TCS Daily


How Wal-Mart Is Like Academia

By James H. Joyner - January 27, 2006 12:00 AM

Retail giant Wal-Mart has created its share of enemies for its competitive practices, low wage and benefits packages, and for putting mom-and-pop stores out of business. Some localities have successfully kept the company from building stores in their communities and, earlier this month, Maryland passed a law forcing Wal-Mart to devote 8 percent of payroll spending to employee health benefits.

Despite all this, the store received 25,000 applications for 325 openings for a new Chicago area store. Critics charge that this will encourage a race to the bottom, as the store fills many of these vacancies with part-time employees and offers lower wages and benefits than the competitors that will inevitably fold against Wal-Mart's enormous buying power.

Meanwhile, Chad Donath, the corporation's Chicago area manager argues, "That incredible number of applications shows the community thinks Wal-Mart is a great place to work."

Well, not exactly. What it shows, though, is that 25,000 people would prefer to work in those jobs than the jobs they have -- or don't have -- at the moment.

That's the fundamental fact of economics that the critics seem not to get. Sure, for those with college educations or substantial technical skills in high demand in the marketplace, work as a stocker or cashier in the retail industry would be undesirable. It's hard, stressful work. But there would appear to be 25,000 people out there who consider those jobs a step up from where they are now.

Arguably, Wal-Mart is actually overpaying for these jobs -- likely because of minimum wage laws and other governmental regulations. If 79 qualified people are applying for every job, then the conditions of work are surely more desirable than they need to be. One imagines that Wal-Mart could, if it had the flexibility, cut the salaries and/or benefits offered and still attract, say, two applicants per opening.

This isn't just an educated professional talking about situations that "those people" find themselves in. I have a doctorate in political science and have found myself in precisely the same situation as those Wal-Mart applicants when on the academic job market. Indeed, there were often many more than 79 highly qualified applicants -- Ph.D.s with publications and teaching experience -- for each college teaching position that I applied for.

Because the academic market is so tight, universities have adopted virtually the same attitude toward aspiring professors as Wal-Mart does to prospective stockers. They demand heavy teaching loads, substantial committee work, a rigorous pace of professional publication -- and offer rather paltry salaries. And that's for people who have, on average, twenty-two or more years of schooling.

Not only is there intense competition for jobs -- a nationwide search and the willingness to move, usually at one's own expense, to whatever school will hire you is a must -- but schools increasingly hire part-timers (called "adjuncts" in the business) who work for peanuts and no benefits rather than full-time professors.

Now, obviously, those who succeed at getting tenure-track teaching jobs make more money and have better benefits than those who land jobs as retail store cashiers. But, then, the latter don't give up a decade of earnings while pursuing degrees in higher education.

Still, some of the same conditions apply. TCS Contributing Editor Arnold Kling points out the irony that self-professed advocates of the poor are standing in the way of their progress:

"In the liberal morality tale, Wal-Mart is a villain, and its workers are victims. However, Wal-Mart workers themselves feel lucky to be able to work there. What low-skilled workers need are more Wal-Marts. More Wal-Marts would increase employment for low-skilled workers, and ultimately this could drive up wages for such workers."

Further, as economist Thomas Sowell explains, people who take low paying jobs gain valuable skills that they can translate into higher paying jobs. "Notions of menial jobs and dead-end jobs may be just shallow misconceptions among the intelligentsia but they are a deadly counterproductive message to the poor. Refusing to get on the bottom rung of the ladder usually means losing your chance to move up the ladder."

While liberal activists and the Maryland legislature seem not to understand this, the good news is that most people do. Among them are 25,000 folks in Evergreen Park, Illinois.

