA workers pay to minimum wage thread'' right here on DL, I''d say most of America and 99 per cent of DL is just fine with America becoming the land of the very wealthy 1 percent and the dirt poor 99 percent.
Could the U.S. get any sadder?
- A few years ago a woman wrote a book about working minimum wage jobs (Nickel and Dimed-?): nursing home aide, cleaning houses, waitressing, etc. in which she worked a month or two at each and tried to live on the salary she was earning. She could barely do it. Then the last one was working for Walmart and she threw in the towel. It was the most horribly depressing book you''ll ever read.
- It''s always funny when you hear people defend this and say that the rich support the economy by providing jobs for others... as though we live in a fucking fiefdom and we all want to work in service of them.
- Yes, r7, Nickel and Dimed by Barbara Ehrenreich.
- If this upsets you, do not shop at Walmart. Free enterprise just works like this. If enough people don''t shop there they will close down.
- I''ve never shopped there, nor do I ever plan to.
- Walmart is the new center of evil in the universe.
- i think the new feudalism is simply fantastic. i''m glad i thought of it.
- I guess he makes 10 times the salary of all the 9 year old Chinese girls who make the stuff Walmart sells.
- People should print out the story, shop for an item in Walmart and give the story to the cashier. That''s one way to spread it around.
- I''m sure this happens with most large American Corporations too.
- It''s a free market economy; the Walmart CEO is entitled and SHOULD make as much as the company wishes to pay him/her, and you better hope it stays that way.\
While it may be repulsive morally, a free market economy is based on just that, freedom for businesses and companies to compensate their executives the way they want to and as they see fit.\
OP, you wouldn''t want the government to limit the amount of money you make, so don''t wish it on others.
NOT a Walmart shopper.
- I make 8 times more than my assistant and I don''t have a problem with this CEO. He''s in charge of hundreds of stores in America and England (and probably other places also). Instead of complaining go back to school, get a degree like his and get a job like his. I did it%0D\
Is Wal-Mart earning profits? Than he''s doing his job
- r18 - He may be doing a good job at turning profits, but he''s also doing a damn good job at impoverishing a whole class of people. This in turn places stress on state governments. In many states, Wal-Mart workers are a huge percentage of working poor on public health assistance.
- I think he''s tremendous!
- R18, Aside from the US and England, I meant to add China%0D\
And look the wonderful products that are exclusively sold in their stores in China
- This man is a piece of shit human being who is not worth this sort of money. NO ONE is!!
- Forbes has very different figures. Qccording to them Duke is only the 65th best paid CEO and his annual salary and benefits isn''t what is quoted above.
- [quote]i think the new feudalism is simply fantastic. i''m glad i thought of it.%0D\
Bill and I have done quite well through Wal-Mart too.
- I''m not sure of the compnay in Australia but I think it''s either Woolworths or Harvey Norman but the rule is that the CEO can only make 30 times more than the lowest paid employee.
- That makes a lot more sense to me R25.
- [quote]If labor unions represent only 7 percent of US workers, how can Repubs, Libertarians, talk radio hosts, and the MSM get away with the Big Lie about unions killing the economy and controlling the Democratic Party? And don''t tell me it''s about how powerful unions USED to be.\
I''d like to know this too. (Where did you get the 7% number though?)
- Barbara E. also wrote a book "Bait & Switch: The (Futile) Pursuit of the American Dream" -about how impossible it is for educated middle-aged people to ever get re-hired after losing their jobs. Good book, equally depressing.
because I am in that boat
- Smith failed to state that Union teachers in Chgo earn more than nurses and accountants. Avg more than 76,000/year and that working 5 hour days. How easy it is to disparage success. We see it in politics today. Take from the rich and give to the uneducated voters to stay in power. Billions being lost in th Post Office, Amtrack, Medicare fraud (60 Billion annually) but oh sure, we can administer Healthcare. Let the free enterprise system alone!
- Thanks Shitt! But we already know your views on the 47%!
- [quote]If this upsets you, do not shop at Walmart. If enough people don't shop there they will close down.
The problem is, with all these employees now making only $8.75/hr (and Walmart squashing all the competition out of existence), people HAVE to shop there! They can no longer afford to shop anywhere else. It's a self-feeding race to the bottom.
What I don't get is, Walmart is always forcing their suppliers down in price...why don't they do the same with this guy??
- But, but he deserves it! He works hard! Those lazy employees are losers.
- [quote]OP, you wouldn't want the government to limit the amount of money you make, so don't wish it on others.
Actually, through federal tax policy, that is exactly what I want, just as it was for decades. And the reason I want it is that it's better, overall, for the entire country, including that CEO, as it makes for a stronger middle class who are better able to purchase the items he's selling.
- What employees need to do is bring back strong unions and strike when necessary. Yes, I know some unions went overboard back in the day - but in our current state of employee/employer relations there is absolutely NO ONE looking out for the working stiffs anymore. If all of the U.S. employees in WalMart went on strike - maybe some changes would be made.
All this time wasted cursing out the CEO for making too much $$$$ is useless.
Organize and fight for rights. It's truly the only way that has EVER worked.
- If people would stop shopping at Walmart until they paid their wokers a reasonable wage...it would be nice. Then if Walmart shaped up, we could work on Target...they are really involved with the master/slave dynamic.
- Who actually shops there? If it were the last store on earth, I would learn to make my own soap and detergent.
- This is increasingly true of most Major US Corporations today.
- If Romney wins this will only get worse
- Sorry, what does what he's paid have to do with anything?
- If America cared about workers...there would be laws to protect workers, instead there are laws to protect corporations.
- [quote]Sorry, what does what he's paid have to do with anything?
- America is run by the Corporations.
Elections are pure theater of illusion.
- If we could get our country back...many CEOs should be sent to the guillotine. This is a serious problem and needs to be dealt with in a very serious way. They are robbing us of our lives, turning us into slaves, they should pay a very heavy price for what they have done. And the congress that allowed it? They should be rounded up wherever they are and they should be tarred and feathered.
- Just tarred and feathered?
Off with their heads as well, starting with Nancy (we will not impeach) Pelosi who leaves behind a legacy of shame.
- Why don't company shareholders have a bigger say in what these CEOs are paid?? I can't imagine they'd be for salaries this big.