As good a time as any

by on August 12, 2008 at 5:36 am in Economics | Permalink

Kathy G writes:

I thought it was as good a time as any to begin a project I’ve been contemplating for a while now: an occasional series of posts about why Wal-Mart is the single institution that, above and beyond all others, represents the despotism, moral depravity, and sheer viciousness of American life in the 21st century.  As surely as the motto of this humble blog is "Écrasez l’infâme!," there is no better synecdoche for the modern infâme than Wal-Mart.

Here is post one in the series.  Here is the next paragraph:

Why Wal-Mart? For one thing, Wal-Mart is huge. It is America’s, and the world’s, biggest company (in terms of revenues), and also America’s, and the world’s, largest private sector employer. Using the figure listed here on Walmart’s 2007 revenues, and the figures for the U.S. GDP in 2007 listed here and here (which all give slightly different estimates for the GDP), I calculate that Wal-Mart’s revenues are equal to approximately 2.7% of the gross domestic product of the United States.

It is argued that Wal-Mart has a negative net effect on U.S. wages.  I would sooner stress that Wal-Mart has boosted Chinese wages and lowered inflation rates (and thus raised living standards) for many poorer Americans.  On the negative side it might be argued that "jobs selling toys" pay less than "jobs making toys."  Even if that is true, perhaps America would not have kept the jobs making toys anyway, thus making Wal-Mart a net increase in the demand for labor.  Alternatively, you might argue that Wal-Mart’s competitive prowess induces other firms to work harder to cut labor costs.  Again, this story works only if you start with a net increase in the demand for labor from the side of Wal-Mart.  Can the induced "get rid of the x-inefficiency of overpaid workers in other firms" effect be so large?  I am still inclined to side with Wal-Mart as providing a net increase in the demand for labor.  Kathy G, it seems, sees the matter differently.

Read the whole thing.

1 John Dewey August 12, 2008 at 6:04 am

Kathy G seems to believe that fighting unions is something unique to WalMart. Corporate leaders, who represent the interest of the firm’s owners, have a legal obligation to hold the line on all costs, including labor.

What’s truly amazing about folks such as Kathy G is that they would use the force of government to deny consumers and workers their freedom.

Walmart does not enslave its workers. Every new Walmart is flooded with job applications weeks before opening day. The company offers an opportunity to job seekers who are eager to take advantage.

Walmart does not rob its customers of their money at gunpoint. Every new Walmart struggles to serve the throngs of customers on opening day. The compay simply offers products at low prices which its customers snap up with glee.

Who is Kathy G that she believes she can deny Walmart workers and Walmart customers their freedom?

2 Andrew August 12, 2008 at 6:50 am

Newsflash, corporation doesn’t like unions!

Given their rural growth stragegy and that they grew out of Arkansas and The Heartland,

http://projects.flowingdata.com/walmart/

is it really that astonishing that in a country of 80% white, where there are more whites distributed in the heartland and rural areas that Wal-Mart might have 90% whites in middle management?

Of course Wal-Mart might get it’s underwear in a knot over a quasi-socialist running the country. We just got done with an experiment called the 20th century where we found a good proportion of the world’s people will do stupid and brutal things following charismatic ideologues.

These people are so annoying, so simple, and yet so dangerous. I really wish they’d just come out and say they hate capitalism and want a kinder gentler socialism.

3 Tom Kelly August 12, 2008 at 7:14 am

I don’t know how my elderly mother would survive without Walmart. Her social security check goes so much farther since Walmart opened up in the town where she lives.

Walmart has become the “Main Street” in her community. It is one of the places where she sees her friends in a warm, safe environment (her town is one of the coldest places in the U.S.).

When a recent crisis affected the municipal water supply it was Walmart that trucked in multiple trailer loads of bottled water within a few hours and sold it at a price that was certainly less than cost.

Before Walmart came to town, there were things you just couldn’t buy. There was no store that sold computers and many other electronic items. Buying such things involved a four hour round trip over a steep mountain pass.

