Last year Walmart was the target of a social media firestorm after it was revealed that they were running a food drive for some of their employees. The outraged felt that this was hypocritical on Walmart’s part since the company could obviously solve of their employees’ struggles with poverty by just paying them more.
They really think it’s just that easy, I guess.
There’s also that claim that Walmart is taxpayer subsidized because many of its employees collect from government programs like foodstamps and welfare, which I believe speaks more about how far those programs have been expanded (to include those with jobs) than Walmart’s pay policies.
Anyway, I was happy to see that this year despite the politically-driven and misguided criticism from last year Walmart continues its charitable works for its employees. It’s not easy to do the right thing in the face of criticism.
Especially from people who are smart enough to know better but don’t.
“When you shop at your local Walmart, you support the profitability of a business that couldn’t survive without your tax-dollars subsidizing its stores,” grumps economically illiterate author Cory Doctrow at BoingBoing. “It’s a business model that made the Walton family into the richest family in America — the six Waltons’ net worth is more than the bottom 42% of Americans’, combined — and you give them a handout every time you shop at Walmart.”
Actually, it’s a business model that has driven down the cost of living for Americans, allowing their dollars to purchase more than they would otherwise by introducing radical new innovations which made the retail experience far more efficient. Shopping at Walmart isn’t a subsidy or a handout. That’s called commerce. And Walmart exists primarily to provide goods and services. Jobs are a side effect.
Which isn’t to say that what Walmart pays isn’t important. It is, but why should Walmart or any company pay above market rates (what workers are willing to accept) for labor? If workers are willing to take Walmart’s level of compensation, then clearly they don’t have the experience or the skills to command more in the labor market. Meaning that Walmart is offering jobs to people who might be employable elsewhere.
Do we really want to destroy that by forcing Walmart – be it through political pressure or legislation – to pay more?
And that’s exactly what would happen. Remember that the minimum wage, when it was first conceived of by progressives more than a century ago, was intended not to help the poor but to drive undesirables out of the labor markets.
These progressives – the sort of eugenicists who also supported forced sterilization laws for those deemed too stupid to breed – wanted a minimum wage to price what they called “undesirables” and “unemployables” out of the labor market.
Princeton Economist Thomas Leonard wrote about eugenics in progressive economic thinking in 2005:
American economics transformed itself during the Progressive Era. In the three to four decades after 1890, American economics became an expert policy science and academic economists played a leading role in bringing about a vastly more expansive state role in the American economy. By World War I, the U.S. government amended the Constitution to institute a personal income tax, created the Federal Reserve, applied antitrust laws, restricted immigration and began regulation of food and drug safety. State governments, where the reform impulse was stronger still, regulated working conditions, banned child labor, instituted “mothers’ pensions,” capped working hours and set minimum wages.
Less well known is that a crude eugenic sorting of groups into deserving and undeserving classes crucially informed the labor and immigration reform that is the hallmark of the Progressive Era (Leonard, 2003). Reform-minded economists of the Progressive Era defended exclusionary labor and immigration legislation on grounds that the labor force should be rid of unfit workers, whom they labeled “parasites,” “the unemployable,” “low-wage races” and the “industrial residuum.” Removing the unfit, went the argument, would uplift superior, deserving workers. …
Progressive economists, like their neoclassical critics, believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the “unemployable.”
Here’s what Sidney Webb – co-founder of the London School of Economics – had to say about the minimum wage in 1907:
It’s startling how minimum wage policy has morphed from protectionism for higher-skilled workers promoted by labor activists a century ago to policy that’s supposedly beneficial to lower-skilled workers today.
The labor activists from that by-gone era had the right of this policy.
What helps people at the bottom of the career/income ladder isn’t wage mandates. That hurts them by pricing them out of the work force. What helps them is a free labor market where access to jobs, and thus experience and skill development, is easier.