A tale of two paychecks

July 4, 2014

Their checks had the same company name at the top, but that's about the only thing that Pam Davis and Rob Walton ever had in common. Elizabeth Schulte explains.

"I MADE $10.45 an hour as an overnight stocker, because of the night differential. I wasn't making enough money, so I took on another job. The day job wanted me to work 34 hours, so I had two part-time jobs that I wasn't making hardly any money from. I was never able to pay for my own living space, and I didn't have my own car."

For Pam Davis, a grandmother of three, Walmart meant never being able to catch up, always worrying about the next expense.

For Rob Walton, the eldest of the five heirs to the family fortune and current chair of the company, Walmart means never having a care in his life.

With an estimated net worth of $34.2 billion, S. Robson Walton has a getaway for all kinds of weather--one in Aspen, Colo., another in a place called Paradise Valley, Ariz. He's also a vintage sports car enthusiast--and so enthusiastic that he owns at least half a dozen cars, including, reportedly, a custom gold Ferrari.

In 2012, Walton took a careless turn on the track in his Shelby Daytona Cobra Coupe--one of only five ever made--and wrecked the $15 million car. The cost of repairs was a couple million dollars--an amount that, as Raymond Bravo of OUR Walmart pointed out, "would take 194 years for a Walmart employee working around the clock to earn."

A tale of two paychecks at Walmart

Davis, a former Walmart worker in Richmond, Calif., and also an activist with Organization United for Respect (OUR) Walmart, worked hard for her small paycheck. Walton, on the other hand, got his money the old-fashioned way: His daddy gave it to him.

Rob's father, Walmart founder Sam Walton, built his empire on the basis of driving wages down and keeping unions out. And Rob, who took over as chair of the company when his father died, keeps things running the way his daddy did--by squeezing Walmart employees. With its "associates" earning an average wage of $8.81 an hour, Walmart's motto "Everyday Low Prices" really should be "Low Wages, Every Day."

IN ADDITION to the poverty-level wages, few avenues for advancement and high turnover rates, work rules at companies like Walmart protect the bottom line at workers' expense. Davis explained that there are few reasons for people to stay at the company "because the only wage increases you can get now are 0, 20, 40 or 70 cents--and no one ever gets 70 cents."

Hours are kept so limited that many Walmart workers are eligible for government-sponsored benefits like food stamps. In an ugly irony, that government assistance often goes right back into the company's pockets. According to Davis:

I would spend a lot of my grocery money inside Walmart. When I was on food stamps, I would buy from Walmart because it was cheaper than Safeway. In my case, I try to help as much as I can with my three grandkids...I did the math--the cost of transportation, etc.--and it seemed like I was paying to work, or paying for benefits," she said, "and the benefits were worse than ever, because of the cuts in hours and the part-time work.

When employees work overtime, it's common for Walmart not to pay them for it. In 2008, the company was forced to pay some $640 million to settle 63 federal and state class actions that charged the company with refusing to pay overtime, as well as other types of wage theft. This is one of several suits against the company over the years charging that management forced them to work without pay, with workers in several stores reporting that they had been locked in.

Crimes against workers like these are repeated in low-wage workplaces across the country. A 2008 study, "Broken Laws, Unprotected Workers," that interviewed thousands of low-wage workers in Chicago, New York and Los Angeles reported that 26 percent of those surveyed were paid less than the legal minimum wage in the previous workweek. Sixty percent were shorted by $1 an hour or more.

Over a quarter of the respondents worked more than 40 hours during the previous week. Of those, 76 percent weren't paid the legally required overtime rate by their employers. When asked about overtime violations, the average worker with a violation had put in 11 hours of overtime, for which they were either underpaid or never paid at all.

Rob Walton may have lots of time to frolic on the racetrack, but his employees are never sure when they'll be working next or for how long--making it difficult to maintain any kind of stability. "A lot of people want to go to school or get another job," Davis said. "In most case, you will never get a routine schedule. They might work a person to midnight, and then schedule that person for 6 o'clock in the morning."

This opens the door to injuries on the job, Davis said:

They're forcing people to do 12 hours of work in an eight-hour shift. They push people to get job done, and they're injuring themselves. Walmart will say if you don't report any injuries for 90 days, we'll reward you with ice cream. I remember one time our reward was a barbeque. There were big banners on the wall saying that we hadn't had an injury in 300 days. But that's because no one reported them. It wasn't because the injuries didn't happen.

THE EXPANDING inequality between those who own Walmarts and those who work inside the stores can be measured not just in paychecks, but in every aspect of workers' lives. From housing to transportation, to education and access to healthy food, to health care and leisure time, U.S. society is made up of the have-nots--and the have-beyond-their-wildest-dreams.

And of course, this great divide continues after workers can no longer work--as more and more people are retiring without the benefit of a company-sponsored pension plan.

