In Why Wal-Mart Pays Less, Russ Roberts notes that it is supply and demand for particular sets of worker experience, patience, kindness, creativity, skills, knowledge, and abilities that determines wages, not benevolence.
I'd like to add two points:
1) Wal-Mart pay is NOT less for workers within the particular pool and geographic locations it pulls from. In many markets around the country, Wal-Mart pay is NOT less than Target, Best Buy, Kohls, or nonunionized grocers -- all the other places at which Wal-Mart workers might alternatively work. Anecdotal information sprinkled throughout this blog and on other sites, from workers who have chosen Wal-Mart over these and many others, demonstrates this.
2) Wal-Mart pulls from a different pool of workers than Costco does. What's so hard about admitting this openly? The focus on Costco, like Dr. DeLong's recent retail "model" post linking to this Financial Times article, even when admitting them, does not zero in on the differences in worker pools, and the problem this presents to other companies who might try to dip into the same pool:
“It’s important to pay people a fair living wage,” says Mr Galanti, “and if you do, and it’s better than everybody else, you’re going to get better people – and they’re going to stick around longer, and we see that.”Mr. Galanti is NOT willing to pay just anybody a "fair living wage"; he'll pay that to people who produce that much, but will not pay it to slackers.
And what is true and workable for an individual firm is absolutely false for an entire economy. Repeat after me: if everyone followed this model, nobody could make a profit. Surely, it is theoretically possible for every retail company to follow this model, but then not every worker will produce as much as he is paid. Who is to cover these losses?
Henry Ford could offer a $5 day AND make a profit when everybody else thought he was crazy. But he and his management team sorted through, weeded out, and rejected thousands of workers of inferior quality, picking out the cream of the crop. If everybody else in the same labor market tried to match that, they would be fighting over the same best workers, not the ones who were rejected. Ford thought and Costco thinks that only a certain type of person deserves high wages. Wal-Mart acts on the same economic principle, but employs many people Costco would reject... and I take from this that there is no moral superiority to the Costco "high-wage model"....
Posted by Kevin on July, 14 2005 at 10:04 AM
Anonymous wrote:I am going to add clarifications for you (mine own - in synonym format).
Laborers - are people.
Pools of workers - are people.
I work at Walmart - and make very little (barely enough to survive).I am in your definition - a laborer and one in a pool of workers.
In my difinition - I am a person -
With very little hope left.
I think I'm on the cutting edge.
-- July 14, 2005 11:55 PM ∞
meyergmac@aol.com wrote:Well, don't even think about bringing up Henry Ford. Yes he did change the country. He changed it by paying a wage twice the going rate, with addendums and specifications - buy a care, pray in this church this and that such. Don't fight an argument with past success - make a new success.
I can't even think how to fight this one, it is so convaluted.
Walmart uses this as justification - well, if we weren't such a good employer - nobody would apply - we have 5,000 applying for every 500 jobs.
Here's the other side of the coin - if we weren't so desperate - we wouldn't be applying.
Some companies have dental care - Walmart workers have very few teeth.Figure that one out - biatch.
-- July 15, 2005 12:12 AM ∞
Roy W. Wright wrote:Funny how people with no recourse to logic or convincing arguments choose to use insults instead.
-- July 15, 2005 02:24 AM ∞
Kevin Brancato wrote:Why shouldn't I bring up Ford?
The short-term and long-term effect of Henry Ford's $5 day was minimal -- except for his company and those deemed deserving enough to get one those jobs at that time. I have seen absolutely no evidence that the $5 a day increased wages or bonuses for the workers Ford rejected as incapable and undesirable. Hence, Ford did not "change the country", however much labor historians would like that to be true.
However, if I am proven wrong on this one, so be it. If you have evidence -- in the form of papers and books and talks by reputable scholars, I'd gladly change my view.
The link I offered above about Ford's $5 day was my calculation that those hand-picked specially-skilled workers earned about $10 an hour in today's dollars; however, as you know, $10 an hour is little more than the average full-time Wal-Mart worker earns today in wages and benefits (but excluding deductions). Please note that half of that $5 a day was a bonus, not a wage...The $5 day was killed in 1917. Why? It cost too much. Ford's claim that it was the best cost-cutting move he ever made is belied by his own accounting records (this is an EXCELLENT paper), which show that almost the entire productivity gain of $5 days on the new assembly line was paid in in the form of higher wages, showing no net gain. henry Ford was talking about man hours, but accountants talk in dollars. The $5 day did little to make cars affordable to the everyman.
Most of the price reduction on Ford's cars came from material price reductions, not labor cost reduction; the $5 day did not provide the means for his employees and others to buy cars, his other cost reductions did.
-- July 15, 2005 10:09 AM ∞
Bob wrote:I looked at the BLS data and it looks like to me that Wal-Mart pays wages consistent with the national average. Costco pays more, but also makes more money per worker. They have a different model and it should be said that they did discriminate against poor customers for years.
-- July 15, 2005 08:59 PM ∞
Brandon Weber wrote:Great article on Costco's model:
http://www.nytimes.com/2005/07/17/business/yourmoney/17costco.html
-- July 16, 2005 05:24 PM ∞
Dimitar Vesselinov wrote:Why so nervous about robots, Wal-Mart?
"All that you have to do is read Robots in 2015 to understand why Wal-Mart doesn't want to discuss it. The completely robotic Wal-Mart is just not that far away. When Wal-Mart converts, the company will need to dump about 1 million employees onto the job market.
At the same time, every other retailer will need to convert to the same kind of system in order to compete, which means about 10 million people will pour onto the unemployment rolls over the course of just 3 to 5 years. At the same time, millions of teachers will be pouring onto the unemployment roles as well. So will pilots. So will... see Robots and jobs for a long list.
It will be a remarkable period of time, for which there is no precedent and for which we are largely unprepared. See Robotic Nation for details."
http://roboticnation.blogspot.com/2005/07/why-so-nervous-about-robots-wal-mart.html
-- July 16, 2005 07:46 PM ∞
Anonymous1 wrote:7/22/05.
Why is your site downloading files to my computer?
-- July 22, 2005 11:08 PM ∞
Kevin Brancato wrote:Please tell me more about this file downloading business.
Which files? When does this happen? How do you know it's from ALP?
-- July 23, 2005 12:53 PM ∞
Anonymous wrote:Specifically - it happened right after I clicked on your site, and right after I began posting. Prior to that I was on the AOL Personal Finance Site.
This has never happened before - ever, and I'll give you the benefit of the doubt, if you explain to me what Beta Testing Is.
Conincidentally - as I post this AOL Spyware kicked in.-- July 23, 2005 11:01 PM ∞
Kevin Brancato wrote:Beta Testing means I've upgraded to Movable Type 3.2 -- a standard blogging tool. That's al I've done, which is why I'm dumbfounded that this is happening. Also bizarre is that my spyware tools are finding nothing.
-- July 24, 2005 12:58 PM ∞
Catmoves wrote:It just might behoove all you WM backers to read a book by Barbara Ehrenreich entitled "Nickel and Dimed." WM workers are in your pocketbooks.
-- July 26, 2005 09:44 PM ∞
Kevin Brancato wrote:Catmoves,
I read Ehrenreich's N&D; what about it would you like to discuss?
-- July 26, 2005 09:51 PM ∞
