I'd like to dig into the various business and economic issues at play when I've got more time, but one of the things that's particularly struck me about this conversation is the following interchange which seems to invariably result when Walmart comes up:
A: Walmart pays poverty level wages. The company makes huge profits and should pay more.
B: Walmart pays low wages because they employ low skilled workers to do low productivity work. The work isn't worth much more than they're paying for it.
A: But if Walmart paid higher wages, they'd get a higher quality of worker and those higher quality workers would be more productive and they'd make even more money. Look at Costco and Trader Joe's!
Now, I like Costco and Trader Joe's, both as business models and as places to shop, and I'm not fond of shopping at Walmart (indeed, we basically never do these days, though back when we were financially really hard up, we did.) But the thing that strikes me about this line of reasoning is that it purports to be really worried about workers at Walmart, yet then immediately jumps to the idea that if only Walmart paid more, it could not hire the kind of people it currently hires.
Now, maybe it would be nice if Walmart paid higher wages, but if instead of 2.1 million low paid low skilled workers it had 1.4 million better paid more skilled workers, that kind of leaves all the low skilled workers who currently work there out in the cold, doesn't it? Making $8.80/hr to stand by the door and greet people doesn't sound to me like a fun and rewarding way to make a living. (Indeed, back when I went to Walmart fairly often the greeters always kind of bugged me because it seemed like a job I'd hate having.) But if Walmart went to a business model in which they paid twice as much as they currently do and hired more productive workers, a lot of the folks who are currently doing that kind of work at Walmart would simply be out of a job, or else doing something worse. That seems an odd way of doing them a favor.
14 comments:
$8.80/hr plus benefits, if full time.
When I hear about how terrible it is to work at Walmart, I can only remember one thing. My cousin is a manager at Walmart and when his only child was born, he got two weeks paid paternity leave. That's real paternity leave, not scraping sick and vacation days together. And that's also two more weeks of paid parental leave than I have ever received birthing three babies working at a 'progressive' institution.
Walmart can't be all bad if they offer paid parental leave benefits for a low-level manager in an area of the country where that type of benefit is literally as rare as a hen's tooth.
I believe the reply is typically, "Well, the minimum wage should be raised, then even the unskilled worker would get paid that much!"
Of course, then comes the reply of, "Or, they wouldn't be hired at all, or far less of them would be hired."
I imagine the counter-reply to that could be, "Well, maybe we could pass a law forcing businesses to hire more people!"
Boo hoo. I'm sorry, but I have two degrees and can only find contract work in copyediting/copywriting--companies that pay WAY less than what contract wages should be so that they don't have to hire as many full time workers and pay for benefits. And at the end of a few months, it goes away. I don't feel that sorry for the Walmart workers. At least they have security.
Now, I'll never claim to be an expert on economics, but several things here don't make sense to me.
It's not as simple as low wages means you hire a certain kind of worker and higher wages means you hire a different kind of worker. The exact same person can be both kinds of worker, depending on what you pay him. Want workers who slack off, have an "I don't give a damn," attitude, are sloppy? Give them pay (or treatment) they feel is unjust. Pay the same people wages they feel are just and voila - magically you have workers who try hard, are careful, volunteer for overtime, and act like go-getters. Sure, some people will never be like that, but a lot of people will.
My husband has seen this with his own eyes at his blue collar job. See, the owner told everyone they weren't getting the normal yearly bonus or raises for several years, jacked up the health insurance costs, eliminated several other benefits, and laid off 2/3rds of the company because business was so terrible. Then he spent $14 million to buy himself a hunting preserve a few months later. Like magic, guys who had spent years acting like they lived for the company doubled their lunch breaks, stopped working 7 days a week, and generally just slacked off.
Besides, why does (voluntarily) giving your workers higher wages mean you hire fewer of them? I thought the whole point of Shea's post was that if the CEO of Walmart took a pay cut, there would be plenty of money to pay higher wages to their existing workforce. Why exactly does that put any lower-skilled workers out of business?
