Drew Ryan

May 8, 2014
This Paper discusses the Current standing of Walmarts current pay to their employees
and the justification and impact of raising their pay in the US.
There are currently 155,359,000 people in the civilian work force of the United States of
America working in the private sector according to the US Department of labor as of the month
ending April of 2014. These employees make an average pay of $23.86 an hour. On average
these employees work 34.4 hours a week. This equates to $820.78 a week and $42,680.77
annual. The total annual income of these employees is approximately $6.6 trillion.
1

Though Walmart does not release the average pay of their employees Payscale estimates
it to be approximately $22,000 a year.
2
Assuming Walmart employees work the same average
amount of weekly hours, Walmart employees would make $423.08 a week and $12.30 per hour.
3

Walmart in the US employs 1.4 million people. Given these numbers, Walmart Corporation pays
30.8 billion dollars to their employees annually.
Walmarts sales less the amount they pay out to suppliers is equal to $28.8 billion. This is
their gross profit. This is split up amongst their employees, stock holders and bond holders. The
amount paid to the bondholders is a set interest totaling $553 million, leaving $112.8 billion to

1
Bureau of Labor Statistics, the US Department of Labor. The Unemployment Situation-April 2014 12. (May
8,2014).
2
Gandel, Stephen. Why Wal-Mart can afford to give its workers a 50% raise. CNN
http://finance.fortune.cnn.com/2013/11/12/wal-mart-pay-raise/ (May 8, 2014).

3
Sparshott, Jeffrey. Unions Warn Obama on Walmart Visit. The Wall Street Journal
http://blogs.wsj.com/washwire/2014/05/08/unions-warn-obama-on-walmart-visit/ (May 8, 2014).

be split between the shareholders and employees annually. The amount that shareholders expect
to earn can be determined using the market to book ratio, a ratio that represents how much
stockholders are willing to pay per dollar of Walmarts equity. The average market to book ratio
of stocks on the S&P 500 is 2.9, Walmart has a market to book ratio of 3.5, twenty percent
higher than the average Charles Lee, a finance professor at Stamford, has developed a
relationship that projects that shareholders are looking for is 20 percent. The annual rate that
dividends are paid is 4.6 percent leaving 15.4 percent to be used as internal return on investment.
The book value of Walmart is $76.7 billion
4

If investors are expecting to receive 15.4% return on investment, they are seeking $11.8
billion annually. Deduct this from the $112.8 billion in gross profit to be paid out between
employees, $101billion is left to be paid to employees.
There are approximately 2.2 million employees globally in Walmart Corporation, 64% of
who work in the United States. It is assumed that two thirds of what Walmart pays to its
employees is distribute in the United States because wages are slightly higher her. By deducting
the CEOs salary from the total amount to be distributed globally first, $66.7 billion is left to be
distributed to American workers.
By dividing the amount of Gross profit to be divided to American employees my the
amount of employees of Walmart in America and then removing the thirty percent that the
Bureau of labor estimates is spent on employee benefits, the average Walmart employee should

4
Gandel, Stephen
be making $33,315.
5
This is a fifty percent increase over the projected $22,000 Walmart
currently pays to its employees.
This justified increase totals $16.8 billion, distributed amongst .9% of the United States
work force. This portion of the United States work force makes up .46% of the total income of
the United States work force. By increasing Walmart employees pay by the justified $16.8
billion, the percentage of Walmart employees pay in proportion to the United States work force
would increase to .72%. This increase would increase the average annual American pay by
$108.09, weekly by $2.07, and hourly by $0.06.


5
Gandel, Stephen
Sources Cited
Gandel, Stephen. Why Wal-Mart can afford to give its workers a 50% raise. CNN
http://finance.fortune.cnn.com/2013/11/12/wal-mart-pay-raise/ (May 8, 2014).
Sparshott, Jeffrey. Unions Warn Obama on Walmart Visit. The Wall Street Journal
http://blogs.wsj.com/washwire/2014/05/08/unions-warn-obama-on-walmart-visit/ (May
8, 2014).
Bureau of Labor Statistics, the US Department of Labor. The Unemployment Situation-April
2014. (May 8,2014).