Free Markets, Free People

Daily Archives: November 23, 2012

Hey consumers, it’s your fault if Wal-Mart strikes

Jordan Weissmann has a piece in The Atlantic entitled “Who’s Really to Blame for the Wal-Mart Strikes? The American Consumer.”

Balderdash.

While I will admit that the demands of the American consumer being partly responsible for the wage scale paid by Wal-Mart, I frankly see no consumer liability in that responsibility.  Wal-Mart saw a need, constructed a model and has successfully fulfilled that demand.   And last I checked, no one has twisted anyone’s arm or marched them into Wal-Mart and made them take a job.

The American consumer’s role?  It is like us saying “you can have open borders or you can have a welfare state, but you can’t have both”. You can demand the lowest prices or you can demand “mom and pop” be saved and pay their workers more (but then you have to commit to voluntarily doing business and paying higher prices) but you can’t have both.

Weissmann is essentially claiming that the consumer is to blame for impending strikes by demanding lower prices. Lower prices mean lower pay and because Wal-Mart isn’t paying a “living wage”, it’s employees are striking. Again it’s a part of the left’s disingenuous”fairness” argument.

But by now, that low-price, low-wage model has become the industry standard among discount retailers, or at least close to it. The median retail worker earns $14.42 an hour, but at big box chains, the pay is significantly lower (the notable exception being Costco, which commendably pays its employees a living wage). Walmart, for instance, says it pays full time sales associates $11.75 an hour on average. But independent analysis peg the figure much lower, closer to $9. According to IBISWorld, that puts it a bit behind companies like Home Depot and Lowes, but ahead of its nearest competitor, Target, which has managed to put a more fashionable face on the same abysmal pay for its workers.

First a “living wage” is different for different people. If husband and wife are both working, the one working at Wal-Mart may be supplementing the higher wage of the other spouse. Who is to say what the Wal-Mart employee earns isn’t sufficient to live quite well on?  If it is a teenager living at home, what’s a “living wage” to him or her?  What, in fact, the Weissmann’s of the world are claiming is that any wage paid to anyone should be sufficient to “live on” based on whatever arbitrary standard they choose to apply.  My reaction?  None of your business – everyone goes to work and accepts the wages they do for their particular reasons.  If they aren’t satisfied, then they can leave.

That brings us to point two, if you don’t like the pay at Wal-Mart, seek a job at another employer. I doubt that most “big box” companies look at their employees as permanent. Wal-Mart and others are, for many, a stop on the way (for experience) to higher paying jobs. If it’s not, if it is all someone is qualified to do, then that’s their problem, not Wal-Mart’s and not the shopping public’s.  My suggestion is to seek out further training or schooling elsewhere.  But it isn’t the job of the public to subsidize your wages just because you think you’re worth more than you really are.

Wal-Mart doesn’t exist to pay a “living wage”, whatever that is. It exists to serve it’s customers and turn a profit. It is that profit that allows them to provide what is demanded by their customers and to pay their employees. If  wages are too low, workers will likely look to an alternative for employment. Yet, somehow, Wal-Mart remains fairly consistently fully staffed.

Like it or not (and the complainers usually don’t) that’s the model. It works. It provides consumers what they demand.

But that’s not what the fair police want, you see. And that’s where you see this sort of an argument:

There are many reasons why pay in retail is often paltry. Among them, it’s a low-skill industry with high turnover and a lot young workers. But the sector’s utter lack of of union presence certainly plays role. And for that, we can thank both Wal-Mart and Washington. From its earliest days, Wal-Mart has taken fiercely antagonistic stance towards organized labor, keeping its stores union free by using every ounce of leverage Congress has given employers — so much so that, in 2007, Human Rights Watch called the company “‘a case study in what is wrong with U.S. labor laws.”

In essence what Weissmann is arguing is workers should be paid more than their worth in a competitive labor market  (low-skilled young workers with little experience).  It’s a matter of “social justice” – that nebulous term used to justify intrusion into markets because they “care” (with your money, usually).  And their go-to vehicle for achieving this “social justice” and upsetting a business model that favors the consumer is the union.  Other than grow fat and demanding, that’s what unions are there to do.

See Hostess and GM for how that usually ends up.

But to his point, there’s a reason Wal-Mart is “fiercely antagonistic” toward unions. That’s because unions would wreck the model they’ve so painstakingly put together over the years, the one which their customers demand. Customers don’t show up there because they love Wal-Mart.  They show up because they get more for their hard earned money.

Unionize, demand wage and pension increases and all the other concessions that put GM in the poor house and Hostess out of business and you’ll find one thing to be true – Wal-Mart’s customers will go to Target.  Or Kohls or some other “big box” retailer.

But they’re not going to pay higher prices.  They like the model.  It works for them and their situation.  And they will seek out the next best alternative when and if they see prices go up at Wal-Mart.

So, perhaps it is time for those like Weissmann to figure out what Wal-Mart is – it is a store that offers deep discounts on thousands of items that its customers demand.  Oh, and by the way, it also has employees who are paid according to that customer driven model.   The  workers have choices, if they’ve prepared themselves – work at Wal-Mart to gain experience and move on, or go do something else.  For those who haven’t prepared themselves for anything else, it isn’t the customer’s job to subsidize their wages just because they believe they should get more even if they haven’t earned it.

But for those who can’t let this go, I have an idea.  Each and every Wal-Mart store ought to establish at least one check-out line which is for those who want to pay the highest retail price found for the items they’re going to purchase.  Wal-Mart could research that, have the cash register price the items according to that research and at the end the Wal-Mart associate could say to the person, “and you over-paid by $53.00, have a nice day.”

Wal-Mart would then promise to take the difference between their prices and the premium prices and apply it to the pay of all Wal-Mart associates.

How’s that for fair?  And people in that line wouldn’t have to feel like hypocrites when they diss Wal-Mart for it’s presumably low pay while they continue to buy at the store.

Of course, that particular line would likely to look like something out of a Halloween display, all covered in cob-webs and the like.

~McQ

Egypt’s Morsi grants himself new powers – So much for Arab Spring

It’s a bit of “meet the new boss, same as the old boss” but with an Islamist slant:

Egypt’s president on Thursday issued constitutional amendments that placed him above judicial oversight and ordered the retrial of Hosni Mubarak for the killing of protesters in last year’s uprising.

Mohammed Morsi also decreed immunity for the Islamist-dominated panel drafting a new constitution from any possible court decisions to dissolve it, a threat that had been hanging over the controversial assembly.

Liberal and Christian members withdrew from the assembly during the past week to protest what they say is the hijacking of the process by Morsi’s allies, who they saw are trying to push through a document that will have an Islamist slant marginalizing women and minority Christians and infringing on personal liberties. Several courts have been looking into cases demanding the dissolution of the panel.

The Egyptian leader also decreed that all decisions he has made since taking office in June and until a new constitution is adopted and a new parliament is elected — which is not expected before next spring — are not subject to appeal in court or by any other authority. He also barred any court from dissolving the Islamist-led upper house of parliament, a largely toothless body that has also faced court cases.

In essence he has declared himself (by issuing his own handy “constitutional amendments”) supreme and above the law.

I’m not sure why anyone is particularly surprised.  He promised no one from the Muslim Brotherhood would run for president and then ran for president.  He claimed that they’d do the will of the people and now he’s actively making women and religious minorities into 2nd class citizens.  And his government will have a pronounced Islamic theocratic slant all written into law.

He also supports the terrorists in Gaza.

Yup, that “Arab Spring” thing is just working out about as well as one could hope, huh?

Forward.

~McQ