I’m on the other end of the spectrum. I live in a major city and can afford to shop anywhere. We do around 30-40% of our retail purchasing at Walmart. It is an amazing cultural experience as we get to shop alongside a veritable United Nations of customers at a store that is situated right in the middle of a sea of multi-million dollar “McMansions”. Their sushi is every bit as good as what we’ve had from Whole Foods right down the street.

So just a bit of anecdotal evidence- Walmart makes my mother very happy in a rural town and makes me very happy in a big wealthy suburb. How can that be evil?

4 Luis Enrique August 12, 2008 at 7:45 am

“the despotism, moral depravity, and sheer viciousness of American life”

If that’s a fair summary, you have much bigger problems than the structure of the retail sector. Also, I don’t know what Kathy’s desired policy response would be, but if it can be reasonably summarised as “more regulation” then that regulation will need to yield some pretty miraculous results, to drag American society out of its vicious depraved depths.

(I say that as a supporter of some more regulation, here and there).

5 Finnsense August 12, 2008 at 8:33 am

Oh come on you lot. The point about Walmart is that it employs people full-time who cannot live anything other than the most basic existence on the wages they pay. I’d argue it’s not Walmart’s fault but it is massively counter-intuitive to most people that someone can have a job in the richest country in the world and still have so few options.

It all comes down to what you think is fair and there’s no real way to argue either way. Personally, I disagree with the author that American life is despotic or morally depraved. It is somewhat vicious though.

6 David August 12, 2008 at 9:01 am

Finnsense-

What would you have Walmart do then? Pay these people more than they’re worth, to the detriment of Walmart shareholders who Walmart executives are ultimately responsible to?

The fact that an almost unemployable human being can even carve out the most basic existence is the only justification of Walmart that anyone should need. If not for Walmart, what would these people do? The ugly reality is they’d die of starvation for lack of any income. The income they make from Walmart, which we may consider meager, is the height of their earning potential and if you actually speak to a Walmart employee, many of them are quite thankful for the opportunity that Walmart provides them.

You’ll rarely find the poor taking up arms in these battles against Walmart’s business or employment practices, because they realize that Walmart is helping them.

7 DK August 12, 2008 at 9:10 am

when did America make toys? I grew up in the ’70’s and all the toys I remember were made in Taiwan or Japan (with most of the profits going to Hollywood intellectual property monopolists). Now my kids get their toys from China (with most of the profits going to American and British (thomas the train) intellectual property monopolists).

8 John Doe August 12, 2008 at 9:18 am

Wal-Mart is the single institution that, above and beyond all others, represents the despotism, moral depravity, and sheer viciousness of American life in the 21st century.

Sheesh, this is going to be one amazingly ideological rant (no matter how much she pretends to dress up her “ideas” in scholarly language).

9 Luis Enrique August 12, 2008 at 9:34 am

David, your “just be grateful you are not dying of starvation, you miserable wretches!” justification, isn’t doing ‘right-minded economists’ any favours. Thankfully, no right minded economists would come out with it.

10 hutch August 12, 2008 at 10:03 am

luis,

another way to express david’s argument is that working for wal-mart is their best option, as opposed to their only option. we all want to pursue our best options. of course they have other options. they could, as you allude, starve, find another job with either less hours or less pay (wal-mart does pay higher than the min wage), sit and live on the g-ment dime, or resort to theft. all of those, i would argue, are less-good options.

we’ve all heard of the people lining up weeks in advance to get jobs when i new wal-mart opens. these aren’t people who have already lost their jobs b/c of wal-mart competition. these are people who feel that a job with wal-mart is better than what they’re currently doing.

on another note, as for target, does anyone know if it is unionized? i would assume so since kathy g doesn’t mention it, but i don’t know.