James H. Joyner, Jr., Ph.D. writes about national security policy at the Outside the Beltway Weblog.
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30 Comments

Compensation
What the anti-low wage folks forget is that the entrepreneur offers more than wages and benefits in compensation for work. They also offer workers the opportunity to market their skills. Indeed, I think it is arguable that the opportunity is of at least equal value to the wages and benefits. Ask any unemployed person.

health care and taxes
The problem I have with Wal Mart or any employer paying low wages and no health care benefits is that the tax payers ultimately end up paying those benefits, since the low paid workers can't.
I just don't find that as acceptable.

not that simple
Some of the article's points are taken from a freshman economics textbook and hardly correspond to reality. When someone applies for such a job, they may ostensibly be willing to work for the advertised wage. But really, there are hidden conditions. Many of those applicants wouldn't show up if called to work next week, nor would they stick around after they got the job and were paid once or twice. Very often, these types of workers want to "try on" a job. Turnover is horrendous and increases with lower wages. My point is that WalMart doesn't offer the forementioned wage because it is compelled to by law. WalMart incurs hidden costs when they hire someone for the absolutely lowest wage that a worker was willing to take the job for, at first. The worker just doesn't stick around. The situation is far more dynamic than merely getting hired for a certain wage, then working at the certain job, as this article depicts.

re; health care and taxes
tpbhome,

My belief is that health care is a responsibility of the individual first, family second, and socio-political systems as a last resort. In no way is it a responsibility of free market activities.

Though some free market activities have chose to provide partial compensation in the form of health insurance, they have done so in lieu of wages. If health insurance is mandated, it will still come in lieu of wages. Free market activities may not be able to adapt to government imposed market imbalances immediately, but they will adapt in time.

Bottom line, the socio-political systems should pick up the tab for health care for those who cannot provide it for themselves. Mandating that free market activities do so is a biased approach, but more importantly, it has no hope of solving the problem, because free market activities have no real interest in solving the problem.

Except that Wal-Mart isn't one of those low wage employers
Walmart does offer benefits and they are fairly cheap ($65 a month for a family or something). They also offer many savings programs, they have a health program including some clinics (such as flu shots).....if you look into it, you will find that this information is available.

Speaking of unskilled workers
On one of my trips to Wal-Mart I bought a couple items that totaled $16.53 (about there). I paid with a $20. The cashier, a teenage girl, went to get my $3.47 change (as displayed by the register) she realised she was out of ones and had to call the manager to get more ones.

While we were waiting for the manager I went through my pockets and came up with $1.53, handed it to her, and said 'here, just give me a five'.

She looked at the money for at least a minute and finally said 'I don't think I can do this.' I was so shocked I couldn't think of anything to say and just waited for the manger to get my change.

Anybody want to tell me that she was being underpaid?

A couple of points
It amazes me that every time I read someone like tpbhome complain about taxpayers picking up the tab for healthcare, for companies which provide none and offer low wages, no mention is made of public transportation. If sufficient fares were charged to cover the real cost of buses, and especially trains, lower wage people couldn't afford them.

And James: I certainly agree that the "publish or perish" rule still applies. By my own experience, and much of my reading, a large portion of the inflation of tuition at traditional universities has to due with a declining teaching load on professors.

Well that's a good point
I don't fault the article (how much shall you cover in one article?), but you make a point that is missed by the legislators like Hillary Clinton and those in MD seem to miss. Sometimes it's extra money in between other jobs or seasonal work, sometimes they helping supporting a family, Xmas money, school money ... It's VERY expensive to train and lose people - ask anyone who owns a restaurant or small business - but besides being the first rung in the latter for some as the author suggests, many of these low wage jobs have become very temporary. 20 years ago, that was not the case. You had waiters that would be with you for 5-10 years. Now you will go through 20 waiters in one year. Even look at your local supermarket. Growing up, many mom's in the neighborhood worked those jobs for 20 years (no benefits!) and now there is a different teenager at the register every week.

There is another thing legislators don't get - the abilities of those in low-wage jobs. I have volunteered at a "women's center" in my area to help provide job skills and forget job skills, try SOCIAL skills (not fighting with people you are working with, doing as you are told) and other things like the importance of showing up on time for the interview, every day on the job...

addendum
Those who do want to learn and succeed at the first rung and beyond (to show up on time, etc. as there are 10 waiting to take my job) have drive. That is not something you can legislate.

