Monday, April 07, 2014

What if Walmart paid employees enough to avoid food stamps?

I enjoyed this video for sharp writing, clarity of data presentation, and measured tone.

While still relying on economic markets for a thriving food economy, we nonetheless can expect our major grocery chains to do better on wages. No matter what one thinks of the proposed federal minimum wage increase, it is clear that the nation's leading employers should face binding social norms that constrain them to pay wages that reach a certain threshold.

What should the threshold be? It is possible that some threshold would be too high, counter-productively putting grocery companies out of business. But, this video focuses on a much more humble and minimal threshold. At the very least, major grocery chains should pay wages sufficiently high to keep workers off the Supplemental Nutrition Assistance Program (SNAP) rolls.


Kate Olender said...

I, too, believe that people should be paid a living wage, but I don't find the video impressive or admirable. Rather, I find it an agenda-driven piece that presents a narrow and overly simplistic view of a complex issue, and I think it does a disservice to solving the problem by serving mostly to fuel hatred toward Walmart, instead of to offer solutions to an industry-wide problem.

Walmart's business model is built on offering the lowest price. Raising prices would undermine their business philosophy and could sacrifice their competitive advantage.

Further, raising the cost of food on the poor at the same time that the cost of gas and oil and other things are going up, and at the same time that real wages are going down, is significant. The poor already spend a larger percentage of their income on food, so increasing food prices 1.4% affects the poor disproportionately. Essentially, if there were a food price increase, the share of income that goes to food would increase by more for a poor person than for a wealthier person. They'd have to decrease their spending on other essentials, while a 1.4% increase to the wealthier might mean decreasing spending on luxuries.

While raising wages of workers may be ethical let's not forget that it does have implications for the other shoppers at Walmart, whose wages are not increasing but who would bear the price increase. And considering the average family of four shopping at Walmart spends less than $65/week at Walmart on groceries, I think it's safe to assume that any increase would be felt.

That said, I think you do some things because it's the right thing to do, regardless of the economic implications - and perhaps we would consider it ethical for Walmart to eat the cost, making shareholders pay for a pay increase rather than shoppers - but my point is, this is complex stuff!

Parke Wilde said...

Hi Kate. Thanks for the comment!

I perceive a tension between two of your interesting points.

1. "People should be paid a living wage."

2. Raising Walmart wages may be a bad thing, because even a 1.4% price increase would hurt the poor.

One way to reconcile these two points is to conclude that Walmart already is paying a living wage. Is that what you meant?

Or perhaps you were still undecided on point #2. Within your comment, you seem to go back and forth a couple times about whether raising wages would be "the right thing to do."

Kate Olender said...

Hi Parke,

Thanks for your response! I am happy to clarify. I don't think that Walmart is paying a living wage currently. I do think that it's important for everyone - Walmart employee or not - to be paid a living wage. But I recognize that if Walmart does start paying a living wage, and they offset the resulting cost to the company by raising their prices to consumers, the effect on their poorest shoppers may be negative. Raising the wage, ethical as it is, can have undesirable consequences if not done carefully. My problem with the video is that it doesn't recognize this complexity. I believe we should have a living wage, but recognize that doing so is not as simple as the video portrays. I hope that Walmart (and other retailers) can find a way to pay their workers a living wage, without needing to raise the cost of goods in the process.