11 thetillerman August 12, 2008 at 10:04 am

well, this rules out my best guess about the blogger who’s too-obnoxious-to-read

12 John Dewey August 12, 2008 at 10:12 am

Grant: “Wal-Mart primarily serves the poor. Judging by the cars parked outside of Wal-Mart stores, most of its customers seem to be lower-class.”

That was once true, but Walmart has moved beyond serving only the poor and the blue-collar of America. Here’s two links showing that Walmart is now offering such amenities as a huge selection of quality wines, sushi bars, and performance bicycle centers in stores in affluent neighborhoods:

Wal-Mart turns attention to upscale shoppers

Highland Village Walmart Supercenter

WalMart saves 125 year old pecan tree

In the parking lots of these North Texas Walmarts one can find as many Mercedes, Lexus, and Escalade vehicles as Chevy’s and Kia’s.

Walmart is still the low price retailer, but that doesn’t keep many of us more affluent folks from saving money there.

13 John Thacker August 12, 2008 at 10:21 am

The point about Walmart is that it employs people full-time who cannot live anything other than the most basic existence on the wages they pay. I’d argue it’s not Walmart’s fault but it is massively counter-intuitive to most people that someone can have a job in the richest country in the world and still have so few options.

But at least they can buy things at Wal*Mart. It’s not like wages at Wal*Mart are any lower than Target, Borders, etc. in places where they compete. One big difference is that Wal*Mart locates stores in rural areas, small towns, and (attempts to locate in, when not blocked) inner cities that Target et al. won’t touch because they’re not wealthy enough. This explains most of the particular anger towards Wal*Mart:

1) Because Wal*Mart locates stores in a wider variety of areas, it’s bigger. *Much* bigger than Target. That’s not so obvious if you only live in a suburb and don’t visit small towns. To a certain type of person, the bigness itself is suspect.

2) Because Wal*Mart locates in small towns and rural areas, there’s a lot more opportunity for stories about all the change to those areas and business put out of business. (Small businesses that buy supplies at Wal*Mart rarely feature in such stories.) It’s a lot harder to make a “Target and Borders and Best Buy are preventing small boutique shops that never existing from opening up in that new suburb!” argument.

3) Because Wal*Mart opens shops in poorer areas with lower cost of living than competitors where there are few competitors, its overall wages are lower, even though they’re similar in areas where there’s competition. (But inner cities’ experiences with grocery stores have shown that chasing out Wal*Mart is no way to guarantee that competitors will arise.)

4) Several others have mentioned that most Wal*Mart critics don’t shop there, and what’s more, make more income than the average Wal*Mart shopper.

In short, to me the decisive point is that Wal*Mart pays similar wages to its competitors in similar areas, but sells goods to a poorer clientele. If big box retail is really driving down wages or not paying enough to live on, then certainly it’s better that Wal*Mart drives down prices on what they buy rather than lowering wages for the poor in order to provide better deals for the middle class, like Borders or Target.

14 8 August 12, 2008 at 10:27 am

If Wal-Mart could run for President, I would vote for Smiley Face dude. I can already see the monthly commercials with the Smiley Face dude chopping taxes. He’d reform the bureaucracy and lower the payroll with people from the welfare rolls and still net an efficiency gain.

15 K T Cat August 12, 2008 at 11:00 am

I love WalMart. I prefer to shop at Target, but I still love WalMart. I find the people courteous and pleasant. I think their concept of greeters and emphasis on helpfulness by their employees has led to a similar revolution across similar retailers.

As for the employees, WalMart does not take all of their employees time, does it? It keeps clothes on their back, a roof over their heads and food on their table so they can work at improving themselves on their own time. The critics seem to imply that being a greeter at a retail giant ought to be a satisfying and sufficient career for someone, providing them a living wage for their family. That’s hilarious! It’s like these people want a nation of proles, a nation of people who never get off (or even want to get off) the bottom rung of the economic ladder.

If I worked at WalMart, I’d be spending my nights studying something more useful and be grateful that they gave my life stability while I climbed up to a better life.

