The Wall Street Journal reported Walmart’s pay raises to its workers as follows:
“Walmart Promises Raises for 425,000 Workers After Strong Holiday Sale. Retailer’s comparable U.S. sales jump 8.6% in fourth quarter, but it predicts slower growth this year“
A more informative headline/byline would have been:
“Walmart Worker Pay to Rise $1/hour, on Record Revenues of $152.1 billion. Raise amounts to an annual $2,000 per worker. The 2020 Executive Compensation was reported to be $112M.”
The latter headline could be extracted from the article itself:
“The country’s largest private employer said its more-targeted raises would increase pay for its hourly U.S. workers to an average above $15 an hour, up from an average above $14 in January 2020. Walmart employs about 1.5 million hourly U.S. workers and 2.2 million people world-wide…Walmart’s total revenue reached a record $152.1 billion in the fourth quarter, an increase of 10.3% from a year ago, and its operating income rose 3% to $5.5 billion.” [emphasis added]
To get the Executive compensation, you need to do a bit more research. According to SEC filings, the Executives made over $112 million in 2020:
Walmart’s Monopolistic Practices Pay Off
Based on university economic courses, one would expect that the average increase should be higher than $1/hour given employers are competing for workers. WSJ reported (in the same article):
“Walmart has been competing with Amazon.com Inc. and others for warehouse workers and other staff that are handling a surge in online orders during the pandemic. Amazon raised its starting U.S. wage to $15 an hour in 2018 and hired 500,000 people last year to bring its global workforce to 1.3 million.”
So, what happened?
Walmart’s ability to limit worker pay is attributable to its dominance of the market. As the Open Markets Institute puts it:
Why does that matter? Fewer stores = fewer jobs = lower pay, as noted in this article:
“A study published in 2008 in the Journal of Urban Economics examined about 3,000 Walmart store openings nationally and found that each store caused a net decline of about 150 jobs (as competing retailers downsized and closed) and lowered total wages paid to retail workers." [Emphasis Added]
Walmart has also invested heavily in anti-labour practices. As reported in The Atlantic:
“The National Labor Relations Board issued a complaint in January of last year, accusing Walmart of illegally firing 19 OUR Walmart members and illegally disciplining more than 40 others after strikes and protests demanding higher pay. Walmart maintains that the firings and disciplining were legal and not in retaliation for protesting“
This is of course the tip of the iceberg. The article goes on to note how Walmart closes stores when labour succeeds to form a union or is about to:
“…the UFCW had a big success in 2004, when it unionized a Walmart in Jonquiere, Quebec—a first in North America. Walmart closed that store shortly afterward, and Canada’s Supreme Court ultimately ruled that the shutdown was an illegal ploy to avoid having a union. Walmart has long argued that it closed the Jonquiere store because it was unprofitable and that the closing had nothing to do with the union. As for Walmart’s decision to suddenly begin using prepackaged meat after that meat department in Texas unionized in 2000, the company said that the timing was just a coincidence and that the decision had nothing to do with unionization.
This past April, Walmart abruptly announced it was closing its store in Pico Rivera, California, along with four other stores, for six months. Many workers saw that as a daunting anti-union statement—the Pico Rivera store has the nation’s most militant OUR Walmart chapter, having staged a sit-in and numerous other protests. Walmart, however, insisted that the closing was necessitated by “ongoing plumbing issues.” [original links maintained]
How does Islamic Economics Address this issue?
Walmart was able to become a monopoly because of its premiere access to capital. Walmart raised $5 million in its 1972 IPO and it has over $50 billion in short/long term debt. Both financing methods are illegal in Islam (for stocks see here and debt see here). Islam requires people to work through human-to-human partnerships instead. Without this premier access to the capital, it's unlikely a company would be able to finance its mega-supply chain that would force the suppliers to lower their prices. Additionally, they would not be able to offer deep discounts on strategic products because they wouldn’t have the cash to take on such losses.
At the same time, Islam prohibits unions and the minimum wage. However, it is the government’s obligation to provide work, employment and use creative means to facilitate people acquiring not just their basic needs, but what is beyond that. For a deeper look at that, see this article that discusses how Prophet Muhammad (saw) helped a man start a business instead of giving him a handout.