I feel like before people should be allowed to put this forward as a serious argument, they should also put forward the numbers behind it.
How much of your current Walmart receipt goes to the non-executive-management in-store staff?
The implication of course is that it would be significant.
It's echoes of the uninformed arguments around the UAW though. Back in 2008 the $70 was all anyone could talk about. That despite the fact that included funding for benefits the Japanese automakers didn't provide because they were socialized. Also completely ignoring that total labor cost was around 10%. Just how much did people think it could be cut?
Cut compensation and benefits in half and you save a whopping $1,500 on that $30,000 car. You know, the domestic one that's already cheaper that you weren't considering in the first place.
So would I tolerate my grocery bill being 2% higher to give cashiers/stockers/etc a living wage? Absolutely. I pay a lot more than that just to avoid shopping at Walmart in the first place (the parking lot is always packed, the lines are long, the aisles a mess and it's further away than Fiesta, the asian market, Albertson's, Kroger's or Target).
What if the receipt was 10% higher? If it provided a living wage, decent benefits, and improved their stores generally then yeah, I probably would. The spread between the asian market and Target is already much much higher than that.
More than that? Not unless they excelled in some area. For packaged meats Target does a real decent job. For produce the asian market is where it's at. For bulk items at low prices Fiesta rules. The others are sort of middle-of-the-road in offerings, at decent, if not amazing prices.
But I seriously doubt anything like or above 10% would be close to necessary to achieve what was proposed.
"One leading hypothesis is that firms employing low-wage workers—such as fast-food chains—have significant monopsony power in the labor market; that is, they are the principal purchasers of low-wage labor in a particular job market. And a monopsonist facing a price floor doesn’t necessarily buy less, just as a monopolist facing a price ceiling doesn’t necessarily sell less and may sell more."
"The employment effect of the minimum wage is one of the most studied topics in all of economics. This report examines the most recent wave of this research – roughly since 2000 – to determine the best current estimates of the impact of increases in the minimum wage on the employment prospects of low-wage workers. The weight of that evidence points to little or no employment response to modest increases in the minimum wage."
Thanks for teaching me a new word (monopsony)! It's been a long while since my vocabulary has been increased with something that's not a millennial invention.
Farmers know that term very well. When the second loading ramp or grain elevator closes, and there's only one buyer left, farmers face a monopsony. Farmers have fought back with co-ops and Government price supports.
Sadly, what we'll see happen is more automation, self checkout, etc. Technology will ensure low skilled workers price themselves out of the economy. This, js likely, to some degree, part of the force resulting in net negative low skills worker immigration.
Too few skills (reading, maths) and now automation is coming to agriculture even fast food restaurants, and at $15 min wage, you can hire a high school dropout, if you really need manual labor.
>part of the force resulting in net negative low skills worker immigration.
That assumes that these workers are coming from countries where opportunities for paid work are equal to or better than those available in the US, and are equally lucrative. Many workers come from communities destroyed by the drug wars, or from economies ruined by corrupt governance. If those structural factors don't see improvement, the impact on net low-skilled migration to the US won't budge much.
Understood, but if there is no market for their labor due to structural changes in the economy (automated taxis, automated check out, mechanized fruit picking) as well as a better educated domestic workforce (high school grads) now willing t work at $15/hr what jobs exactly would they be coming for?
People in desperate situations aren't going to be stopped from coming to the US because the Fed/WSJ/BLS says there is no market for their labor. Migrant communities are extremely resourceful because they likely have experience in finding opportunities that others would pass on.
For a lot of people, decision making is based on which option allows them to just live another day; relative to their circumstances, we are exceptionally privileged to be able to make decisions based on the extent to which macroeconomic indicators impact our standard of living.
You're thinking about the state of the economy today and yesterday. Maybe you're only thinking about people who grew up south of the southern border. Low skill immigrants come from many places. Many pay lots of money to get here, if they don't see a market for their low skills, there is no reason to come here. Low hanging fruit [low skills jobs] are being replaced by automation, slowly, but it's on its way. Currently there is a net negative low skills immigrant flow. As automation accelerates, it's likely to increase low skills immigrant outflows. Conversely, we may see more net inflows of mid and high skills immigrants.