16 floccina August 12, 2008 at 11:26 am

IMO if Walmart paid more they would get different employees. The real quetion is how to make the alternatives to a Walmart job good enough and plentaful enough that Walmart has to pay more.

BTW does anyone think that low pay would motivate one to work harder to move up to a better higher paying job?

17 liberty August 12, 2008 at 11:49 am

Luis,

Well said. First off, I’d much rather be low skilled in the US. Why? Because even if my first job was lower paid, I would also have a chance to climb the ladder.

This is also the main point about regulating stores like Wal-Mart. The more regulation and controls apply to those who innovate in efficiency, the fewer gains from technology and exchange occur in the sector and hence the slower that jobs are created, wages rise and prices fall in the sector. In other words, you need creative destruction to grow.

As for whether Wal-Mart has had the effect of first displacing other kinds of work, and then offering the best deal around in that new environment, Regulation Magazine did try to address this issue (along with others). The evidence to this point is “no, it did not.”

18 John Dewey August 12, 2008 at 12:11 pm

toxic: “can someone point to a unionized company that is successfully competing with non-unionized companies?”

UPS has been successfully competing with FedEx in time-sensitive deliveries for about two decades. Last I heard, FedEx pilots were the only unionized group in that company.

Kroger and Safeway are unionized. They compete intensely with Walmart’s grocery business.

19 John Dewey August 12, 2008 at 12:21 pm

floccina: “if Walmart paid more they would get different employees. The real quetion is how to make the alternatives to a Walmart job good enough and plentaful enough that Walmart has to pay more.”

I generally understand and agree with your points, floccina, but this time I’m confused. Why should we care whether Walmart pays more?

If Walmart is the leading retailer in the nation, its customers must be happy. If a Walmart opening attracts thousands of prospective employees, those employees who do get hired must be happy. If Walmart is earning many billions, its shareholders must be happy. Why should anyone want to change all that? Everyone who has an interest in the matter is happy.

If Walmart were somehow forced to pay higher wages, the company would find ways to reduce the number of employees. It may seem that the tasks of stocking and checkout could not be made even more efficient. But Walmart engineers and systems analysts would find a way.

20 JordanT August 12, 2008 at 12:31 pm

I rarely shop at the Wal-Mart in my area for two reasons. One is the extremely long lines, with a small amount of checkers and those checkers are slow. They have about 20-30 registers they could use, but on a Saturday I see about 5 open. Secondly, living in Southern California means that the average Wal-Mart worker speaks so little English they can’t direct me to where something is.

21 Snorri Godhi August 12, 2008 at 12:43 pm

the despotism, moral depravity, and sheer viciousness of American life in the 21st century

Sounds a lot like my experience of the Ivy League to me.

Wal-Mart’s revenues are equal to approximately 2.7% of the gross domestic product of the United States

By this measure, Europe should be much worse off than the USA — especially small countries with big corporations, like the Netherlands, Denmark, and Sweden.

22 hutch August 12, 2008 at 12:52 pm

luis,

i won’t pretend i know much about denmark’s welfare or labor systems, but i guess from what you said that it’s more generous than in the u.s. if true, who is “paying” for that more generous structure? skilled workers, right? so the question could also be: if you are a skilled worker, would you rather be in denmark or the u.s.?

it is possible to organize an economy differently, but based on the options out there, including denmark’s, the u.s. appears to offer the most options to the most people. isn’t that the ultimate goal? i know its a rough measure, but as far as i can tell, gdp per capita is roughly 15-20% higher in the u.s. than in denmark and they both have relatively low unemployment (admitedly higher in the u.s.). so if organizing the economy differently is an option, what should be its goal?

23 Xmas August 12, 2008 at 1:37 pm

I really like Tim Worstall’s comment…

http://thegspot.typepad.com/blog/2008/08/wal-mart-why-th.html#comment-125081744

To paraphrase: WalMart could be unionized and pay better, just like Costco. But then they’d have no need for half their workforce.

