If the idea of prices and wages is that they should clear the market, leaving neither shortages or surpluses, consider that Wal-Mart might be overpaying. According to ChicagoBusiness.com: “The new Wal-Mart Stores Inc. location opening Friday in suburban Evergreen Park received a record 25,000 applications for 325 positions, the highest for any one location in the retailer’s history.”
Source link: http://blog.mises.org/4604/is-wal-mart-overpaying/
Is Wal-Mart Overpaying?
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One could quibble and say that government policies distort the employment market, particularly in places like Chicago, but the observation is still a significant one.
I believe the common Leftist talking-point is that Wal-Mart has, all by itself, so depressed the economy that people have no choice but to go begging at its doorstep.
Needless to say, this position is controverted by both evidence and logical reasoning.
You beat me to posting this topic (that’s about twice in 3 days). I live in Chicago and heard a few seconds of this on the news and considered how remarkable it is that almost everyone I know has a big house, two big cars, at least one big TV and really big furniture, but they’re all broke. On the flip side of things, I have befriended a few Wal*Mart managers in my years of owning a retail chain (Wal*Mart sent us more referrals than our customers did) and Wal*Mart seems to actually pay pretty decent wages if you stick around as an employee. The Wal*Mart managers received great fringe benefits above and beyond government mandates.
I don’t agree with Wal*Mart’s manipulation of government when they use actual taxpayer funds to promote themselves, but on the other hand I do agree that every business SHOULD try to get out of paying sales tax and property taxes and the rest for as long as possible.
The odd thing is, Wal*Mart seems to understand that even with supply/demand factors regarding hiring and pay rate, having 25,000 people applying does not mean you have 25,000 reasonable candidates. I’ve had rushes of people applying to my businesses and the more that apply, the lower the signal to noise ratio seems to be.
Wal*mart understands that paying a good employee well will keep them growing and profitable. Not giving bad employees raises and upgrades in positioning allows that employee to leave.
It is too bad we have minimum wage laws. I believe Wal*Mart could be the company to prove that hard work, learning on the job and a good attitude can give even the lowest educated person a reasonable living.
There are a few things missing from your formulation. First, Wal-Mart is seeking persons with certain qualifications (as low as those qualifications might seem to us lofty bloggers). Having been in the business of hiring people (my portfolio included what’s now called “human resources”), I can tell you that job openings typically attract dozens of unqualified applicants for every qualified applicant.
Second, it’s also conceivable that Wal-Mart is offering better compensation than the applicants (including the qualified ones) are able to command elsewhere in the relevant geographic area. Given Wal-Mart’s superior business model, a person with a given set of qualifications is worth more to Wal-Mart than he or she is to, say, a 7-11 down the road.
Third, it’s also conceivable that there is presently a “surplus” of persons with the requisite skills in geographic area; reluctance to move, for various reasons, tends to create a kind of geographic “stickiness.” Thus, Wal-Mart’s entry creates jobs and soaks up some of the surplus.
The market-clearing notion applies only in the “perfect” microeconomic world where there is no stickiness and no growth.
Tom, the circumstances you conceive of *may* have something to do with it, but I think we’d need more evidence to suggest that this is the more valid explanation.
Certainly, Wal-Mart couldn’t have destroyed jobs and ‘forced’ people to work at Wal-Mart if the store just opened!
This reminds me of Henry Ford paying his workers $5 a day when the market wage was half that.
This tells me that the official government statistics on unemployment are grossly understated.
No surprise there.
I worked at Wal*Mart once when I was 17. The managers did make decent wages, but that’s the case for Bed Bath & Beyond, Costco, Lowes, just about every big box store. The grunts still get paid shit.
This particular Wal*Mart was exceptionally evil in its bonus structure. The bonus was pooled, so right around xmas before the main rush weeks, the managers would find any excuse to fire peons, and hire new ones. The new ones would not qualify for bonus pay due to lack of time worked, thus enlarging the pie piece for those managers.
Tools.
Just a sad story. No need to draw inferences.
So-called “stickiness” is just another manifestation of individual, “market”, choice. If you choose to stay in a particular area and accept a lower wage, as opposed to moving to another area for a higher wage, it’s because you prefer to live in the lower-wage area for whatever reason (it’s where your family and friends are, etc.), not because there’s really any such thing as “stickiness”. Thus your (Tom Anger’s) last sentence makes no sense to me.
Walmart wouldn’t exist in a free market. DiLorenzo’s vulgar defense of the corporatist class belies his own capitalist class interest. Rothbard once said that corporations were fair game for acquisition by workers by force if necessary. One only hopes that the true free market supporters realize this sooner or later.
