In North Dakota, Walmart Cashiers Make $17.40 Per Hour


walmartMy friend, University of Michigan economist Mark Perry, visited North Dakota this weekend (I had dinner with him in Minot on Saturday) and snapped the photo to the right during the Williston leg of his trip.

It’s exactly what it looks like: A sign in Walmart advertising available positions and what they pay.

“Walmart pays wages that reflect the economic conditions in a local market based on the supply and demand realities of the local labor market,” writes Perry of the photo. “In other words, Walmart can’t really set wages independent of market forces and it’s really at the mercy of the market in every local community. If Walmart offered the minimum wage of $7.25 per hour in the Bakken area, it wouldn’t be able to staff its stores.”

Often, when we discuss policies such as the minimum wage, proponents talk of wages as though they were the result of price fixing. The only way to break through this supposed wage monopoly is for the government to impose higher wages through law.

Yet, as Perry points out, here in North Dakota (which has lead the nation in personal income growth in 6 out of 7 years and now ranks behind only Connecticut and Washington DC in median incomes) wages reflect the labor market. Walmart has to pay more because workers can demand more.

Wages, thus, are a product of supply and demand and not some sort of corporate oligarchy.

Of course, there’s a flip-side to this equation too. Businesses forced to pay more often have to charge more for their goods and services. Walmart is probably a bad example for this as they can no doubt spread out regional spikes in labor costs across their multi-national operation, but other businesses don’t have that sort of ability to absorb costs.

Yes, wages are higher in the oil patch region. But so is the cost of living.

But that’s all the more argument for allowing wages to find their own equilibrium, rather than inflating them with public policy.