COVID and Wages of Retail Workers

by Terrance Hunsley

The Brookings Institution has published research showing how front line workers have fared so far during COVID. The analysis is unequivocal, both about the actual corporate behaviour and about the future of frontline workers absent government intervention.  

The report, entitled Windfall Profits and Deadly Risks, is authored by Molly Kinder, Laura Stateler, and Julia Du.

We find that while top retail companies’ profits have soared during the pandemic, pay for their frontline workers—in most cases—has not. In total, the top retail companies in our analysis earned on average an extra $16.9 billion in profit this year compared to last—a stunning 39% increase—while stock prices are up an average of 33%. And with few exceptions, frontline retail workers have seen little of this windfall. The 13 companies we studied raised pay for their frontline workers by an average of just $1.11 per hour since the pandemic began—a 10% increase on top of wages that are often too low to meet a family’s basic needs. On average, it has been 133 days since the retail workers in our analysis last received any hazard pay.

…The failure of most companies in our analysis to include frontline workers more fully in their pandemic-enabled success highlights the limitations of capitalism and voluntary corporate action. Policy change and structural reform are needed. Policymakers have many ways to change the rules of the game for corporations, from raising the federal minimum wage to reigning in stock buybacks to enabling workers to collectively bargain. With a new presidential administration incoming and control of the U.S. Senate potentially flipping, federal lawmakers must consider ways to permanently aid our frontline workforce in absence of corporate support.

The authors point out as well, that the top retailer CEO’s were prominent among the Business Roundtable CEO’s who recently signed a formal declaration on the future role of corporations. They suggested that corporations should serve not only their shareholder interests but also those of stakeholders – workers, customers, their communities, and society. Since that declaration, featured prominently by the World Economic Forum among other institutions, there has been substantive analysis indicating that the signatories have made no significant change in corporate behaviour, and have even accelerated such things as share buybacks, which boost share prices and in turn, increase management remuneration. 

The bottom line here is that retail workers are not likely to be paid a living wage and have health and disability insurance, sick leave, and other benefits necessary for economic security, if government does not step in. Unions have not done anything significant for the sector in decades.  

A report I wrote for the Pearson Centre suggested several government initiatives which would help. One is to adopt a policy that everyone working full-time should receive a guaranteed living income. Their wages would be supplemented by the Canada Workers Benefit (CWB) to the point where they receive at least three quarters of the median full-time wage in their economic region. The national average would work out to about $18-19 per hour, higher in some regions, lower in others. Employers should be required to pay for standard benefits, and proportionately extra for part time work. Because the CWB would be in effect a portable wage subsidy, low end workers would be able at least to choose employers where working conditions and future prospects are better. The report, Future of Work Policies for the 2020’s, can be found on SocialCanada.org. (Scroll down).

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