Walmart hike doesn’t drive Delaware wages

Sen. Robert J. Marshall
Sen. Robert J. Marshall

By Kathy Canavan

Katharine Buoncuore makes $7.75 an hour at Dollar Tree in Wilmington, but she said she wouldn’t move to the Walmart less than two miles away, even for a 20 percent raise.

Despite the mega-retailer’s announcement that they’ll pay all employees at least $9 an hour by April and at least $10 an hour by February, Buoncuore isn’t budging.

“At Dollar Store, they understand the value of their employees. If you had to take off for a medical issue or something happened to your children, with Dollar Tree, there’s no problem. They’ll still keep me,” she said. “That is a good business, in my opinion.”

(Walmart spokesman Kory Lundberg said he has heard what he termed “that misperception” about Walmart schedules before, but he said, it’s untrue “Any time an associate needs to take off to take care of a family need, store managers will go out of their way to help them do that,” Lundberg said.)

Will many of the state’s roughly 74,000 low-wage workers be swayed by higher wages offered by Walmart or maybe other employers as the economy heats up?

David Torrance, a Dallas workplace culture consultant, said younger workers, particularly millennials, seek the same flexibility that Buoncuore values.

“They have a totally different mindset toward work. Walmart’s traditional model is based on hours worked. The millennials’ is based on accomplishment. Walmart is running into a real issue with that – and so is everybody else.”

Torrance described the Walmart culture as a fairly strict retail efficiency operation with a fairly light employee presence, given the size of the stores.

“The workers have little to no power, and the system is built off efficiency, to where there’s certain metrics people have to make,” he said. “Then people call in sick. Absences are fairly high, so that the shifts are fairly dynamic. Any absenteeism just drives the shifts crazy, because you’re having to fill in on the fly.”

Millenials, in particular, won’t have it, Torrance said, and that costs retailers money. He said it typically costs retailers three to five times the employee salary to replace a lost worker – advertising, recruiting, training and overtime paid to other employees until the new hire is in place.

Carrie Leishman
Carrie Leishman

Walmart’s Lundberg said it’s too early to tell if the new policy will increase applications to Delaware Walmart stores.

Carrie Leishman, executive director of the Delaware Restaurant Association, said Walmart’s decision is an example of why state legislators should not raise the minimum wage, a proposal the DRA has attacked on the web page it posted at delawarewagefacts.com.

“The important thing to know with the Walmart decision is this is exactly the reason why, when our legislature looks at raising minimum wages through government channels, it’s a great reason not to,” Leishman said. “It shows that, with the economy getting a little bit better, the restaurant industry has to compete for good employees, and this often means they have to offer a higher wage to keep good employees, as Walmart has.”

State Sen. Robert J. Marshall, chairman of the state legislature’s Low-Wage Service Industry Task Force, which is lobbying for increases in the state minimum wage, called the Walmart announcement “a significant move in the right direction.” “It gives momentum to the bill that I will be introducing this month in the state legislature increasing Delaware’s minimum wage over a four-year phase in to $10.25 an hour,” Marshall said.

Saul Hoffman, a University of Delaware economist, said wages have been very flat at the lower end of the pay scale but, if the economy heats up, companies competing for those workers are going to have to pay more or find other ways to keep them.

Delaware’s unemployment rate dropped to five percent in January, down from 5.2 percent in December. All-employee hourly wages only rose three cents in the past year, but the average number of hours worked rose from 31.9 to 33.6 hours, according to the Delaware Department of Labor.

Les Dukart, owner of seven northern Delaware McDonald’s, said it is too early to tell how the Walmart move will shake out. Michael A. Meoli, co-owner of six McDonald’s in Sussex County, said, “Certainly an interesting decision by Walmart, but too early to tell for my business.”

John Stapleford, president of the Caesar Rodney Institute in Newark, said there is some upward pressure on department store wages in Delaware, but they still lag behind inflation.

“Between 2007-13, the average annual wage in department stores in Delaware went up 3.3 percent, while inflation in the Delaware region went up 11.2 percent. In other words, in purchasing-power terms, department store wages have dropped substantially since before the recession,” Stapleford said. “An increase by Walmart is welcome, but it would take at least an eight percent hike now for the wage to have kept pace with inflation.” ♦

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