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The Wal-Mart Problem (cont.)

In a groundbreaking investigation, The New York Times has discovered that Wal-Mart doesn’t pay its workers very much. This morning, it reports that “a number of community groups and lawmakers have recently teamed up with labor unions in mounting an intensive campaign aimed at prodding Wal-Mart into paying its 1.3 million employees higher wages.”

In a groundbreaking investigation, The New York Times has discovered that Wal-Mart doesn’t pay its workers very much. This morning, it reports that “a number of community groups and lawmakers have recently teamed up with labor unions in mounting an intensive campaign aimed at prodding Wal-Mart into paying its 1.3 million employees higher wages.”

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The Times’ star witness is Jason Mrkwa, a 27-year-old high school grad who stocks frozen food at a Wal-Mart in Independence, Kansas. He makes $8.53 an hour, “even though every one of my evaluations has been above standard.” That isn’t enough, as he complains, to afford a decent apartment or transportation classier than his ’91 Dodge Dakota (though the photo of Mrkwa reveals that he apparently can afford a Dell PC with Internet access).

To me, the article begs several questions. First, to what extent is anyone entitled, per se, to drive something better than a ’91 Dakota? As Mrkwa observes, the labor market in Independence doesn’t afford him a whole lot of options. So, is Wal-Mart therefore obliged to pay him more–or is it up to him to move someplace where he can find better work?

(A hint as to our inflated expectations in the U.S.: The Times quotes William McDonough of the United Food and Commercial Workers Union observing that “Henry Ford made sure he paid his workers enough so that they could afford to buy his cars. Wal-Mart is doing the polar opposite.” Indeed, Ford famously more than doubled his workers pay to $5 a day, in 1914. But in 2005 dollars, that works out to $96.65–not that much more, really, than the $77 that Wal-Mart’s $9.68 hourly rate implies. And I’m betting that Henry’s employees worked harder than the average Wal-Mart cashier.)

And second, the Times’ traditional antipathy to market economics notwithstanding, is Wal-Mart really best served by paying an hourly wage that’s 20% less than the national average for retail workers? What’s the trade-off–which its execs obviously have considered–between low wages and the high costs of employee turnover and negative publicity?

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