Mutualist,
That is simply a flat-out lie. Rothbard wasn’t an anarcho-syndicalist. He never said that corporations were fair game for acquisition by workers by force if necessary. He did say that in the Soviet USSR, it might make sense to privatize by some form of syndicalism, where essentially the teachers homestead the school. However, Rothbard supported private property and didn’t accept violent violations of private property.
It’s one thing if you want to be a mutualist, anarcho-socialist, or whatever other brand of socialism you want. However, it is simply unacceptable to lie about what Rothbard — an advocate of propertarianism, anarcho-capitalism, libertarianism, private property rights, liberty — said about private private property and corporations.
When debating, please maintain academic integrity.
PS: Also, how do you know Wal-Mart wouldn’t exist in a purely free market? Are you omniscient?
David said;
“Rothbard wasn’t an anarcho-syndicalist. He never said that corporations were fair game for acquisition by workers by force if necessary. He did say that in the Soviet USSR, it might make sense to privatize by some form of syndicalism, where essentially the teachers homestead the school. However, Rothbard supported private property and didn’t accept violent violations of private property.”
Sounds about right.
Tom Anger said;
“Third, it’s also conceivable that there is presently a “surplus” of persons with the requisite skills in geographic area; reluctance to move, for various reasons, tends to create a kind of geographic “stickiness.” Thus, Wal-Mart’s entry creates jobs and soaks up some of the surplus.”
Tom, in an economic sense a “surplus” of any good, labor included implies one thing – the price of the good is too high. If the price were congruent with the local labor market there would be profits to be made using that labor, as long as accessibility, regulations, taxes, etc did not make that use uneconomic.
“The market-clearing notion applies only in the “perfect” microeconomic world where there is no stickiness and no growth.”
That statement is clearly absurd and doesn’t deserve a rebuttal, but I will do it anyway – some people will not move any distance no matter what the inducement, while others will for little economic inducement at all. And no valid economic analysis worth spit would presume no growth. So your argument is bull.
Further, in places like the hills of West Virginia and eastern Kentucky, whatever “stickiness” does exist is exacerbated by the federal government taking money from hard-working taxpayers to give to those who are “stuck” thus creating and exacerbating economic causes of that “stickiness”.
Mr. DiLorenzo:
This is the second article in a matter of a few short days in which you lionize Wally World and demonize everyone and everything else.
I have but one question:
How much is Wal-Mart paying you?
Wow antilib – that’s some clever logic. The real question is: how much is Target or the Unions paying you?
See! Making baseless accusations doesn’t get you very far.
Quincunx: Well the big difference here is that I’m not spewing this “God Loves Wal-Mart, and hates everyone else” rubbish all over the net. Maybe if your beloved Mr. DiLorenzo would take a *balanced* look at Wally World, instead of playing the dutiful sycophant, his views would have merit, instead of being so much electronic wastebasket filler.
I fully realize that Wally World has done some wonderful things, and has also more than a fair share of “naughties” under it’s corporate belt. They’re neither perfect nor meritless. Mr. DiLorenzo apparently can’t comprehend a world where binary viewpoints are not de rigeur.
Maybe you should actually *read* (Yeah, what a concept) the last two articles by Mr. DiLorenzo. If they weren’t paid for by Wally World, they sure do sound like it. I wouldn’t be surprised if some identical verbage appeared on Wally’s own “Truth” website. Who’s writing for whom?
Intellectual independence is a valuable trait, and wholly lacking in Mr. DiLorenzo’s recent articles. So, my accusations are “baseless” …. hmmmmm, sounds like there’s a “base” there to me. But then again, I could be just as wrong as Mr. DiLorenzo.
antilib,
One thing is to have personal quarrels with a certain company (as sane as they may be), another quite different is saying anyone that does not write what you like to read must be receiving payola. DiLorenzo’s analysis may have errors or mistakes, but rather than pointing these out with proper counterarguments or evidence, you resort to crass innuendo.
Antilib,
I doubt your sincerity, as you seem to doubt Professor DiLorenzo’s. I have a feeling that in a general discussion, he would concede a few of your points, i.e., Wal*Mart and many other companies do things that in a pure free-market sense are anathema.
But leaving aside your (and his) personal feelings about Wal*Mart, you have utterly failed to rebut his ANALYSIS, which is that a surplus of applicants for a finite number of jobs is indicative of a higher-than-market wage.
You hate Wal*Mart SO much, that you ignore a couple of valid economic insights which would support a Misesian analysis, which is the raison d’etre of this site.
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