After the smart, aggressive thing Bernie Sanders did in Congress just 48 hours ago, Walmart had better watch out.

Because while his new bill in the U.S. Senate (introduced in the House as well by U.S. Rep. Ro Khanna, Democrat of California) has virtually no chance of becoming law anytime soon, it means Sanders is now running the exact same playbook that he just ran successfully against Amazon.

Here's the history, the new law, and what it could very well mean for Walmart

The Stop BEZOS Act

You might recall that in September, Sanders introduced something he called the Stop BEZOS Act, which stood for "Stop Bad Employers by Zeroing Out Subsidies Act."

It would have created an extra corporate tax against companies whose employees were paid so little that they received government assistance. That bill too had no chance of becoming law. Sanders is an independent socialist who caucuses with Democrats; the Senate is controlled by Republicans.

But it didn't matter. After a combination of legislative threats and public pressure, Amazon made a big change: raising its minimum wage for all U.S. employees to $15 an hour, which largely accomplished the same thing Sanders's law would have done.

This was no small thing for Amazon to do, either--increasing to $15 an hour will likely cost the company a minimum of an additional $1.75 billion a year in wages. It was a total victory for Sanders.

And with that win in his pocket, Sanders and Khanna are now turning to Walmart.

The Stop WALMART Act

This time, they're introducing another aptly-named bill: the Stop WALMART Act, which is short for the "Stop Welfare for Any Large Monopoly Amassing Revenue from Taxpayers Act."

It's tailored to put pressure on the Walton family personally, which as Sanders noted in an announcement about his new bill is Walmart's largest shareholder (about 50 percent of its stock), and the wealthiest single family in the United States,  

"Since 1982, the wealth of the Walton family has increased about 10,000 percent, and the family now owns more wealth than the bottom 40 percent of Americans. Meanwhile, 55 percent of Walmart's associates are food insecure," Sanders wrote.

So, this new Stop WALMART Act would prevent public companies from buying back their own stock, a move that greatly benefits current shareholders, unless:

  • They pay all their employees at least $15 an hour,
  • Their CEO is paid no more than 150 times as much as the pay of the company's median employees, and
  • Every employee has the ability to earn at least seven sick days per year.

Public pressure, private gains

We get into some very interesting dynamics when considering why Amazon raised wages starting November 1, and why Walmart might feel pressure to do so as well.

In Amazon's case, it wasn't just altruism or public pressure. Arguably, raising wages in the way the company did resulted in two benefits for Amazon, even though it will cost a significant amount of money.

First, Amazon is in a constant recruiting battle--and rolling out its wage increase like it did, in response to public pressure, made it a big story--with lots of free publicity. If you're part of that labor market that would be interested to work for $15 an hour, chances are you now know that Amazon pays that much as a result. 

Second, by increasing its minimum wage to $15, Amazon also basically required other less-efficient competitors to increase wages as well. Amazon can weather the financial hit a lot better than they can, so it's a big advantage.

Now, the question will be whether there's a self-serving benefit for Walmart to increase wages.

History suggests there might be one. For example, in January Walmart increased its starting wage from $10 to $11 an hour, which works out to $19,448 a year for a full-time worker. Why then? Because of the 2017 Tax and Jobs Act, which greatly benefited the company. 

Similarly, if Walmart were to conclude for example that paying its lowest wage workers more would let more of them afford to buy more Walmart products--and similar to Amazon, squeeze some of their competitors on the labor market--maybe they'd decide now to increase wages, too.

And the odd thing is that once again, it's the independent socialist from Vermont who would have given them cover to do so.

Published on: Nov 17, 2018
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