Tuesday, March 24, 2009

Walmart paying less than slave labor?

Have things changed?

Talking with some friends about businesses today, we came across the subject of ethics and morality in businesses. Walmart was brought up as a company that has grown rapidly and it was stated that they must have done something "right" -- I say "right" because what Walton has done is exploit workers to get the lowest possible prices. I pointed out that adjusting for inflation, Walmart probably uses the equivalent of slave labor. This got me wondering what the actual numbers are, so I did some digging.

I won't go on and on and on about the evils of Walmart; that's been done ad nauseum. What I will do is present a little research on wages for employees adjusted for inflation. Details from the 1820's (slave era America) isn't of the highest quality so I can't say the data is exact, but it gives a good idea.

Using this calculator for inflation, we can compare current US minimum wage laws ($6.55 as of July 24th, 2008), we can compare it to unskilled labor from 1820:

2008: $6.55
1820: $0.03

Multiplying the hourly rate by the average hours worked per year by a full-time employee (8 hour days, 5 days a week, 50 weeks a year = 2,000 hours) and those worked by the average slave (18 hour days, 7 days a week, 52 weeks a year = 6,552 hours), we find the average salary each would have been paid (slaves weren't paid, but this is what they would have been making):

2008: $13,100.00 (at 40 hour weeks)
1820: $00,196.56 (at 126 hour weeks)

That's the annual salary for unskilled labor. As I said, slaves weren't paid, but they were provided food and housing. Having no numbers for 1820 cost of living (housing, food, clothing) it's hard to say exactly how the numbers compare. Using rough numbers for housing ($500 a month), food ($150 a month), transportation ($75 month), I'm going to assume about $725 per month for average living for one person in the US, more for families. Multiplying $725 by 12 we get an idea for the minimum cost of living in the US in 2008, $8,700. That is the a rough estimate of the bare minimum for housing, food, and getting to and from work -- and it's a conservative one at that, especially for a family.

Slaves were given housing and food and didn't need to transport to work. We can say that those things were their "payment." While minimum wage still has a Walmart employee on minimum wage with no benefits working full time making $4,100 more than is needed for a conservative living, it doesn't factor in any medical or other expenditures. If you consider a mother with two or three kids, the cost of living goes up significantly and that $4,100 extra will most likely become a deficit.

Without more accurate information a real analysis is hard to do. And yes, one can make the argument that the slaves weren't able to leave, the living conditions were worse, etc.

Keep in mind the slaves also worked 18 hour days, 7 days a week, 52 weeks a year (according to sources). If we do a comparison and equalize the hours, and say slaves worked 8 hours a day, 5 days a week, 50 weeks a year, with the minimum wage hourly rate, the slave number changes from $196.56 to $60. Again, numbers from 1820 are hard to come by, but it wouldn't be a stretch to say that it cost more than $60 a year for housing, food, and clothing for a family. On that comparison, Walmart actually pays their employees less than slaves were given.

[These are very rough numbers and estimations/guesses were used. I am not a historian nor economist. If anyone has more accurate information I could look at I'd appreciate it.]

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