Wednesday, May 04, 2005

Can't Wal-Mart Pay More?

NYT reported Can't Wal-Mart, a Retail Behemoth, Pay More?

If there are people willing to work for what they pay, why should they?
With most of Wal-Mart's workers earning less than $19,000 a year, a number of community groups and lawmakers have recently teamed up with labor unions in mounting an intensive campaign aimed at prodding Wal-Mart into paying its 1.3 million employees higher wages. A new group of Wal-Mart critics ran a full-page advertisement on April 20 contending that the company's low pay had forced tens of thousands of its workers to resort to food stamps and Medicaid, costing taxpayers billions of dollars. On April 26, as part of a campaign called "Love Mom, Not Wal-Mart," five members of Congress joined women's advocates and labor leaders to assail the company for not paying its female employees more. And in a book to be published this fall, a group of scholars will argue that Wal-Mart Stores, having replaced General Motors as the nation's largest company, has an obligation to treat its employees better....
What does size have to do with it? If they paid more, they would have to charge more for what they sell, then fewer people would shop there, and then they would not be as big.
Frances Browning, for example, once earned $15 a hour, but now at Wal-Mart, where she is a cashier in Roswell, Ga., she is paid $9.43. She says she is happy to have the job. "I was unemployed for two and a half years before I found my job at Wal-Mart," Ms. Browning, 57, said. "Like everybody else I'd love to make a lot more, but I have to be realistic."...
Precisely. I am sure that if that $15 job was still available, she would be working there, but that company probably had to lay her off because they were paying too much, and therefore having to charge too much for what they sell.
H. Lee Scott Jr., Wal-Mart's chief executive, vigorously defends his company, arguing that wages are primarily determined by market forces and that Wal-Mart pays more than most retailers and provides better opportunities for advancement....

Wal-Mart critics often note that corporations like Ford and G.M. led a race to the top, providing high wages and generous benefits that other companies emulated. They ask why Wal-Mart, with some $10 billion in profit on about $288 billion in revenue last year, cannot act similarly....
Two days ago I blogged about how GM was paying its workers so much, and giving them such a good health care package, that they might be forced into bankrupcy, and if that happened, where would the workers go for a job.
"They don't pay a living wage," said Ms. Barker, who quit her $8.40-an-hour job in 2004 to take a $15-an-hour social work job. While at Sam's, she said, she qualified for Medicaid and $139 a month in food stamps.
If a $15 job opened up, I am not surprised she took it. I hope the Social Work job has as good a benefits package as Walmart has
By contrast, Jamie Schifferer, manager of the health and beauty aids department at a Wal-Mart in Algonquin, Ill., said Wal-Mart was a terrific employer. She quit her $25,000-a-year post running a Cingular wireless shop to go to Wal-Mart. After 20 months, she earns $12.50 an hour - close to her previous pay - but now works 40 hours a week rather than the 60 hours at Cingular. "I was very miserable," she said. "As soon as I heard about this store opening, I jumped. It's perfect for me right now."
Salary is not everything. I have also heard good things about their benefits package.
McQ blogged Interesting that the same people who demand higher wages would probably be unwilling to pay higher prices in the stores Wal-Mart runs to pay for the wage increases.

That's what I call the "Wal-Mart" dilemma. I always hear the criticism that Wal-Mart runs the "Mom and Pop" shops out of business when it comes into town. Think about it. It doesn't have too. All you have to do is have enough people willing to support Mom and Pop by patronizing their store and paying the higher prices Mom and Pop have to demand because they're unable to get the volume deals and live on the thin margin that Wal-Mart does. But it never happens does it? Mom and Pop go the way of the Dodo bird and Wal-Mart saves people a bunch of money. There's a reason for that, folks. Its because Wal-Mart has kept its costs down through volume deals and lower wages.

John Hawkins has a very good satire responding to this item.

If there were not people willing to work for the wages Walmart pays, it would have to pay more. Perhaps if we did a better job preventing illegal immigrants from coming into the country, there would be fewer people willing to work for low wages, and then Walmart would be forced to pay more, and then they would have to raise their prices, and thus fewer people would have an incentive to shop there.

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