Paul Jacob

At Common Sense I made two additional points against The Nation’s oh-so-typical swipe at the big box store:

  1. The Nation writes as if Walmart employees are victims of stinginess. But these workers choose to work at the big company because that company offers them the best deal. If some other company were offering more, they’d work elsewhere. Are they victims or victors? After all, what would Walmart workers’ wages be if Walmart hadn’t employed them? More? Not plausible. Plus, Walmart’s mom-and-pop competition typically pay lower wages. Almost never do leftist critics mention the possibility that Walmart, if forced to pay higher wages by law or social pressure, might choose different (perhaps higher-skilled) workers. Like in most discussions of the minimum wage, leftists (and even left-leaning centrists) blank out on the issue of opportunity cost, supporting policies that might as well be designed to hurt most the people they say they aim to help.
  2. The Nation makes much of the concept of a “living wage,” focusing on the idea of a Walmart worker supporting a typical “family of four.” If you imagine yourself as benevolent overlord, this perspective can seem awfully persuasive. Then you realize that you aren’t an overlord, your benevolence is probably more fantasy than reality, and the whole perspective is ineffectual. Markets aren’t run by overlords. After all, whose responsibility is it to feed “a family of four”? The employer of one family member? No. The parents in the family, who might be morally compelled to develop more lucrative skills or a plan for contraception or abstinence. Of course, many Walmart workers are single, or have spouses or parents who work as well — thus obviating the alleged compulsion that Walmart set wages that would, in every case, allow one person to support three dependents.

Lurking behind the critique of Walmart is a strange view of business. . . . very old-fashioned. It is almost as if progressives see big businesses as little different from slave plantations. When the masters treat the slaves well, then left-leaning critics might give them a pass. But when the masters don’t meet up to some imposed standard, then the masters are said to be evil.

To the left, employers remain “masters.” And workers remain “slaves.” The terms of the wage contracts that would prove otherwise get little or no respect. You can tell by progressives’ willingness to override or prohibit any contract they don’t approve of.

This weird institutional bias seems to dominate leftist imagination. The institutions are there to employ workers, and they are under obligations more specific than merely living up to their contracts. The reason to treat workers well is entirely a matter of “morality,” of “humanity,” and not business sense or contract. That is, the only reason businesses do not drain and drink the blood of their employees is because governments, urged by well-meaning activists, prohibit such acts.

Not mentioned? The business reasons contra-indicating the draining of employee blood.

The bias assumes radical inequality: Workers have few obligations; employers have many. And yet every wage contract is between two parties. Both have some negotiating room. Both can reject offers. It is commonly said that businesses have more options than workers do, considering competition amongst laborers, but that depends on skill levels, and time and place. Generally, the higher the skill set of a worker, the higher the pay — and the more options. It’s related to productivity, to something economists call “marginal product,” but apparently no wants to talk about that. Even ignoring productivity, just looking at the numbers game of supply and demand competition, the more employers there are the more workers will bid up wages (that’s one reason why most wages aren’t as low as they are at Walmart, or its competitors).

So you might think that those who say they want higher wages would try to minimize the obstacles to business formations and capital accumulation.

But you’d be wrong.

Indeed, they take the opposite approach: attack successful big businesses as a sort of compensation to help more struggling businesses. Whether from the desks of The Nation or the geniuses in the District of Columbia’s ruling body (who have recently been favoring some big box stores over others), the demand of the moment is for the bigger outfits to pay wages substantially higher than smaller businesses would be forced to pay. This, they reason, might help favor the small at the expense of the big.

Maybe. But it’s not the only effect of the policy.

Raising the costs to the successful stores means that the lower prices offered by those stores will not so effectively reach the mass of consumers, many of whom are poor. Indeed, considering the effects on consumer prices of the left’s obsession with big box stores, I have to wonder: who really is being served by all this?

As near as I can make out, only the progressives themselves. Their desire to interpose between producer and worker, consumer and producer, shows no consistency other than that of a meddler, a puritanical scold who “always knows best.”

But does fewer people working at higher wages paying higher prices for goods make any sense?

Not if you’re poor.

But it does feed the eternal “progressive” love for progressively larger government.     [further reading]

Paul Jacob

Paul Jacob is President of Citizens in Charge Foundation and Citizens in Charge. His daily Common Sense commentary appears on the Web and via e-mail.