Wal-Martnomics is a Distraction from the Real Problem of What to do with Unskilled Labor

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Wednesday of last week, the DC city council approved a bill that would require certain large retailers to pay employees a “living wage” of $12.50 an hour, which is 50% higher than the city’s minimum wage of $8.25. After the bill passed, Wal-Mart officials announced that they were scrapping plans to build three new stores in the city.

Predictably, this has led to plenty of outcries from both sides about how the other guys aren’t playing fair. It appears that the city council was specifically aiming the legislation at Wal-Mart: The rule applies to retailers with corporate sales of $1 billion or more that operate in spaces over 75,000 square feet, excluding stores like Starbucks and Apple (two companies with higher profit margins and which cater to a much higher-income clientele, ironically).

Although many soi-disant “social commentators” are all-too-eager to take to snarkily bloviating on the Internet about Wal-Mart (or any corporation that doesn’t build cell phones), much of the opposition to Wal-Mart isn’t hard to understand. In the 90s and 2000s, the company completely changed the economics of retailing, which put a lot of pressure on small businesses to either try to compete on prices or shift their business models away from easy general retailing and toward the more difficult strategy of selling specialized products and services.

And on the other side, you’re Wal-Mart, and you have no idea if any given job applicant is an outstanding worker or the kind of employee who rolls their eyes at customers and calls in sick every other week. You’re reading Randy Truckerhat’s application for a stock-boy position and you see he’s left his previous two jobs after just three months. Now, you may well be willing to give him a chance at $330/week, but if he demanded $500, you’d be ready to release the hounds.

If some city council member says you have to give it to him, you’d go balls-out Galt on that city.

But both of those fair points aside, the bigger issue we’re really talking about when we condemn Wal-Mart or living wages is this: what the hell are we going to do with unskilled/low-skilled labor?

Manufacturing, on any scale that provides jobs for large numbers of the educationally un-credentialed, is not coming back to America. Unions are all but totally irrelevant in the 21st-century economy. College wasn’t the panacea everyone thought it would be. Marriage rates are falling for lower income groups, so the working poor aren’t even pooling their resources. Immigrants are paradoxically “taking the jobs” that “no Americans will do anyway,” however that works.

And, though Wal-Mart brings jobs, puts downward pressure on the price of consumer goods, and often stimulates more retail investment via building new stripmalls nearby, it unquestionably disrupts local business communities and has put many mom-and-pops out of business. The unemployment rate is slowly falling, but the employment level of 25–54-year-old men has been stagnant since 2008, and disability enrollments are up.

The future of American workers who lack the skills for the knowledge economy is a huge, huge problem that, in addition to entitlement reform and the country’s batshit financial shape, milennials are going to have to deal with, whether Wal-Mart is here—or is the solution to that problem—or not.

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  • Hard head–hard heart

    Why do low-skilled workers not deserve to starve if they can’t make ends meet in this economy? Suffering on the lower end of the bell curve is a natural outgrowth of laissez-faire policy, otherwise moral hazard arises and the impetus for social evolution dissipates. As masters of our fate, we must take personal responsibility for the outcomes we achieve. Truckerhat should have considered this before making the decisions that lead him to his unfulfilling outcome. I don’t see how Truckerhat’s poor decisions should be of any material concern to me. Would you seriously propose that I sacrifice some of my own resources to help someone who can’t/won’t work for theirs?

    • I don’t think anyone “deserves” to starve. Ever. And most of the time people who are unskilled or low skilled are so because of circumstances outside of their control (poor education or health, or simply because of the fact that they are young).

      And as far as sacrificing your own resources—I don’t think anyone here said anything about that.

    • This sort of thing is easy to say when we are not in the class being denigrated. Would you still have the same income potential after a traumatic brain injury or losing an arm?

      I am not trying to say that you should be forced by the government to pay to help anyone else but the viewpoint you express here seems extremely callous and uninformed. Some lower income workers are in that position because of decisions they have made, but this is not always the case there are inequalities in physical or mental abilities that some are born with that impede these things, there are inequalities in opportunities to gain these skills in the first place, etc.

      If you didn’t know where your next meal was going to be coming from would you really make the decision that would lead to you being in a better position for a high paying job in 6 or 8 years when you’d be done with high school and college or would you focus on being able to eat so you could maybe survive that long?

      It’s not as simple as make the right decisions and you’ll have a good life.

      • Les Kyle Nearhood

        Funny, but there has never been wide spread starvation in the United States even when we had NO public relief programs. The thing is, we have a basic social safety net because people want that. And it is
        supplemented as it always has been by charity. But anything beyond a
        basic safety net will foster dependency and become self defeating,
        and too expensive.

    • AuntMerryweather

      I’m going to guess that you’re between the ages of 18 and 22, and a big Ayn Rand fan. 😉 (jk. sort of. maybe?)
      Unfortunately, most of the factors that go into a person’s arrival in Randy Truckerhat’s position can’t be traced back to their own decisions. His parents were likely disengaged, blue-collar workers with little education who cared more about him staying out of trouble than bringing home good grades. He might have a mild disability that was never diagnosed. Randy wasn’t lucky enough to have been born to a family of hardworking, god-fearing people white people. Yes, some kids persevere despite these setbacks, but they are very much the exception; class mobility has never been quite the proof of equality-of-opportunity that many libertarians wish it was.
      As for sacrificing your own resources – while I personally don’t agree that Taxation=Theft, I’m not putting forward any policy prescriptions with this post. The point is, as JDKolassa says above, that there’s a growing number of people in this country who are marginally unemployable, at best. “Letting them starve in the streets” is never going to be acceptable public policy, and these folks are going to start trafficking guns long before they willingly starve. (If I may offer a warning: “Tax-theft” is probably a less-bad solution than all-out class warfare).

  • jdkolassa

    This.

    Actually have an op-ed on this waiting to be published (at least, I don’t think it was published yet…) This is something that really concerns me. I’m afraid in 25 years we’re going to have more than half of our workforce be completely unprepared and unable to actually do work, and that’s going to spell a lot of trouble for our country.

  • Maddie Gootman

    This is a really interesting question that you pose. What I begin to think of when I hear about “living wage” requirements or any raise in the minimum wage is the ultimate effect that this increase will have on the price of the products that these companies sell. The wage increases, but I don’t think the business are going to eat the costs. They are going to pass them on to consumers, which kind of makes the wage increase irrelevant.

    • AuntMerryweather

      There’s a joke that Wal-Mart’s wages are just enough to enable its employees to shop at… Wal-Mart. Of course, the Wal-Mart employee who was making $17,000/year and now makes $22,000/year is arguably better off, but eventually those price increases tend to bite the ass of the person making $25,000/year somewhere else.

  • Les Kyle Nearhood

    I constantly hear the lament over the “mom and pop” stores who are put out of business by chains like Walmart, Auto Zone, Home Depot etc.

    Well, I grew up in a small town where there was nothing but local stores. Guess what? They were expensive, never had just what you needed, were not open the hours you needed them. I remember my dad keeping me home from school so that I could ride my bike down to the local auto parts store and get a part for the family car because they closed at 4:00 every afternoon and were not open on saturdays and he could not miss work.
    Now I can go just about any time I want, and get just what I need and it’s cheap. Screw mom and pop !

    • Arnold

      We have the same thing in my relatively small town. The mom and pop merchants downtown complain that no one supports local businesses but they are not open during regular business hours and a half day in Saturday. When people suggest this is the reason they immediately get angry for suggesting that they make shopping at their store simple.