And, as minimum wages go up, high school graduates become more willing to work. At $10 you may not find manual labor worthwhile, but at $15 it looks more enticing. Now, immigrants typically work a little harder, but not so much to overcome a lack of education and poor communication skills --which can take years to develop if Eng is not their native lang.
As tech advances and "hollows out" low skilled labor from advanced economies, these economies will struggle to keep their mid skills labor market employed.
The money for a cashier to make a livable wage doesn't have to come from increasing the costs of all goods. The point of the article was essentially that companies have more money than they know what do with. If they paid their employees more, not only would it be better for the employees, it would be better for the company as more money in the hands of the poor will drive up demand for goods.
I think you mean, "If other companies(but not us) pay their employees more, then as consumers they can buy our stuff". I seriously doubt that giving an extra dollar to an employee generates more than a dollar in actual revenue looking solely at the purchases made by that employee. Maybe there are other social knock-on effects, but I don't see them spending more than $x on your own products when you give them $x.
One plausible exception would be for items so expensive that they're often financed with debt: A car manufacturing company might plausibly generate more than a dollar in revenue in the short-term if its employees borrowed money to finance it.
Another plausible exception would be if you gave someone a temporary raise, and they immediately started spending more and going further into debt(think buying a bigger house, bigger car, funding a bonus vacation on a credit card, etc.). Then when you cut their wages 6 months later, it's possible that for some items you would've convinced your own employees to spend more money than you gave them on your own products.
A third exception might be for companies that completely control the employees' spending. For example, a prison or a camp full of debt slaves might be paid $3/hour, but they could only spend it on overpriced company goods. Raising it to $4/hour still wouldn't exactly generate direct revenue over the long term, but it wouldn't cost the company much at all since they'd capture 100% of the spending. Anything short of that 100% is savings, and people might be more willing to spend down their savings if they thought money was easier to get. So you could - in the short term - make money by raising wages. Doubly-so if you extend them credit(on top of whatever debt they're working off).
I can't think of a way that the "giving people more money gives them more money to give back to you" argument actually works that doesn't involve saddling them with debt. And these are merely plausible - I don't know that they're what would actually happen.
Actually, what does them being employees have to do with the argument? If that argument were valid, why wouldn't my local grocery store hand out free $20 bills to anyone who comes in, since this would spur them to buy stuff? Or if you were truly convinced that this would make the companies more money, you could easily be a millionaire by buying up a local McDonalds(with a government-backed loan), raising everyone's wages, and then when your income goes up by x% reselling the business for an x% increase on the $300,000 or so you bought the McDonald's for(and repeating this a couple times).
I would argue that the overall economy is more productive when the lowest wages meet some minimal living line (higher than we have now). This causes businesses to search to meet a higher efficiency of value creation in order to stay in business. The evolutionary culling of poor efficiency businesses drives a virtuous cycle for our civilization and economy in the long term.
If the companies are searching for a way to leverage lower wages for employees - that isn't real value creation. Driving wages too low, we get our current economic stagnation.
Isn't the point of that statement in the context of this article that maybe we don't need to pay more for goods? If companies have so much extra capital, some of that could be turned into higher wages for employees, since we already are paying higher prices.
I don't actually have an opinion, but your statement is missing the point.
No more than I do now. I want the wage increase to come from lowering the company's profitability. And it is... In 2016 Walmart is spending $1.2bn more on wages, and in 2017 it'll spend $1.5bn more. That's without putting prices up. The 2014 wage hike hit the share price quite hard, but Walmart has the cash to do it and I imagine the shares will bounce back. I hope other businesses follow their lead.
According to Walmart themselves (as reported by NPR) the hike in wages has nothing to do with the store closures, most of which are a failed concept of smaller Walmarts.
When Walmart tried to compete with ALDI in Germany, they couldn’t. They gave up after just a few years, because ALDI managed to have lower prices and higher wages, because they had optimized every single process to maximum efficiency.
So a business model of screwing every penny out of your staff and suppliers can result in customers too poor to buy your merchandise?
Who could have forseen this?