In her compelling book Nickel and Dimed, Barbara Ehrenreich chronicles her experiences working “under cover” in various low-wage jobs, including a stint as a clerk in a Minneapolis Wal-Mart. She reports in general that workers in such jobs, which at the time of her research (1998-2000) made roughly $6-$7 per hour, face many economic hurdles beyond the obvious fact that if they have any dependents then they are living below the government’s definition of the poverty level. (One of the things that I must admit had not occurred to me until I read the book was that on this salary few people can afford a security deposit for an apartment, and therefore many live in single room occupancy situations where the cost of living is increased by such factors as the absence of a kitchen.) Depending on which reports one reads, it appears that roughly half of Wal-Mart’s employees cannot afford even the cheapest of the health care benefit plans offered to them by their employer.
All of this is in keeping with a strategy that I understand Sam Walton emphasized in his memoirs -- maintaining and increasing profit margins by working to ensure that the growth of workers’ productivity exceeds the growth of their wages and benefits. Today’s Wall Street Journal reports on another tool that Wal-Mart is employing to implement that strategy: a computerized scheduling system that will move many of its workers away from predictable shifts in favor of staffing based on the number of customers in the store at particular times. The front-page article indicates that workers in Wal-Mart stores where this system has been implemented complain that it deprives them of the ability to “know when or if they will need a babysitter or whether they will work enough hours to pay that month’s bills.” Some also have asserted that it has been used to cut back on the hours of the highest-paid sales associates. But it does improve the efficiency of staffing, which the retailer apparently hopes will translate into greater customer satisfaction, presumably leading to higher profits.
Many who criticize Wal-Mart’s employment practices rail against the unfairness of practices that enable the nation’s largest private employer to optimize its profits by pushing its workers toward (and in some instances below) the poverty level. I agree. But a company that profits in this manner is doing so not only on the backs of its employees, but also on the backs of all taxpayers -- who, among other things, foot the bill for the public assistance for which many of these workers undoubtedly qualify. It’s really nice that Wal-Mart is now selling fancy light bulbs that use less electricity, in an attempt to give more people the choice to become more environmentally conscious (as reported, coincidentally, this morning on the “Today” show). But I would suggest that no corporation of Wal-Mart’s size and profit levels should be permitted to pay employees so little that they qualify for public assistance.
Perhaps companies the size of Wal-Mart should be subject to a separate, meaningful minimum wage. Perhaps (as some have proposed) they should be fined when they “dump” employees into Medicare and other public programs by cutting back on wages and benefits. Or perhaps the answer is something else entirely. But in all events, it seems clear that despite its recent, highly-publicized efforts to improve its image, Wal-Mart is not going to fix this problem voluntarily. I hope, therefore, that we can move toward dealing with Wal-Mart’s labor practices as the public problem that they are, and take steps to address this problem on a national scale.
thanks garth, but that wasn't me that you just read. the wal-mart post was by adrienne koch. you have to look at the bottom of each post to see which of the bloggers wrote it. (i write about 60% of the entries.) happy new year to you. in my next comment, i'll address the merits of adrienne's post.
ReplyDeleteand now, a thought in response to adrienne's post, with which i generally agree. there are at least 3 different ways that the govt could ensure that low-wage workers do not have a deplorably low standard of living: 1) by mandating a higher min wage, health benefits, and other benefits; 2) by providing in-kind benefits or sector-specific vouchers (such as food stamps and medicaid) to persons whose income renders them eligibile; and/or 3) through mechanisms like the earned income tax credit, which operates essentially as a wage supplement. Adrienne favors strategy 1. Current public policy is a stingy mix of all three. Many economists would say that something like number 2 or number 3 is preferable in that it provides the least distortion to the labor market (while option 3 has the added virtue of rewarding work). My own economically unsophisticated view is that we oughtn't worry too much about the mix of these different approaches but should care more about the actual standard of living that results for the working poor and the non-working poor.
ReplyDeleteLet me add that I also favor the strategies Michael labels "2" and "3". My argument here, however, is that if the government is going to provide assistance to the working and non-working poor -- as I believe it should -- it should also take steps to ensure that its largesse is not being used to pad the profits of corporations who are not the intended beneficiaries of those particular programs. (Those guys have plenty of other programs from which they can benefit.) If Wal-Mart keeps costs down by letting the government pick up the tab for its workers' health benefits (or food stamps, or anything else), then the government is subsidizing Wal-Mart. I'm not suggesting that therefore we should have a minimum wage for everyone set based on what Wal-Mart and other corporations like it can afford -- although I suspect that in fact many small businesses whose profits are nowhere near those of Wal-Mart give their employees better pay and benefits than Wal-Mart does. My point, rather, is that maybe one size does not fit all here, such that perhaps it might be appropriate to codify a different (higher) minimum standard for the Wal-Marts of the world than we have for the corner grocery store.