I'm in spitting distance of the poverty line right now. I, who always expected to be a stay-at-home mother, now have two part-time jobs, one a seasonal contract job. And yet, somehow, I can still summon up sympathy for Walmart workers and indeed all those who are struggling in this economy. "Security" doesn't mean much when all the security you have is the knowledge that every month you'll get a paycheck that is smaller than your expenses and you can be fired at any time, for any whim because there are 100's waiting to take your place.
Frankly, no American should play the "anybody who's better off than me doesn't deserve sympathy, but I do" game, because you can always find some Chinese sweat-shop slave or African subsistence farmer drinking filthy water and living in a mud hut to make us look like we live like kings.
If anyone isn't being paid just wages, then they aren't being paid just wages; that there are other people worse off is irrelevant. And it's pretty clear that unjust wages are a big deal to God; shouldn't it elicit more than a sneer or a mental shrug of the shoulders from us?
Salixbabylonica,
You bring up some good issues, and I feel bad that I haven't written a more extensive post on the issue yet, but I'll try to answer these in detail as best I can.
You're right that often when workers feel that they've been treated badly, they often stop working as hard (or look for work elsewhere.) I saw this happen at the job I left down in Texas. However, I think it tends to be more something that happens in cases where people see their expectations changed. If a company normally pays out bonus, but then it stops doing so, morale often plunges. If people see their wages cut or the cost of their benefits significantly increased, same thing. While it's true that people often don't feel good about jobs that don't pay much, Walmart has always had fairly low wages for its entry level associates, so at the very least there's no denial of expectations there. They pay about the same that other big box retailers do (Target, Kmart, Best-Buy, Barnes & Noble, etc.) and also about the same as fast food. Like those, this means that a lot of their entry level associates are people who would really like to be doing something else and making more money, and often bring a less than diligent attitude as a result. However, they also promote from within a fair amount, and their wages for department managers, store managers and assistant store managers are pretty decent, so there are certainly reasons out there to have a good attitude and work hard if one does end up there.
Besides, why does (voluntarily) giving your workers higher wages mean you hire fewer of them? I thought the whole point of Shea's post was that if the CEO of Walmart took a pay cut, there would be plenty of money to pay higher wages to their existing workforce. Why exactly does that put any lower-skilled workers out of business?
I kind of have the feeling that may be the point of Shea's post, but unfortunately it's not true. The relative salaries of the Walmart and Costco CEOs have nothing to do with how much their workers are paid or can be paid. For instance, the Walmart CEO gets about $18 million in annual compensation (his salary is a little under $2 million of that and the rest is stock grant and bonus.) That's a lot of money, but the company also has 2.1 million employees. So if his salary was zeroed out and the money was given to all the employees, this would get them only eight dollars and fifty cents per year or four tenths of a cent per hour. They have a number of other high paid executives, but even taking away all their pay would only raise hourly pay by a couple cents. Indeed, even if all of Walmart's profits were distributed to their workers as wage increases, Walmart employees would still make a good deal less than Costco employees.
The reason for this is that Costo's business model is different from Walmart. They're not open as many hours, products are put out on pallets rather than stocked on shelves, the number of products available is much lower, and their larger pack sizes and more affluent customer base means that their average sale is much higher than Walmart's. The result of all this is that Costco's annual sales per employee are $620,000 while annual sales per employee at Walmart are only $211,000. Costco's annual profits per employee are $10,625 per employee while Walmart's are $7,428.
So, given that Costco's sales per employee are three times those of Walmart, it's probably not a big shock that they pay twice as much as Walmart.
Now, it might well be the case that if Walmart paid all their people a bit more, they'd feel better about their jobs and work harder. But it's hard to believe that Walmart associates working harder would result in the sales at each store tripling, which is what would have to happen for Walmart to have sales per employee as high as those of Costco. In the retail industry, getting same store sales up just a couple percent over the previous year is usually seen as really good. If Walmart was going to be transformed into a company that paid as much as Costco while having roughly the same number of stores and sales per store as it does now, it would have to do so by having fewer employees and having those employees get a lot more done -- something which may not be all that possible given the size and type of stores that they have. But if it is possible, it would almost certainly mean that a lot of the folks who work there now would be unemployed or else working somewhere else worse.
