Two weeks ago, Mendy Hughes used $4 from her thinning bank account to pick up a family dinner from McDonald’s on her day off as a cashier at Walmart, the country’s largest grocery store chain. After 12 years with the company, Hughes makes $12.85 an hour as a full-time employee, which leaves about $200 every two weeks after monthly rent and utilities to cover essentials and food for herself and her three kids.
“Food — it’s stressful,” said Hughes, 47, of Malvern, Arkansas. “I think all day: ‘What am I going to buy when I get off [work] that I can afford? What am I going to get?’ It’s just hard.”
I think all day: ‘What am I going to buy when I get off work that I can afford? What am I going to get?’ It’s just hard.
As prices have skyrocketed because of pandemic-driven price inflation, Hughes has found that her grocery budget has essentially dropped to zero, leaving fast food as the only affordable option to survive. The cost per pound of ground beef, for example, rose by about 19 percent nationwide from January to October, according to the Bureau of Labor Statistics, or BLS. But the last time Hughes got a raise was last year, when Walmart bumped her hourly pay by $1, which amounts to about an 8 percent increase. Walmart’s new wage increases, introduced in September, put her at just 85 cents above the company’s standard starting salary.
“It’s worse now because things have gone up so much,” Hughes said. “I can’t even afford to buy a cart of groceries.”
Walmart declined to comment on specific employees’ wages. In September, the company raised its starting wage to between $12 and $17 an hour, depending on the market, and it can go up to $34 for people in specialty roles, such as store baker. The average hourly wage at the company is now $16.40, the company said in a statement at the time.
Over the 12 months through October, consumer prices increased by 6.2 percent, according to the BLS. But according to the department’s latest figures, wages and salaries grew by only 4.2 percent in the 12 months that ended in September.
The gap between wage growth and price inflation doesn’t mean all consumers are feeling the impact of higher prices on their wallets — workers who make the lowest incomes are feeling it the most. In May of last year, the median hourly wage for retail sales workers was $13.02 an hour, or about $27,172 in full-time annual wages, while computer and IT workers made a median annual wage of $151,150, according to the most recent data from the BLS.
“The main takeaway for [the hospitality and retail] industries is that real wages are not keeping up with inflation and these jobs are barely treading water,” said Nela Richardson, the chief economist at the payroll processing company ADP. “As you make more money, price increases take up less of a bite of your budget. But if you’re making a smaller salary, inflation is a meaningful dent in your overall income.”
If you’re making a smaller salary, inflation is a meaningful dent in your overall income.
The pandemic highlighted an economic divide between people who can work from home and those who can’t. Those who couldn’t work from home — retail workers, bus drivers, delivery workers — were more likely to catch the coronavirus and less likely to have savings or benefits to support them if they became sick, and they were more likely to lose income, according to a report in September from a federal advisory group to the secretary of health and human services. According to data collected by the United Food and Commercial Workers International Union, 198 of 835,000 grocery workers died from Covid-19 and at least 43,900 were infected or exposed from March 2020 through August 2021.
Meanwhile, the grocery industry had a record sales year as people hunkered down at home to avoid the virus. The industry traditionally grows by 1 percent to 2 percent a year, according to the management consulting firm McKinsey and Co. But the North American grocery industry grew by a whopping 12 percent last year. Kroger had $135 billion in sales last year, up by 10.6 percent from $122 billion in 2019, according to the company. Costco’s sales grew by 9 percent last year, to about $163 billion, from $149 billion the year before. Walmart’s food sales grew by $3.6 billion in the third quarter of this year alone, the strongest quarterly growth in six quarters, Walmart’s chief financial officer told investors in an earnings call last week.
Bianca Agustin, the corporate accountability director for the nonprofit labor advocacy group United for Respect, said in an email that the strain of rising costs on low-wage earnings is “an urgent reminder for Congress to raise the federal minimum wage to at least $15.”
“This is the bare minimum to ensure essential workers and working families are included in the economic recovery,” she said.
There has been a wave of calls to raise the federal minimum wage as the grueling pandemic has thrown grocery workers like Hughes onto the front lines of the virus and driven political animosity toward safety protocols like masks. In response to the added work risk of contracting the virus, some retailers temporarily enhanced their sick leave benefits and rolled out hazard pay for front-line workers a few months into the pandemic last year. However, by June, Albertsons, Kroger and Fred Meyer were some of the grocers that ended their bonus pay for working through the pandemic.
As the pandemic lapped its one-year mark, retail workers began leaving the industry in droves because of low wages and burnout. The Labor Department reported that 730,000 retail workers quit their jobs in August and 685,000 in September. In response, retail companies rushed to increase wages to retain workers and enhanced benefits to draw in applicants to fill a growing list of open roles. Costco raised its minimum hourly wage to $17 last month. Natural Grocers said last month that it is raising its starting hourly pay to $14 to $18. Aldi announced in August that it is bumping its average hourly starting wage to $15.
“Wage increases have been hopeful signs,” said Gary Burtless, a senior fellow in economic studies at the Brookings Institution. “Although at the moment it’s not widespread enough to be reflected in the economy.”
At the same time, skyrocketing consumer demand for goods, a global supply chain crisis and labor shortages have fueled higher prices. Price inflation hit its highest point last month in more than 30 years, at 6.2 percent.
When it comes to wage gains, workers in the hospitality industry got a 1 percent increase in September compared to the year before, Richardson said. Trade and retail wages rose by 6.7 percent in September compared to a year ago, which means wages in the sector are barely keeping up with prices, she said.
The gap between hourly wages and the cost of food often means many grocery workers face the daily experience of being around food they can’t afford.
“It’s terrible checking out baskets and baskets of groceries knowing I can’t buy them,” Hughes said.
It’s terrible checking out baskets and baskets of groceries knowing I can’t buy them.
While job-switching has led to higher wages for some, leisure and hospitality and retail are unique segments, in that moving jobs is generally not as profitable as it is in other industries, Richardson said. The few benefits some workers get from their grocery employers are too valuable to give up for better-paying jobs with fewer benefits.
A supervisor for a Kroger store in Tennessee, who asked to remain anonymous because she isn’t permitted to speak to the media, said she often skips breakfast and eats a couple of crackers to stretch her budget. She makes $10 an hour working part-time while she attends community college. But for a college student supporting herself, the company’s benefits outweigh the low pay.
“I have looked into other jobs,” she said. “But Kroger has certain benefits that I want in case I ever need them, like health insurance, and if something with my school scholarship falls through, there is tuition reimbursement.”
Kristal Howard, a spokesperson for Kroger, said in an email that the company has invested $800 million in wages and training over the last three years. It is investing $350 million more this year to raise its average national wage to more than $16 an hour. It also rolled out one-time pandemic-related bonuses of $1,200 for part-time workers and $1,760 for full-time workers.
Hughes said that she has considered leaving Walmart but that she earned full-time status at the company only last year, which comes with long-term and short-term disability benefits.
“It’s hard to even pay my bills and make it through,” she said. “It’s just figuring out how to get through day to day and trying to budget how I’m going to afford food.”
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