I’ve heard people accuse Walmart of paying their employees too little—so little that many of them are on food stamps. That may or may not be true.
But think about it: is Walmart paying them less than they’re worth in the labor market? If so, why are they still working for Walmart? If they could get paid more for the same job somewhere else, they wouldn’t be working for Walmart; they’d be working somewhere else.
When we go to the grocery store, do we try to find the bargains? Do we look for the best deal possible (i.e. the lowest price) when we buy goods or services? Or do we deliberately look for the worst deal available and pay the highest price we can find? Obviously we shop for the lowest price and we take advantage of items that are on sale. Why is it OK for us to do that, but it’s not OK for Walmart to do the same thing? Wages are the prices corporations pay for their labor. They’re going to do everything they can to pay the lowest price for their labor they can get, just like we do.
On the other hand, corporations also have to pay their employees competitive wages. Why? Because if they pay them too little, they’ll go work for someone who is willing to pay them more. That’s how wages remain stable and fair. The corporation pays wages that are low enough to enable them to keep their retail prices down and high enough to retain their workforce without losing it to other companies.
This, by the way, is a basic economic principle that is completely lost on many (if not most) of those who endorse left-wing ideology. I’ve actually heard left-leaning commentators tell us that without the minimum wage, for example, there’s nothing to stop employers paying their employees 10 cents an hour. Nonsense. They are embarrassingly uneducated on the concept of wage/labor competition. In places where there is no minimum wage law in effect, are employers paying their workers 10 cents an hour? Hardly.
Walmart is doing what any company would do and what any intelligent consumer does: buy what they need at the best price. If the price they pay for labor is too low, they’ll lose their workforce. But guess what? Their workforce is still there. That proves that they’re not paying their employees too little. If they were, they wouldn’t have a workforce any more.
One of the benefits of Walmart’s thrift in keeping their costs of doing business down is that people on the lower end of the economic scale can buy goods from Walmart at cheaper prices that they couldn’t afford if they bought them from stores that charge higher prices than Walmart does. That’s how Walmart helps the poor: their lower prices give people who aren’t very wealthy the chance to buy things they couldn’t otherwise. Why, oh why, would anyone criticize Walmart for that, especially in view of the fact that we have already demonstrated that Walmart does not exploit their workers with “unfair” wages?
One of the most common reasons for the accusation that Walmart, along with other businesses and corporations, pay their employees unfairly low wages is that those employees can’t live on those wages and have to be on food stamps as a result. We often hear about the myth of the “living wage.” In reality there is no such thing. How much people need to earn to live depends on their personal living expenses. Their personal living expenses depend on the choices they have made and haven’t made. If someone can’t afford rent, they should either get roommates, or move to a cheaper dwelling, or both. People have been doing this for hundreds of years.
Furthermore, life is not static and unchanging. Most people naturally assume that those on food stamps will be their whole lives. But people who work hard and provide for themselves rarely stay in the same place forever. Older people tend to make more money than younger people. There’s a reason for that. People make more money over time as they gain more experience and skills. What wasn’t a “living wage” for them yesterday may very well be tomorrow. That has little to do with what any given company pays their employees at any given moment in time.
Wages are not based on need. They’re based on the value of an employee’s productivity and skill. An employer doesn’t look at the people working for them and say, “so and so needs x amount of dollars to pay their rent, so we have a moral duty to pay them enough money to meet that need.” To put it bluntly, that’s asinine. Wages based on need is one of the typical myths people who are economically illiterate tend to give credence to. This is why most politicians propagate this fairy tale to garner votes for their “noble” advocacy of a higher minimum wage. Minimum wage is charity and nothing more. Corporations like Walmart are not charities, and it would be foolish to criticize them for that.
We are also constantly hearing about the supposedly exorbitant salaries CEOs working for companies like Walmart are making these days. This is another example of invalid criticism coming from those who haven’t been educated in the field of economics. One of my favorite economists has pointed out that if a CEO can save a corporation $100 million per year, paying that CEO $8 million per year is a bargain. If someone thinks pulling off that feat is easy, I suggest they try it. Not very many people can do what CEOs do. That makes them rare, and therefore more expensive. This is simple supply and demand at work.
Finally, I find it amusing that people tell us that Walmart’s owners are rich and buy lots of expensive houses and toys. Maybe they do. But what business is that of ours? Who are we to tell them they can afford to pay their people more? What criteria are we basing that on? Ben Shapiro once related the fact that if the CEO of Walmart decided to work for free and distribute his salary to his entire workforce, each employee would make $10 more per year than they did before. Walmart’s CEO might spend a couple million more for his house than the average American. But believe it or not that’s a relatively trivial amount, and it wouldn’t make any difference if he spent a couple million less. People are so busy focusing on what the owners of Walmart spend their money on that they miss what they also spend the corporation’s money on: expansion of the business, building new stores, hiring more people, creating more jobs for people who need them. It would be hypocritical to criticize them for buying a few toys for themselves, as if we never bought a single luxury in our lives. Our toys aren’t as expensive, but they’re still toys.
No one is saying that Walmart is perfect. In a fallen world, why in heaven’s name would we expect them to be? It’s been said that if you demand perfection in this world, be prepared to forfeit your freedom for it. I would add that once we have given up our freedom to obtain perfection, we’ll instantly discover that it was an illusion, and in reality it’s the furthest thing from perfection we could imagine.
Photo credit: Mike Mozart (CC-By-2.0)