24 Finnsense August 12, 2008 at 2:28 pm

I’m not ducking the questions people above have asked by for the sake of brevity I’ll explain my main point again. The question being asked here (by me at least) is what the minimum salary is, people working full-time at the pits of society should live on. Clearly there is no *right* answer to this. You might not care about the weakest in society or you might have convinced yourself that they are where they are because they are lazy or morally inferior in some other way. Most people, however, would agree that there are a lot of people who are not capable, for no fault of their own, of doing difficult jobs. You can say, so you were born dumb, life’s a lottery, bad luck, fuck off or you can say, life’s a lottery but you’re still a person willing to put the hours in, so you can have enough money for a house, a holiday, a hobby, healthcare and so on. The de facto situation is that on the lowest WM wages don’t get that and the fact that some of them get paid more or that some people have partners who earn more, is completely irrelevant. No-one’s worried about some people, they’re worried about the worst off.

25 josh August 12, 2008 at 2:37 pm

People who work full-time at wal-mart are not homeless. They do take holidays. They do get health care, though perhaps not health insurance. They most certainly have hobbies. Have you ever met anyone who works at wal-mart. Next time you need to do some shopping, why not stop by to ask the workers about their wretched, wretched lives.

26 h-dawg August 12, 2008 at 3:32 pm

“Read the whole thing.”

This tells me that Tyler has no respect for my time.

27 Brian 2 August 12, 2008 at 4:02 pm

The question being asked here (by me at least) is what the minimum salary is, people working full-time at the pits of society should live on.

There are actually two questions there: what the minimum salary should be, and what a worker should live on. My two answers are significantly different.

You might not care about the weakest in society or you might have convinced yourself that they are where they are because they are lazy or morally inferior in some other way.

Strawman. There are many ways to help those at the bottom, and I’d argue that preventing employers from paying them less than an amount you deem to be “fair” is among the worst. Personally, I’d eliminate the minimum wage altogether and go with Milton Friedman’s negative income tax.

28 John Dewey August 12, 2008 at 4:47 pm

finnsense: “You might not care about the weakest in society or you might have convinced yourself that they are where they are because they are lazy or morally inferior in some other way.”

You insult us, finnsense, by implying that we do not care about the economic welfare of our nation’s poor. You have no basis at all to make that claim, and we deserve an apology from you.

How about a third case, finnsense, in addition to the two insulting implications you’ve provided? Many of us in capitalist America firmly believe that allowing employers to pay workers what they are worth maximizes the welfare of not just the entire society but of everyone in it. The poor and the disadvantaged in the U.S. have a pretty damn good life. If they cannot perform in the workplace, we go to great lengths to educate and train them. If they cannot be educated or trained, we provide for their welfare in numerous ways.

Distorting our economy by forcing employers to pay them more than what they are worth is by far the most damaging solution.

The U.S. has a much more ethnically diverse population than just about any other nation. We’ve accepted so many refugees, including millions of “economic” refugees from Latin America. Hispanics and Asians and Africans continuie to flee to our nation because they know this is the land of freedom and opportunity. Have you ever talked at length with any of America’s refugees and poor immigrants? Do you have any idea how thankful they are to be here? That some of them must work for months or years at wages you think are unjust doesn’t matter to them at all.

29 Greg August 12, 2008 at 5:47 pm

Southwest is highly unionized and apparently competes quite well. My hypothesis is that companies with relatively content workforces are less unionized but also have less to fear from unionization because there’s no animus between employees and management.

Regarding the point about turnover of 50% at WM being high, I’ve seen turnover at Domino’s cited as being 300% at some points. No one really likes minimum wage jobs. They basically treat you like an autonomon.

Some of the specific critiques of Wal-Mart are likely quite well-founded in my opinion – examples include unpaid overtime and sexual discrimination. People who want to extend that to the overall question of income inequality are misguided, in my opinion.

Lastly, I would be seriously tempted to give up 13% of my paycheck to get bumped up to 5 weeks of vacation. Maybe I should move to Denmark!

