Re: the Wal-Mart effect
Dwayne Monroe wrote:
And, in a related story.
Hot off the BBC…
http://news.bbc.co.uk/2/hi/business/4377344.stm
Wal-Mart calls for higher wages
The Gigot Collective weighs in…
Wall Street Journal - October 26, 2005
The Wages of Wal-Mart
Hoping to make nice with detractors, Wal-Mart Chief Executive Lee Scott has called on Congress to increase the $5.15 minimum wage. Senator Ted Kennedy, whose latest bid to raise the national minimum was spurned last week, had this reaction: “When even the head of Wal-Mart, one of the most anti-worker companies in the world, says that a minimum wage of $5.15 is out of date, we know it’s long past time for an increase.” That’s probably not the response Wal-Mart was looking for.
As part of a wider effort to burnish its image, Wal-Mart also has announced a slew of environmental goals, including plans to invest some $500 million in new technologies to reduce greenhouse gases. Perhaps Mr. Scott will fare better with labor unions and environmentalists than he did with the Massachusetts Senator who does their bidding, but we’re not holding our breath. For many of Wal-Mart’s foes, the problem isn’t the retailer’s behavior so much as its existence.
It’s understandable after years of pounding from unions, trial lawyers, anti-sprawl activists and the media that Wal-Mart would go on a PR offensive. What’s troubling, and more than a little curious, is Mr. Scott’s desire to make price controls for labor a part of his public atonement for the company’s success. Given that anti-Wal-Mart types mostly fire populist blanks, why is Mr. Scott so eager to provide competitors with real ammunition?
The answer may be that calling for an increase in the minimum wage amounts to Wal-Mart calling for a hike in the labor costs of its smaller rivals, not to mention any potential start-ups. Wal-Mart already pays its workers an average hourly wage of close to $10 and so Mr. Scott is essentially asking Congress to strengthen its competitive advantage.
The CEO said his goal is to “help working families,” but minimum wage laws have the opposite effect. By putting a floor under wages, regardless of skills or competition, they can force businesses to cut payrolls or even shut down. Hence, they reduce employment in general, and especially among the low-skilled and inexperienced.
It’s a shame that a company that offers a wonderfully wide selection of quality goods at low prices, and provides 1.3 million people in the U.S. with jobs, could have image problems. But Wal-Mart isn’t going to solve them by trying to win over the liberal special interests. As Senator Kennedy illustrates, that’s a fool’s errand. The company can, however, alienate friends and exacerbate matters by beckoning the government to give it a competitive edge over smaller retailers.
If Mr. Scott feels the market is doing an inadequate job of determining worker compensation, he can always increase the wages of the Wal-Mart workforce, rather than lobbying to increase the labor costs of everyone else.