The Economic Policy Institute (EPI) reported in a study last year that 401k plans--known as defined contribution plans, rather than the defined benefit model of traditional pensions--are creating an even bigger gap between rich and poor. In 2010, households in the top 20 percent income bracket had an average of $308,674 in retirement account savings, accounting for 72 percent of total savings in these accounts.

The median retirement savings for households in the richest fifth of households was $160,000--for those below this top quintile, average savings ranged from $8,000 to $36,000. And, as the EPI underscores, these are numbers for those families who actually have retirement savings. The median for all households, including those with no retirement savings, is close to zero, since almost half of households have no savings whatsoever.

Because of the decline of traditional pensions, says the EPI, enrollment in all types of retirement savings plans has decreased steadily in the past 30 years.

For its part, Walmart provides a 401k retirement plan to employees. But when the company decided on the plan, it made sure their setup worked out best for their Wall Street buddies, at workers' expense.

In 2011, Walmart and Merrill Lynch had to pay out $13.5 million after a class action lawsuit showed that the company's 401k plan passed along "unreasonably high fees and expenses" to Walmart workers. The company, by the way, does not guarantee it will match employee contributions.

As Forbes magazine pointed out:

Walmart stores sell 140 different kiddie car seats, 110 TV models and 220 types of plus-size bras, all at the "everyday low prices" that have made it a retail colossus. How strange, then, that in a world of 8,000 mutual funds, for the 1.2 million participants of what is the world's most populous 401k plan, Wal-Mart assembled a measly selection of 10 funds–most of them at everyday high retail prices.

That included two low-cost equity index funds and just one bond fund. Among the eight actively managed offerings, fees were discounted nary a penny from what a lone individual with no buying power would pay. It was as if the greatest retailer in history had consigned its employees to shop for retirement services in a Soviet department store.

And how are things on the other side of the wealth divide? When Walmart CEO Mike Duke retired from his "job" in 2013, he left with $140 million, after his retirement account increased more than 23 percent in his last year at the company.

ACROSS THE board, bloated executive compensation has become the new normal, even as average workers' salaries stagnate. According to an EPI study released in June that measured top CEO pay in 2013, including the value of stock options exercised in a given year, CEO total compensation for the chiefs had increased 2.8 percent since 2012--and 21.7 percent since 2010.

The study underscores a long-term trend, as the EPI researchers explained in their study, "The CEO-to-worker compensation ratio was 20-to-1 in 1965 and 29.9-to-1 in 1978, grew to 122.6-to-1 in 1995, peaked at 383.4-to-1 in 2000, and was 295.9-to-1 in 2013, far higher than it was in the 1960s, 1970s, 1980s or 1990s."

Yes, that's right, 295.9-to-1. So, while executive compensation may have taken a hit after the 2008 financial crisis, it's well on it way to recovery, and then some. Workers, however, haven't been so fortunate. Since 2010, compensation for private-sector workers has actually fallen 1.3 percent, according to the EPI report, stagnating at 2009 levels.

There used to be a saying that "a rising tide lifts all boats." It was based on the idea that economic prosperity for Corporate America would lead to prosperity for all. This free-market dogma was never true--but it's completely out of touch with the times we live in today, where a few luxury yachts are riding high, and lots of workers are hanging on to driftwood, if they aren't crashing into the rocks along the shoreline.

Despite the fact that workers' productivity has continued to increase, they're seeing none of the benefits. According to another EPI study released in June, productivity grew by 64.9 percent between 1979 and 2013, but hourly compensation of production and nonsupervisory workers, who comprise 80 percent of the private-sector workforce, grew by just 8.2 percent.

"Productivity thus grew eight times faster than typical worker compensation," the report's authors concluded. "Much of this productivity growth accrued to those with the very highest wages. The top 1 percent of earners saw cumulative gains in annual wages of 153.6 percent between 1979 and 2012--far in excess of economy-wide productivity."

This gross inequality is being exposed by low-wage workers' struggles like OUR Walmart, campaigns for living wage ordinances and referendums, and nationwide walkouts by fast-food workers. Despite reprisals by companies like Walmart, which spend millions on lawyers and injunctions to try to stop protests and workplace actions, a number of low-wage workers are beginning to stand up against the greed. These workers are part of a helping to rebuild networks of those who will some day be able to mount an even bigger challenge to the corporate giants.

"I believe what I'm doing is the right thing to my core," said Davis, who has taken part in three civil disobedience actions as well as a strike last year, after which she was fired. "Low-wage workers are taken advantage of to the nth degree."

"Walmart is the largest retailer in the world--they should be setting the standard for other companies," Davis said. "Executive salaries are way out of whack. They need to bring them back in line." She added, with a laugh, "Walmart is on list of top-paid CEOs--we just want them to sit down with us and figure out how they can get on the list of 'most desired places to work.'"

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