30 Hei Lun Chan August 12, 2008 at 6:39 pm

labor turn over at WMT is over 50%

All supermarket type chains have high turnover. Many are high school kids who leave after a few years for college or full time jobs elsewhere. I don’t know how Wal-Mart compares to other retail chains; I suspect they’re similar.

31 Brian August 12, 2008 at 7:56 pm

“If that’s the case, isn’t it a good thing that working at Wal-Mart keeps them from falling over the edge?”

In the sense that working at Wal-Mart is better than having no job at all, yes. But because of its low wages, it doesn’t tax the imagination to think that a lot of people who work there are living from paycheck to paycheck or are one accident away from serious problems; use whatever analogy you wish.

Nobody forces people to work at Wal-Mart, but those who do work there are limited by a more meager income than they might otherwise earn. We hear these statistics about charging a few pennies more per item would allow the chain to increase the salaries for its workers by a few dollars an hour. I understand that Costco, to use a commonly cited alternative, has a different business model than Wal-Mart, but if there is some truth behind those statistics, perhaps implementing a very minor increase in prices would allow for some solid gains in income for its workers. No, adding $1,000 or $2,000 won’t make these people rich, but getting $100 to $200 more per month could make a difference.

32 Richard August 12, 2008 at 9:35 pm

I understand that Costco, to use a commonly cited alternative, has a different business model than Wal-Mart

If Costco pays more, the remedy for “exploited” Wal Mart workers is to resign, and go to work for Costco.

33 Anonymous August 12, 2008 at 11:22 pm

well, this rules out my best guess about the blogger who’s too-obnoxious-to-read

No it doesn’t.

34 Brian August 12, 2008 at 11:39 pm

“If somebody has limited choices, you’re generally not helping them by removing the one that they actually chose. Do WalMart employees have better options that they’re ignorant of? Or is it that WalMart’s presence eliminates alternatives that would otherwise exist, like the celebrated “mom-and-pop stores” that often have worse wages and benefits?”

I don’t think I’ve ever advocated the elimination of Wal-Mart, nor would I.

We keep going back to the idea of having a job versus not having a job, but I am not sure why. The issue is income. If Wal-Mart drives down wages in an area, even as it lowers some prices, it could worsen the quality of life for some people. (About Tyler’s comment from above about a net increase of labor, I am not entirely sure of where he is coming from. It’s been a few years since my college economics classes.) Will people come out ahead if the prices of certain goods, like food, are lower, but others, such as housing and transportation, stay the same or increase? I find it easy to believe that independent retailers (whom I have no particular fondness for, by the way) pay worse wages than Wal-Mart, but I’d like to see some proof. If that’s not the case, and the incomes of people are lowered while their expenses stay the same or go up, then they probably aren’t better off.

“Yes, WalMart could give charitable donations to its employees (which is all that paying above the market price would be). Raising prices would be an especially bad way of doing so, since it would harm their customers who also skew toward lower incomes. And if they’re going to engage in charity why are their employees especially deserving recipients, compared to the actually unemployed, or starving Africans?”

That’s a very creative way of describing what I said. However, I think you are making what I said to be far more dramatic than it would be. If the price of something was raised by a few cents, say from $1.88 to $1.93, would this be enough to give the employees substantial raises? Some say yes. If that’s the case, then I’m curious about why the company is so reluctant to do it. I understand its margins are a lot slimmer than some realize–I’ve read the Furman analysis–and I know that the money has to come from somewhere. It just seems that the company could do more for its workers and not drastically reduce the wealth of its shareholders.

35 Richard August 13, 2008 at 5:17 am

I understand that it’s easy to say that people should just find higher-paying work, but it’s not always that easy.

Brian, if Wal Mart employees can’t find higher-paying work elsewhere, that means (assuming no market failure) that they’re by definition not underpaid.

36 John Dewey August 13, 2008 at 7:10 am

Brian: “We keep going back to the idea of having a job versus not having a job, but I am not sure why.”