Retail Clerks
smbell: I quoted you on a post of mine on retail clerks at The Daily Brief.

Thank you Mr. Joyner
The irony of the left labor/so called intelligencia's arguement that Wal-Mart is taking advantage of employees is, that ultimately any of the workers who may have worked in the mom and pop shops to begin with were almost certainly not recieving minimum wage, and in all likelihood neither was the owner of this shop paying payroll taxes. There were no medical insurance benefits, nor were there any sick or vacation days for these undocumented employees.... And to top it all off, the mom and pops had been gouging the locals on prices for years (either on purpose or inadvertantly).... In my opinion Wal-Mart provides an invaluable public service, it hires many people who are marginally employable to begin with.... According to stats George Will obtained from WM, they, WM payed out 4.7 billion in benefits to 1.3 million workers last year,WM makes approx. 6000.00 profit on each emplyee after all the bills are paid, which is 1/3 below the industry average.... Not a number easily sneezed at though.... Everyone, (actually it is mostly the failing unions with dwindling membership) are boiling over regarding WM because they are missing out on a potentially huge membership possibility, and in their marxist way, they have been serving up a pretty steady diet of WM bashing.... The truth is, whatever employment practices WM uses to keep costs down were certainly not invented by WM, Sears used these same tactics for years, hire part time and work people 39 hours every week.... The truth is that at WM just like in any position academic, or otherwise people would not be doing this for a living if they did not want to, no one is twisting their arm, and nine times out of ten, if someone is capable of greater earning potential, they move on to bigger and better things.... WM to many is the next step up the ladder from flipping burgers or or as a housekeeper at a hotel, or a landscape laborer, or roofer.... They provide literally over a million jobs to college students, retirees, moms with school age children that can only work certain hours.... I wish that WM was around when I was a teenager, mowing lawns and driving an un-airconditioned delivery truck in central Florida was no cup of tea....

Not a problem of capitalism
tbphome, your claim that tax payers ultimately have to pick up the tab for benefits is a problem of socialism, not capitalism. Where did we come to the point where we became obligated to pay for someone else? Why does one person's need entitle them to lay a claim on the property of another?

Isn't this really an example of "we are our brother's keeper?" As such it is an unConstitutional imposition of religion on the rest of us.

If I go into a restaurant, ordering and eating a meal, and then claim I don't have the money to pay for it, I will be held responsible for it one way or the other. Why should it be any different with Health Care. If you use it, you should be required to make good on what you owe.

beg to differ
Would you prefer that the employee in question have no job?

For the vast majority of people in this situation, the choice is not between a low paying job and a high paying job, it's between a low paying job and unemployment.

Eliminate these Wal-Mart style jobs, and the alternative is permanent unemployment.

Entry level jobs give people the chance to learn skills. For some people, the realization that your boss wants you to show up every day, on time, and properly dressed comes as quite a shock.

For those who do learn these basic lessons, they quickly move up the pay scale.

who should decide
Don't you think that Wal-Mart is in the best position to decide what's the best price point that attracts sufficient quality employees while minimizing turnover?

Not you, not me, and most certainly not the government.

Walmart benefits
My son graduated from High School 6 years ago. The Navy sent himn to college and he is now a Naval Officer. Several of his friends also went to college, and worked at Walmart off and on over the years. One guy I knew well went to work for a locally based international company. I saw him working in Walmart one night, and asked him what happened. He told me that during a typically long week, he got out his calculator and figured out his hourly pay compared to what Walmart had paid him, and decided that he had taken a pay cut. The next time he was back in town, he went to see his old boss at Walmart, and was offered a night department manager job at just a little more than he was making with the International Employer, and pretty much a 40 hour week, which more than doubled his hourly pay. Since then, he has moved up and on. He says that when Walmart promotes you, you get a notable change in your standard of living.
I know a number of Ph.Ds who are so prominent in their field that they don't bother to put their title on their cards. If you don't know who they are, you are below the level of needing to know. While they do draw a University check, the money they bring into the University not only more than covers that check, but their total staff, including grad student stipends, teaching assistant fees, classroom, lab and office expenses are more than covered by their grants. One guy told me that he was thinking of going into private industry so he could work in his field, rather than having to keep raising funds.