ReplyDeleteWe could get at THAT through the corporate income tax, couldn't we?
ReplyDeleteI think one has to consider the efficiency issue, and it is not a trivial one. If we want to help the poor, by all means we should, but we should do it in a way that minimizes social costs. It is populist to attack corporations because they're making money - that's what they are supposed to do. Regulations should try to minimise the overall effect.
ReplyDeleteAnd I don't see why we should treat big companies any different then small ones. Isn't that discriminatory? if what we wish to do is increase the wellfare of poor working people, shouldn't we do it to ALL poor working people?
Omer
http://the-thousand-words.blogspot.com/
"But a company that profits in this manner is doing so not only on the backs of its employees, but also on the backs of all taxpayers -- who, among other things, foot the bill for the public assistance..."
ReplyDeleteGet rid of the public assistance, and the problem is solved. Simple enough.
"...there are at least 3 different ways that the govt could ensure that low-wage workers do not have a deplorably low standard of living..."
Government could also recognize that (a) no one has a right to any sort of standard of living from a private corporation, and (b) anyone trying to raise a family on a Wal-Mart salary needs more help than government can give them.
I made minimum wage once. I was 16 at the time.
Walmart will not fix this problem volutarily because from their perspective it is not a problem. They need the cheapest possible unskilled labor to produce the maximum amount of profit.
ReplyDeleteRather, the question is as a society, what sort of safeguards do we want to provide for unskilled labor and who should pay for these safeguards?
I believe that regulation should require a minimum living wage which rather than distorting the labor market would reflect the true cost of that labor.
How a minimum living wage would be computed, like a cat, can be skinned in many ways and is properly the subject of another post.
What is most disturbing is the deference shown to corporations and their "rights." The term Corporate Citizen is an oxymoron. A citizen has duty to his government and the interests of his way of life and society close at heart. He is capable of a pledge of allegiance to something other than profit. A corporation is a legal construct incapable of being a citizen.
If a corporation is incapable or unwilling to pay a living wage, it is an ill suited vehicle for its purpose.
Corporations are tools and should not be allowed to pursue practices inconsistent with the ideals of a just, free and wealthy nation.
Sobek, I'm not sure why we care that you made minimum wage only once when you're 16, but let me know if you'd like a cookie.
ReplyDeleteThat being said, most of America is not a Dorf on Law regular. And most Americans making minimum wage are not 16 year olds. Further, an increase in the minimum wage drives up wages for the entire lower end of the wage scale.
You're right, individuals do not have rights to standards of living from Walmart as a private corporation. But they should have a right to a standard of living from society, or at least a chance at improving their position.
Companies like Walmart are increasing wealth in the aggregate, but not spreading the wealth at all. The richest get richer, and the poor get relatively poorer. The amount of social mobility- the "American dream" of pulling one's self up by the bootstraps as I bet you endorse- in this country is nil.
For example, I realized this a few months ago when I realized that, as someone who grew up comfortably middle class, I am probably in the lower third of my law school class in terms of family income. The top third is probably comprised of students in the top 5% of income in the U.S., and the middle third 10-25%.
Now, I also made minimum wage when I was 16 (or maybe 15), but at 15 or 16, I had already accumulated substantial advantage in my life that made it improbable that I'd be working at Walmart in 15 years.
Sadly, many of those who are making minimum wage in their 30s at Walmart were also making minimum wage at 16. They didn't simply slack off for their lives. And unlike you or I, Sobek, their minimum wage at 16 may have put food on their table or help pay for rent.
"Rather, the question is as a society, what sort of safeguards do we want to provide for unskilled labor and who should pay for these safeguards?"
ReplyDeleteOne might first ask whether the federal government has any business providing such safeguards in the first place. It seems to be an unchallenged assumption around here. Or sometimes, a directly stated (but not defended) assertion:
"But they should have a right to a standard of living from society, or at least a chance at improving their position."
Why is that, exactly? Still more: "Companies like Walmart are increasing wealth in the aggregate, but not spreading the wealth at all." Why is that a problem? Since when does the Constitution mandate that private corporations spread the wealth? And yet you favor federal intervention, not just as a good policy decision, but in terms of rights. Again, why is that?
P.S. pardon the delay in my reply. Computer problems.
"working to ensure that the growth of workers’ productivity exceeds the growth of their wages and benefits."
ReplyDeleteUmmm...why is this bad? Is it not the goal of a business to ensure that its outputs exceed its inputs?
I don't understand the Medicare argument, either. If you think Medicare costs too much, then get rid of it. It's somewhat strange for the public to enact a welfare program and then blame a private party for the cost of that program.
I'm not actually suggesting we get rid of welfare-- clearly this is a rich country and we should redistribute some wealth. But stating that a private party is the "cause" of a welfare program that the public at large enacts strikes me as naive.
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