Um, basic supply and demand? When the price of a good or service increases, the demand for that good or service usually declines. If Walmart were forced by law to pay higher wages, they would simply employ fewer workers. How? One way is to invest more into self-serve checkouts by making them even easier to use. Another is to employ fewer but more productive stock clerks they couldn’t attract at the lower wages.

Brian: “If the price of something was raised by a few cents, say from $1.88 to $1.93, would this be enough to give the employees substantial raises? Some say yes. If that’s the case, then I’m curious about why the company is so reluctant to do it.”

Why should they? Again, if Walmart’s U.S. sales are higher thsan any other retailers by a huge margin, its cutomers must be happy. If Walmart gets thousands of job application when it opens a new store, those who do get hired must be happy. If Walmart continues to earn huge profits, its shareholders must be happy. Why should Walmart raise prices and pay higher wages? Because you don’t believe those workers are being treated fairly?

Brian: “If Wal-Mart drives down wages in an area, even as it lowers some prices, it could worsen the quality of life for some people. “

Do you have any evidence to support this assertion that Walmart drives down wages?

37 AHan August 13, 2008 at 11:00 am

Headlines if Wall Mart increases wages:

Poor Residents have to cut down on stables because of higher prices at Wall Mart.
Higher Wages at Wall Mart hurts local business looking for similar employees.
Wall Mart firing its lowest skilled workers – leaving many with little hope for the future.

38 Brian August 13, 2008 at 10:17 pm

“Brian, if Wal Mart employees can’t find higher-paying work elsewhere, that means (assuming no market failure) that they’re by definition not underpaid.”

I understand that, but the technical definitions here don’t reveal the entire picture.

“Brian, et al: are you assuming market failure? How to fix that. Hmmm, let’s see: unionize; regulate (how, exactly?); don’t let those nasty vicious morally depraved businesses, like Walmart, into your town; or __________?”

Hey, I wouldn’t mind Wal-Mart being unionized. If only there was a remote possibility of that happening.

“When did Walmart become a worker-owned business / cooperative?”

I never said it was, nor suggested it should be. I simply said that if the company raised it wages just a little, it could do a whole lot of good for a great number of people. There’s a difference between getting a raise and working for a cooperative.

“Um, basic supply and demand? When the price of a good or service increases, the demand for that good or service usually declines. If Walmart were forced by law to pay higher wages, they would simply employ fewer workers. How? One way is to invest more into self-serve checkouts by making them even easier to use. Another is to employ fewer but more productive stock clerks they couldn’t attract at the lower wages.”

I’m not talking about direct government regulation. I’m talking about the firm itself taking the initiative to use some profits to give its employees a raise.

“Why should they?”

If they are paying wages that are lower than other similar retailers, and there’s a belief that those wages should be more in line with other retailers, the only way to do it is to give them a raise.

“If Walmart continues to earn huge profits, its shareholders must be happy. Why should Walmart raise prices and pay higher wages? Because you don’t believe those workers are being treated fairly?”

The points you raise aren’t particularly relevant.

The idea that many applicants for a limited number of slots is an indication only that the company itself is great to work for is ridiculous. That could very well be part of it. But there’s also a chance that it’s for lack of a better opportunity. I know, I know, some job is better than no job. Nobody is denying that.

As for the issue of wages, if it is indeed possible for the company to raise some prices by a few pennies to give its workers a raise, I’d support it. Of course, I’m not running the company, so I don’t have a say in the matter. And before anyone tries to suggest it, I am not advocating creating some special law that says this company in particular should pay its workers in a particular way. It’s just a discussion of hypothetical.

“If Walmart gets thousands of job application when it opens a new store, those who do get hired must be happy.”

I am not sure what this means.

“Do you have any evidence to support this assertion that Walmart drives down wages?”

There’s some research that suggests this, although it doesn’t seem like there’s a clear answer one way or another.