are you insane, comrades?
What the original story tells us? it tells us that the US economy (or at least the economy of Cook county, IL) stinks: where normally 3000 people apply, there are now 8 times that number. The (very populous, including Chicago and suburbs) county of 5 mln has one in 200 inhabitants (including toddlers, elderly and mentally retarded readers of TCS) applying for streesful and not too promising job. And one is asked to cheer up? I'd rather not... I, for one, would rather believe that WM cooked their numbers to look better. But if you guys prefer WM over the overall US economy, that's your choice...

Now, about choices. This government spends my tax dollars (and quite sizeable at it!) sending troops abroad, where this country lost nothing. I want my dollars to be spent on universal healthcare, not on mindless wars. Can, please, some brave libertarian soul advise me, which branch of Cato institute could address my grievance? Would be much obliged...

I leave the completely misinformed outline of the career situation in academia outside the frame. The lame attempt to offend my fellow travellers is too obvious, too lame and, frankly, too irrelevant to spend any mory bytes.

Amicalement,

Leo

facts
So to you, the fact that a lot of people want to work at Wal-Mart only proves that the economy is bad.
Despite the fact that the unemployment rate is at historic lows and the economy is growing better than it has at almost any time in our history.

As to the foreign wars, I presume you are refencing Iraq, not Afghanistan.

Regarding Iraq, the Czech's still stand by their statements about Atta meeting with Iraqi security agents in Prague.

Recently translated documents show that Iraq was training at least 2000 terrorists a year prior to the war.

More and more evidence shows that Iraq's WMD's were transfered to Syria.

I could go on, but I doubt you care.

You've been told by your handlers to oppose the war, not becuase it is wrong, but because a US failure in the war will hurt Bush.

As to universal health care. That's been a total disaster anywhere it's ever been tried. But I doubt you would let facts get in the way of your opinion on this subject either.

Untrruths
"I could go on, but I doubt you care."

You do go on, and in fact nobody cares.

Not a single statement in your post is a fact, not the stuff about unemployment or the stuff about growth or the stuff about Iraq or anything else. Not a single statement is backed up by a source. Still, you have the nerve to call other people names and accuse them of being puppets with handlers.

You have no scruples no shame, just time on your hands to waste making meaningless electronic noise. Grow up or go away.

No Subject
Man, and these guys bill liberals as misty-eyed dreamers... You have a fact (if you chose to believe a corporate statement, that is): that in a metropolitan area 1 in 400 people is striving for low level poorly paid job; 8 times as many as typically reported number, and no - "economy is growing better"... Soviets had their economy growing better, man (and never had shortage of servile self-appointed propagandists just like you).

However main problem in your post is about its logic. I complained that no freaking libertarian protect my problem how my tax dollars are used - I want them to be spent on health care, not on the military procurement. They spend terabytes of drivel explaining why directing tax dollars against the taxpayer will is theft - good, boys, let's accept this. But what if we *want* to them to flow into healthcare, and not to the hands of DoD blockheads? Where are my market-minded protectors?

And now, these *facts*, if you allow. Newly translated documents, three years into occupation - they were slow, producing these documents, man. Blockheads, if you pardon my directness. "Czech's" insisting on something? Like Atta meeting Iraqi in front of Radio Liberty, the most heavily protected building in the very center of Prague? Syria having WMD? Heh, that at least is funny.

