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Walmart protesters, man with arm around woman, man wearing a sign saying
As Walmart's shareholder meeting approaches, there's a slew of news on the effect the retail giant has on the American economy—and protests against how it treats its workers. Walmart is a poster child for low wages, of course, but an updated report from Demos shows that Walmart's low wages may actually be undermining its sales. Rather than investing in good service through adequate staffing, Walmart keeps pouring its profits into share repurchases—more than $6.6 billion last year.
Repurchases help the company meet earnings targets even when sales are down by reducing the number of shares on the market and lifting earnings for those that remain. But when buybacks are poorly timed or crowd out other investment, they can actually undermine longer term goals. In a 2012 study, analysts at Credit Suisse showed that just 36 percent of S&P 500 companies performing share buybacks returned value to shareholders above the basic cost of equity.
Instead, Walmart could be investing that money in more staffing hours, ensuring shorter lines and shelves that aren't left bare because there aren't enough workers to restock them. And it could pay its workers significantly better, ensuring an experienced workforce with low turnover.
According to a growing body of research on human capital management in retail, experienced employees with broad knowledge of the company are better equipped to serve customers, leading to higher sales numbers and better performance overall. Research from management experts at the Wharton School of Business shows that stores see an average of $10 in new revenue for every additional dollar spent on payroll. Better staffing practices lead to higher sales, since customers can count on stocked shelves and knowledgeable employees.
Walmart's executives, of course, continue to be paid lavishly, even when they don't meet sales targets, and the company uses tax loopholes to make sure that much of the cost of that high pay falls on taxpayers. Over the past six years, eight of Walmart's top executives have received more than $298 million in tax-deductible "performance pay." That's cut around $104 million from Walmart's federal tax bills, money that could have gone to paying for the food stamps many Walmart employees need to get by on their low wages.

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Originally posted to Daily Kos Labor on Wed Jun 04, 2014 at 10:59 AM PDT.

Also republished by Daily Kos.

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