+JMJ+
My apologies, Darwin, if I have shared this story before.
A few months ago, when I was hired for my current job, I couldn't believe how much the paycheck (the biggest I had ever been able to command) motivated me to do well at work. Money talks, you know, and what this money told me was that I was more valued there than I had been even at St. Luinwath College, where I was supposed to have been doing "God's work" or something.
My naive conclusion was that if employers in the Philippines just raised salaries a little, they'd get more out of their employees. (My current company is European owned.) I said so to a friend who happens to be an employer, and she said, "Enbrethiliel, do you think everyone is like you?" Then she explained that if I worked for her, she'd pay me anything I asked for, but if she raised the salaries of her current employees, she would end up losing the money because it would change nothing about their work. And she argued that what she was paying them was the fairest possible figure.
I'm not saying that that's the issue Walmart is facing, but it seems to touch what you and Salixbabylonica have been saying in the combox.
In other news, it's not Walmart I have a problem with, but Amazon. By any chance, have you come across the "elf-slave" article and done an analysis of it here?
Enbrethiliel,
Doesn't ring a bell. Googling around on "elf slave Amazon" is that the Mother Jones piece from last year talking about working in fulfillment center warehouses?
The real path of advancement out of Wal-Mart's low wages is to someplace like Costco. However, from what I've seen shopping at both, 90% of Wal-Mart workers wouldn't last at Costco. Costco employees *hustle*, which is not true of most Wal-Mart employees. Those who do will either find their way to better-paying jobs, or slack off so they're still getting promoted, but not much more than that.
All that said, there's a lot of stupidity in business, and it's entirely possible that Wal-Mart could find a way to raise wages and raise profit-per-employee, though one suspects that would be accompanied by a lot of layoffs, as the amount of profitable work to do at any given Wal-Mart store isn't going to increase much.
+JMJ+
Darwin -- Yes, that's the one! I actually haven't ordered anything from Amazon or the Book Depository since I read it. =P
Enbrethiliel,
Okay, I've read over the Mother Jones piece and the other "Ohio's war on the middle class" Mother Jones piece that it references in regard to warehouse fulfillment center conditions.
I should be clear, my first reaction is skepticism just given the source. Mother Jones is the kind of far left 'zine where they still figure that Karl Marx got most things right even if they're now willing to admit that Stalin is not someone you'd want to invite over for dinner. So I come at the piece with a certain amount of suspicion.
Part of the problem with this pair of articles is that in an effort to keep sources from getting in trouble, it's very hard to know which stories are being related about which company's warehouses and which are first vs. second hand. The worst incidents mentioned in the Elf/Slave article appear to come from the friend "Sue" of the author of the "war on the middle class" article, but that friend is a manager at a warehouse for some un-named company that sells gift/trinket items -- not Amazon.
That said, working in a warehouse can be pretty lousy. The job I had back in California involved a bit of warehouse work fulfilling sample orders, and it was certainly always hot in the summer and cold in the winter and the work of packing and shipping stuff would be pretty mind-numbing if done all day.
My tendency is to think that the Mother Jones authors are taking some negative anecdotes and spinning them into a not-wholly-accurate tale of corporate cruelty just because that's what Mother Jones authors do. However, my youngest brother in law recently left a job at UPS to work in an Amazon fulfillment warehouse here in Ohio, so I guess if he runs into any elf slave situations I'll hear about it.
There are no Costco stores around here, or indeed anywhere within driving distance. So obviously they are very specialized and only serve certain markets -- unlike Walmart, which serves everyone.
And actually, Walmart is pretty picky about their hiring. I couldn't get hired there, and I had plenty of relevant experience.
+JMJ+
Thanks, Darwin! I didn't know that about Mother Jones, but I'd love to go undercover in the same warehouse for a week, just to see what's what. (Okay, I don't really mean that, but now I'm really wondering.)
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