Universal healthcare as disaster? I lived in Germany and France, and the only people lacking teeth I saw there were US employee from military bases. It's a huge success story, by all measures. Most of you guys have little experience, and please, please - don't call me brainwashed: the sword has two blades.

No Subject
Man, and these guys bill liberals as misty-eyed dreamers... You have a fact (if you chose to believe a corporate statement, that is): that in a metropolitan area 1 in 200 people is striving for low level poorly paid job; 8 times as many as typically reported number, and no - "economy is growing better"... Soviets had their economy growing better, man (and never had shortage of servile self-appointed propagandists just like you).

Amicalement,

Leo.
However main problem in your post is about its logic. I complained that no freaking libertarian protect my problem how my tax dollars are used - I want them to be spent on health care, not on the military procurement. They spend terabytes of drivel explaining why directing tax dollars against the taxpayer will is theft - good, boys, let's accept this. But what if we *want* to them to flow into healthcare, and not to the hands of DoD blockheads? Where are my market-minded protectors?

And now, these *facts*, if you allow. Newly translated documents, three years into occupation - they were slow, producing these documents, man. Blockheads, if you pardon my directness. "Czech's" insisting on something? Like Atta meeting Iraqi in front of Radio Liberty, the most heavily protected building in the very center of Prague? Syria having WMD? Heh, that at least is funny.

Universal healthcare as disaster? I lived in Germany and France, and the only people lacking teeth I saw there were US employee from military bases. It's a huge success story, by all measures. Most of you guys have little experience, and please, please - don't call me brainwashed: the sword has two blades.

Health Care vs Military
Re; "I complained that no freaking libertarian protect my problem how my tax dollars are used - I want them to be spent on health care, not on the military procurement."

If you want to control how you spend your money, then don't give it to the government. Oh, you thought you were going to have a say in how to spend rich people's money? Well, that was foolish of you, wasn't it?

No Subject
Is this RandyB guy advocating tax evasion? Not quite sure...

Re; Tax Evasion
Trotsky,

Of course I am not recommending tax evasion. That would be against the law. What I do recommend is that you get some insight on who is actually paying the taxes you neo-liberals/socialists keep voting for. Here's a hint; when you tax the rich, where do the rich get the money that they hand over to the government? You wonder why the standard of living for lower income workers is stagnant. Its because they are being paid in government services instead of dollars. No, I don't recommend tax evasion. I do recommend that you stop taxing the poor to help the poor.

Legislative usurpation of Judicial function
Bill of Attainder

Definition: A legislative act that singles out an individual or group for punishment without a trial.

It occurs to me that the Maryland legislature has issued a bill of attainder against Wal-mart.

Taxpayer?
Turns out those Wal-Mart workers are taxpayers to the tune of about 15% of their salary in ss and med taxes.

comeon eric
Care to try and refute any of my points?
Care to try and prove any of the wrong?
Or do you insist on declaring anything not found in one of your DNC handouts to be a lie?

idiots on parade
If you have some facts, please present them.
Otherwise you look like eric, all fury, no brains.

If you want to believe that European health care is that great, move there.
They pay much more, for much worse results.

no
He's arguing tax elimination.
You on the other hand want other people to pay your way.

Not worth it
Mark, trotsky already blew all your fictions out of the water. The one about Atta is particularly pathetic. It's been exploded for years: it was another Atta. the hijacker was in the U.S. at the time.

And you have no credibility in general. You can and have said anything about everything. The only thing that doesn't change is your stupid insults.

heath-care costs --responsibility of the individual???
A good health care policy costs 12-15 thousand dollars for a family. How is a minimum wage earner expected to pay that. Or should we let him and his familiy suffer and die?

The original title was "health care and taxes": the cost of health care should be added to to the cost of taxes whether the employee, the company or the government pays. That would be the whole cost and the whole truth about health costs.

Every single person should have health-care. Rich or poor.

As far as walmart being a training groud? Well, look at the older people stuck there. They are training for -- what?

Mitchel Gratwick 2

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