39 John Dewey August 14, 2008 at 10:36 am

Brian: “If they are paying wages that are lower than other similar retailers, and there’s a belief that those wages should be more in line with other retailers, the only way to do it is to give them a raise.”

There’s a belief by whom, Brian? Why should any other method than the market determine the wage rates of Walmart workers? Again, if Walmart receives thousands of job applications for the jobs it offers at $9.00 an hour, why on earth should the company pay one penny more? Furthermore, do you have any evidence that Walmart pays less than all other retailers? Not just Costco or Krogers, but all other retailers?

Brian: “I’m talking about the firm itself taking the initiative to use some profits to give its employees a raise.”

Why, Brian? Why should they take money from shareholders and give more to workers? Again, if Walmart is getting all the workers it needs at the wage rate it offers, why should they pay more?

Me: “If Walmart gets thousands of job application when it opens a new store, those who do get hired must be happy.”

Brian: “I am not sure what this means.”

It means that when people stand in line and fill out job applications, they are usually trying to get a job. When they actually do get the job, they are usually happier than before they got the job. My point was that Walmart workers are happy to have their jobs at $9.00 an hour. Why do you think that needs to be changed?

Brian: ” Of course, I’m not running the company, so I don’t have a say in the matter.”

No, you don’t. But do-gooders such as you have used the power of governemnt to impose your bel;iefs. Owners of retail stores such as me have been forced to pay employees more than market-based wages, Some of those employees who were happy to work for less have lost their jobs as a result of do-gooders “good intentions”.

40 Brian August 14, 2008 at 7:20 pm

John Dewey,

The point is that because of Wal-Mart’s size, it can do a lot to affect not only its employees but those other other companies. If it’s going to emphasize bare bones compensation, that could lead to many people finding it harder to earn what most consider a decent living. As I’ve said, the evidence isn’t entirely clear one way or the other, but it’s an important point to discuss.

Of course if people are working there, they must like what they are getting in return more than they hate whatever negative parts the job entails. But I don’t see why it should be all or nothing, a job that might not push you over the edge just yet versus unemployment. Why is it so inconceivable to try to improve working conditions for people? Of course they can always leave those jobs, but again, the choice shouldn’t have to be working in a job because it’s the absolute last resort before unemployment.

I don’t understand why you act as if it’s so bizarre to think that people who don’t make a lot of money should be paid more. I’m not talking about a seven-figure income for a cashier. I’m talking about a fairly modest $1,000-$2,000 raise from current levels. Based on how small the current salaries are, that seems like it’d do a lot of good for people. The money has to come from somewhere, but assuming that there could be no large scale increases in price (a toothbrush that costs $4.96 going to $4.98, for instance), this course of action seems appealing because it could help a lot of people.

As for the minimum wage, I’m not getting into a discussion of that here. It’s not really central to any discussion of Wal-Mart. Besides, there’s a lot of conflicting evidence on it.

41 Anonymous August 15, 2008 at 8:32 pm

John Dewey at Aug 15, 2008 11:53:43 AM

A straightforward, no-nonsense explanation of the free market.

Those who believe that seemingly small increases in business regulation and tax and mandated wage rates don’t negatively impact small businesses and employment levels aren’t paying attention. Or are not concerned with the consequences. My guess is the latter.

Brian, feel free to give your money to whomever you want, in any amounts you want. Especially if you own a business.

42 anonymous October 4, 2008 at 6:12 pm

First of all, Hi, Grant! No offense, Grant, but when an employee isn’t smiling, they might be trying to catch their breath, or they might be trying not to have a heart attack or stroke. I am old. Last week, on cut hours, I did 3 different people’s jobs.

I want to say this about unions. The employees of Walmart would not have started getting the pay and benefits that we have gotten if the Unions hadn’t started knocking on Walmart’s door. Sam Walton fought to keep from paying his employees MINIMUM WAGES.

Walmart and “Buy American”? It was Sam Walton who decided to go “global”.

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