Seth Ackerman, Matt Yglesias, and Doug Henwood had an interesting Twitter conversation earlier this week about boosting wages at Walmart. As Ackerman and Yglesias note, higher pay has to come from somewhere and Walmart, a company whose munificence has always been lacking, wouldn’t bear the full brunt of such an increase: They’d likely pass a portion of it on to customers. Walmart has staked its reputation on delivering low prices, however, so they couldn’t substantially hike prices without sullying the company name.
For his part, Henwood contends that the Demos plan—increasing full-time workers’ annual pay to $25,000—”Could stimulate growth and offset redistribution. Relative incomes would change, but absolute could all rise.” Henwood’s economic chops dwarf my own, so I won’t quibble with his assertion. The underlying labor-capital conflict won’t disappear, though, so, absent ever-escalating profits, the pay increases would eventually cut into Walmart’s bottom line. Workers will have to act in concert to get what’s rightfully theirs, especially when profits aren’t bountiful.
What really rankles me is when people assume Walmart would bestow benefits on their workforce if they could. A perplexed Peter Suderman asks, “Paying Walmart’s workers more would mean the money has to come from somewhere. But where?” Megan McArdle runs the numbers and finds this (h/t Matt Yglesias):
Walmart’s $446 billion of revenue last year was eye-popping, but its profit margins are far from fat–between 3% to 3.5%. If they cut that down by a percentage point–about what retailers like Costco and Macy’s have been bringing in–that would give each Walmart employee about $2850 a year.
McArdle pooh-poohs this apparent pittance, but three grand is a substantial sum when you’re living paycheck to paycheck. This is emblematic of McArdle and her ilk, though: unprecedented worker and solidarity actions across the country, and all it elicits is a collective shrug. (A similarly dour Yglesias informed us that the Black Friday actions were woefully inadequate.)
The core issue in this dispute—and, really, nearly every dispute—is power.
McArdle et al. view the struggle between labor and capital as illusory and, thus, are skeptical of workers’ need to act collectively: Walmart will help workers out when they can. They welcome workers who are prostrate in privation because hey, low prices. Agency, dignity, democracy—all meaningless because Walmart sells cheap food, microwaves, and TVs. These inveterate capitalists have weighed the costs and benefits of raising workers’ wages and augmenting worker power, but—surprise!—cheap consumer goods and more neoliberalism are the answer.
If the Black Friday protests weren’t perfect—there will need to be a tactical escalation, more organizing, and, obviously, more striking workers—they were a start and a success. Building power takes time.
As I said to Elias, I’m starting to understand why the distinction between the anti-state Left (that is, left-libertarians) and what people commonly mean in the U.S. when they say “libertarian”.
Within my understanding, the fact that Wal-Mart uses the welfare state as a supplement to their wage structure should register as a clear violation of lasseiz-faire principles (thus offensive to people like Megan & Peter). Yet, it doesn’t. The implication that without the welfare state they would have to raise their wages merely to maintain the workforce they currently have & have determined they need somehow does not even draw fire. To me, this is because when the market & big business disagree, they are picking big business rather than the market: “if the state has to function as partial compensation, then so be it”.
This is I think a very fair observation and one that Megan and Peter ought to answer for.
It seems to me like there was a case from Maryland or Delaware where the state sued Walmart to recover losses due to low compensation. I can’t remember the cause of action there.
btw, I crunched the numbers, and $2850/yr comes out to about $55/wk.
At $12/hr, this would be an 11% increase in wages– certainly substantial.
the fact that Wal-Mart uses the welfare state as a supplement to their wage structure
I really don’t get this line of argument. It seems to assume that if government benefits to the working poor were eliminated, Wal Mart would find it necessary to pay their employees more. But what they’d really have is employees who were in even more desperate need, which would reduce the employees’ bargaining power.
And the argument seems to suggest that surest way to improve wages is to eliminate government benefits for low income workers. Does anyone here really believe that? Does anyone really think that the corporate response to the end government benevolence would be to raise wages?
Wal Mart’s not benefiting from those government benefits to low income workers–the workers are, who instead of getting only Wal Mart’s low wages are instead getting the low wages + benefits.
James:
Only if they wished to maintain the same amount of workers they have within the current arrangement. Otherwise there’d be some on the margin who cross them off as possible employment in areas with competitors. Wal-Mart would more likely just make do with fewer employees than raise wages though.
It’d be one thing if they just happen to qualify, but there’ve been reports of management actually encouraging signing up for the programs. That’s treating it as part of the compensation package.
The argument is not that eliminating government assistance for low-income workers would in itself improve wages. It’s that full-time workers needing government assistance is ridiculous, a sign that wage improvement needs to be fought for.