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How Big of a Deal Is a Raise to a Walmart Employee?

A breakdown of the difference between $7.25 an hour and $10.
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(Photo: Chris Hondros/Getty Images)

(Photo: Chris Hondros/Getty Images)

After years of criticism over low wages, Walmart is giving a pay raise to 1.2 million of its employees in the United States. Those who were hired before the start of the year will now earn $10 an hour, $2.75 more than the federal minimum wage of $7.25 an hour.

That doesn't mean every Walmart sales associate is getting a $2.75 raise. Besides those who already earn more than the minimum for their time and experience, thousands of associates work in states that have higher minimum wages. The boost for those individuals won't be as drastic. Still, as an exercise, Pacific Standard decided to take a rough look at how the life of a Walmart sales associate or cashier might change, assuming she earned the federal minimum wage before and will now earn $10 an hour.

First, some quick calculations. Someone who earns the federal minimum wage and works eight hours a day, for 23 days a month, earns about $16,000 a year, before taxes. This amount aligns with the low end for salaries for Walmart cashiers and sales associates reported to Payscale (as of January 2016).

Someone earning that much:

  • Is ineligible to receive SNAP benefits, or "food stamps," if she's only responsible for herself. (If she's supporting at least one other person in her household, such as a child, she would qualify.)
  • Can afford to pay up to $350 a month in rent, using the old rule of thumb that a person should spend no more than 30 percent of her take-home pay on housing. The median cost of rent plus utilities in Benton County, Arkansas, where Walmart is headquartered, is $787. In Ventura County, California (the nearest county to the Pacific Standard office that has a Walmart store), the median rent-plus-utilities cost is $1,494.

    We should note that economists have pointed out many problems with the 30-percent rule. In particular, at an income this low, spending even that amount on rent can create hardship.
  • Counts as "very low income" for Benton County (and would be"extremely low income" for Ventura County). That may make her eligible for public housing.

Now, if our Walmart worker makes $10 an hour and is given the same number of hours to work, she'll earn about $22,000 a year. Someone earning that much:

  • Would no longer be eligible for SNAP benefits if she's supporting only one dependent. She could still get SNAP if she were supporting two or more people.
  • Can now afford to pay up to $480 on rent. That leaves her with $1,122 left over to use in a month.
  • Counts as "low income" for Benton County, so she still may be eligible for public housing.

It seems a pay raise to $10 an hour can make a real difference. While $22,000 a year doesn't make for an easy life, it feels at least a bit more feasible than trying to get by on what some Walmart cashiers and sales associates were previously making. Of course, if our worker is responsible for anyone besides herself, or if she lives somewhere more like Ventura County than Benton County, that makes things more difficult, even on $10 an hour.