Afternoon Monkeys,
For those of you in the D.C. metro area, this is something I'm sure you've heard plenty about, but others may not know much about a recent bill that has recently passed the D.C. Council requiring large retailers to pay their employees $12.50 per hour. The basic idea is if you have more than 75,000 square feet of retail space, or over $1 billion in revenue, your minimum wage is $12.50 per hour, while smaller outfits are only required to pay $8.25 per hour.
It should come as no surprise that this bill has elicited myriad reactions from across the political spectrum, all with their own flavor of analysis and approach to the issue. One particular columnist caught my eye in that while I read through their analysis, I could never shake the feeling that there was something horribly wrong with the analysis itself. That columnist is Harold Meyerson of the Washington Post, who may have put together a very misguided case for the bill. But, who knows, perhaps I'm the one who is off base.
Take a look at some of the points Meyerson makes, and see how you would approach the same analysis
The column begins with a suggestion to Republicans, followed by support for the position:
For Republicans who want to cut the number of food stamp recipients, here’s a helpful suggestion: Support the ordinance passed last week by the D.C. Council, which required big-box stores like Wal-Mart to pay their employees at least $12.50 an hour.
Some quick background, Wal-Mart is planning on opening six stores in D.C. two of which are planned for this year. However, none are currently open as far as I know. Additionally, it appears that Wal-Mart is (unsurprisingly) very against this bill and is considering cancelling their expansion into D.C. That being said, Meyerson does offer support for his assertion.
On average, Wal-Mart pays its workers $12.67 an hour — which means that a huge number of its 1.4 million U.S. employees make a good deal less than that. By paying so little, the Bentonville behemoth compels thousands of its employees to use food stamps to feed their families and Medicaid to pay their doctor bills. It compels taxpayers to pick up a tab that wouldn’t even exist if the company paid its workers enough to get them out of poverty.
From a mathematical standpoint, the average of a given set of values doesn't give you any insight into the distribution of the set of values. But, from my reading of the passage, the author's qualm is with low wages in general and union strength in particular, as noted in an interesting anecdote.
[Just] the possibility that Wal-Mart might receive the go-ahead to open stores in Los Angeles in 2004 compelled that city’s supermarket employee union to accept a management demand to establish a markedly lower pay scale for new hires. When subsequent public opposition to Wal-Mart’s entry kept the chain largely out of L.A., the lower pay scale was eliminated the next time the union’s contract was renegotiated.
But, the real issue according to the author still appears to be wages, which he attempts to view from a business perspective.
With Wal-Mart repeatedly failing to gain entry into the nation’s largest and most lucrative consumer markets, its investors might wonder why the company insists on maintaining its one-size-fits-all pay scale.
I find this passage to be especially perplexing as it appears to assume that a firm must pay an arbitrary wage in excess of the minimum wage in order to enter the nation's "largest and most lucrative" consumer markets. Also, that investors are interested in increasing costs, but perhaps I'm missing something. The author continues along this line of argument, by comparing Wal-Mart to Costco.
The executives at Costco, Wal-Mart’s closest competitor, know how to run a profitable discount chain that pays workers well: Its average hourly wage is just over $19. That’s why there are Costco outlets in the cities where Wal-Mart is still on the outside looking in.
I'm fairly certain that while Costco competes with Sam's Club, they do not compete with Wal-Mart. Interestingly, it looks like the magic number you must pay, on average, to workers, to get your stores into major markets is $19.
How do you monkeys view this analysis? Does it seem reasonable? Do you see a causal connection here? If not, what would you change?
More like WAshington Joke.
He's prolly on that rock with Marion Barry funny thing is Dc has been trying to attract retailers then once they get them they pull crap like this. In the metro area ive heard it called the wal-mart bill
Since when has minimum wage been something someone uses to raise a family?
WalMart should just not open stores in DC.
Another compelling question, since when has it been the responsibility of an employer to grant an employee wages sufficient to "live" (w/e a "living wage" is in practice)?
That looks like what will happen. It's sad that Wal-Mart already began construction on 2 stores. On a related side note, it looks like you may be able to buy some land in DC with some partially finished buildings already erected. Could be profitable!
They've been planning and I believe even building stores in the district. Some of the stores are in areas that really need jobs. I've heard they're now planning on closing several of these stores now. Including a much needed store in ward 5. That's just talk I've been hearing on the radio tho.
I read another Washongton columnist who said some of the city wage slaves make less than that 12.50, but hey, let's pick on Walmart, it's not like we can spend time making our district not suck.
I love that these guys admonish Republicans to support it because this higher minimum wage is going to lower unemployment and get people off of food stamps. Whoever believes that should not be paid more than minimum wage.
Have you ever been to a Walmart? Their employees are grossly overpaid, even at minimum wage...
Here's a nice mathematical analysis for the liberal Democrats:
0 hours times $12.50/hour = $0.00 in wages 25 hours times $8.25/hour = $206.25
$206.25 > $0
Wal-Mart will not be opening the stores at all now, and that will cost an area with something like 34% poverty rate 1,200 badly needed jobs. I've also heard some of the areas in D.C. that Wal-Mart wants to open stores in are considered "food deserts", which means there is not currently access to close by affordable groceries. So the liberal Democrats on the DC council will be robbing its people of 1,200 jobs and affordable groceries.
But ya know what? The people of DC get EXACTLY what they deserve. Not only do they continue to elect far left wing liberal Democrats, they continue to elect the most corrupt Democrats they can find. If it were up to me the poverty rate would be 100% in DC. You elect people that you know are corrupt? You get what you deserve.
If anyone is trying to make a living wage for a family by working at Walmart they are sadly misguided, just some real quick math, if a person worked for $9 per hour doing 40 hours a week they would make roughly $17000 a year, before taxes, in DC the average monthly apartment rent is around $1300 for a 1 bedroom apartment. That means a single mom working at Walmart would pay almost all of her before tax income to just rent if she were working at Walmart. What liberals do not understand is that these minimum wage jobs are intended for teens and part time workers using the money for supplemental income, not full time income.
DC wants to make it a "living wage" but at $13 an hour a Walmart employee would still only make roughly $25K a year before taxes, meaning still half of their pre tax wage would be going towards rent. This is still by no means a living wage and will cause Walmart to either not open stores in DC or hire less employees. This does nothing but hurt the lower income people of DC. Walmart has such good prices that it allows people to buy better and healthier foods than if they have to buy from Whole Foods or Kroger, and increases people's quality of life. Secondly if Walmart doesn't open these six stores thousands of jobs will be lost and taxable income will be lost.
Just my two cents
I personally think we will end up having "living wages" across the county as the need for unskilled workers decline and the only places these people can work are in WalMart type jobs. Unfortunately prices will also increase or Wal Mart will seek automation which will only end up fucking them in the long run.
This is going to be a long term problem as the US continues down the path of being an information/service based economy. Even our manufacturing is relatively skilled.
I'm a free market guy, but you have to realize that many of those ideas don't exist in a vacuum.
I'll play devil's advocate here: What if Wal-Mart is actually externalizing/socializing its labor costs? If a WMT employee works 40 hrs/wk and is still below the poverty line, they are going to need to supplement their (lack) of income courtesy of our tax bills. So, in essence it could be viewed as a subsidy.
Let's also not forget that Walmart typically has the lowest prices on many grocery items. So now, the residents don't get any jobs and are paying more for their groceries.
Also, Walmart typically attracts other development. Even in poor areas there's often a McD's, Dollar Store, etc... that come to the area right by Walmart. Again, these aren't the best jobs, but those are additional jobs that won't come now.
Way to go DC, this makes a ton of sense.
Free market solution: take out or minimize those social services (ie food stamps & medicare). Employees will then not tolerate such low wages, and their wages from Walmart would increase.
That's probably why hiring old people is such a good idea. They are covered by medicaid, so they don't have to worry about paying as much for healthcare, and they don't need to save as much, since they will not have children, probably already own a home, etc.
Hence why I said, not in a vacuum. Good luck minimizing social safety nets in today's political/economic environment.
The analysis is disorganized and nonsensical.
First the writer says that the new law reduces government welfare expenses (food stamps, etc.) by asking large-cap companies to pay more instead. I suspect this theory is incorrect (at the very least it requires further study). Any economist can tell you that increasing minimum wages increases unemployment. This is because market equilibrium in the labor market is disrupted by a price floor. So some poor people will get paid more (and move off food stamps), but others will be fired/not hired (an move on food stamps). ...i suspect food stamps largely go to people who don't have any jobs, so the law would actually increase the amount spent on food stamps.
Second the writer changes tacks, and suggests the Walmart's business model is ineffectual as they're giving up a market opportunity to save on costs. This argument is just fucking stupid. You know the most likely reason Walmart is passing over an opportunity? It's not a very fucking attractive opportunity.
That is all.
Let me reiterate this point in a slightly different way--an unemployed person is far more costly to the state than an under-employed person. Passing this law has forced Wal-Mart to nix the 1,200 jobs that were going to be created. So a person making nothing is more costly to the state than a person making $8.25/hour.
Let me also point out that I believe this law is a de facto bill of attainder since they are grandfathering everyone in who is already there. The law is specifically targeted at Wal-Mart and is meant to keep them out.
I think your point is very interesting DBCooper, and should not be unfairly criticized. Indeed ideas do not exist in a vacuum. Those of us on this board who are fiscally conservative must still work collaboratively with the fiscal liberals, and make compromises that are in everyone's best interest (and the fiscal liberals must do the same for us)
However, i still disagree with you. I think currently, Walmart is employing X people. I think if the minimum wage rises, they will employ fewer than X people (as is evidenced in them not opening up DC stores). I think this will actually cause us the spend MORE of our tax money supporting the poor. However, I could be wrong and i would of course listen to any real-historical-data driven analysis of this idea.
This arguement doesn't work because it's not Wal-Mart's fault that a lot of the employees are trying to sustain a family on minimum wage. I mean think about it as an analyst, do you you think your bank is going to make sure you get a salary where you could support a family of 4 in NYC? No, of course not.
Lets say a family, where there are two earners work at Wal-Mart. At $8 an hour and a 40 hour work week, they would earn a combined $30k. Obviously nothing good, but its not like they will be in homeless shelters. Also I have a friend that used to work at Wal-Mart and they have an insanely good health insurance program. Its pretty cheap, I think he was paying like $30 a month and he didn't have copays or deductibles. Wal-Mart implemented this after all the scrutiny about poor benefits. So not sure where these politicians are saying these employees need medicaid.
Everyone here brings up the standard anti-minimum wage points, so I won't rehash, but something particularly strikes me about Meyerson's logic:
Meyerson accuses Wal-mart of "compelling taxpayers" to foot the bill for social benefit programs by "underpaying" its employees. Of course, Wal-mart is a taxpayer, and an enormous one at that. I'm going to go out on a limb and say that Wal-mart's tax bills, along with its employees' withholdings, sufficiently compensate for the taxpayer burden of paying for its employees' foodstamps. A more salient issue here is that Wal-mart will have to pay the same taxes rate either way! It's not as though paying its employees a higher wage will reduce its tax burden, and contrary to Meyerson's suggestion here, I find it absurdly unlikely that D.C. would lower taxes in response to lightened food stamp expenditures. Those taxpayer dollars would just end up being allocated to some other government program that would bridge the gap.
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