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No, I don’t write for the Post

But you might think I did based on my last blog post and this morning’s op-ed piece in the Washington Post. Maryland is on the verge of passing legislation (over the governor’s veto) that forces any employer of over 10,000 people in Maryland to pay at least 8% of their payroll towards health insurance. Guess how many companies it affects… one. Go ahead and guess which one, that’s right Wal-Mart.

I really cannot believe the stupidity of the Maryland legislature. There really isn’t any doubt what will happen if this is passed, Wal Mart will close at least some of its stores in Maryland. Lots of people will lose jobs and more importantly, lots of people will be forced to pay more for the same stuff they bought before. Keep in mind that right now people have a choice of where to shop, many choose Wal Mart strictly because they can’t afford to go anywhere else. . I find it appalling that the government’s short sightedness will cost people so much. Will anyone benefit? Surely not the people that the law is supposed to help. People that work at Wal Mart will, overall be worse off due to the inevitable loss of jobs even if they do not close down stores. 8% is a big chunk of change, especially when your business model is based on low margins. If you read the links I posted in my last blog post, you’ll know that Wal Mart’s competitors will be the clear winner. In their best case scenario, they will be relieved of their most fierce competitor. Read Walter Williams’ very short piece again. I’ll even post the link again here.

The Post, to its credit, had pretty much the same stance on this as I do. They too found the Maryland senate’s actions to be the worst kind of lip service to protecting workers. Taking away jobs and limiting competition is only ever good for a very small group of people. The rest will pay for that privileged group.

Isaac

12 replies on “No, I don’t write for the Post”

Of course I have gone without health insurance when I couldn’t afford it. My question to you is what difference does it make? How bad off do you want the people that Wal Mart to be? It’s bad enough that they do not have the skills or education to get a better job, but to put the job into jeopardy certainly does them no favors. The point is that you cannot legislate companies to start giving it to people without big consequences, all of them bad. Not only will many people not have insurance, they’ll be out of a job. his type of legislation is the worst kind. It benefits Royal Ahold (the parent company of Giant food) and possibly the grocery union but it hurts the very works it’s supposed to help. See my why demand curves slope downwards bit on my web page for the workings of what’s going to happen.

Isaac

I wasn’t arguing that it wasn’t the best idea in the world. In fact, I wasn’t arguing at all.

The point I’m trying to make is that the reason Wal-marts prices are cheap are because they take advantage of their employees. Take advantage of the fact that they can’t get a job elsewhere. They pay less and provide less benefits than their competitors.

It’s not as if more shopping needs to be done now than before Wal Mart was so huge. (Except for communities that had no grocery or department store within a convenient distance before,) I don’t think they’re filling a gap, I think they’re replacing what was already there, with something that’s of less benefit to the employees.

I just think that if you were came from a different background, you wouldn’t think Wal Mart was so great.

WALMART CANNOT TAKE ADVANTAGE OF ITS EMPLOYEES!!!!!! Why do people believe that they can? If it’s a terrible job, quit, what do you think Wal Mart’s turnover is like, I bet it’s incredible. What’s that, they can’t get any other job? Well then it sounds like Wal Mart is doing them a big favor. They can get experience and some skills and move on to better jobs. I bet that’s what the majority of Wal Mart workers do. How many career fast food workers have you met? How many career dishwashers have you met? No many, that’s because people move on to better jobs when they can.

Think about what you wrote, “I don’t think they’re filling a gap, I think they’re replacing what was already there, with something that’s of less benefit to the employees.” Two things, first of all the people that start working at Wal Mart ARE NOT coming from a better job, matter of fact I bet that they are probably out of a job before Wal Mart rolls around. The fact of the matter is that when a Wal Mart opens up, they are flooded with job applications. The “benefit” to the employees is a regular paycheck. It is not a dream job, it is not usually a career move, and it is certainly not what I would want to do (although I have worked at worse jobs). Walmart is most certainly filling a gap, both for employment and for shopping. “But they could pay their employees more!” They could, but then they wouldn’t be Walmart, or at least they would be deviating from has made them the most successful and powerful retailer in the world. Here’s a glimpse into capitalism at it’s best… By being ruthlessly committed to keeping all prices low (from distributers, from employees, from their entire supply chain) they have made their stockholders very wealthy, all due to the volountary interaction of consumers and their employees. But they have also employed hundreds of thousands of people and have saved millions of people billions of dollars. By pursuing what is in their best interests, many more people benefit than just themselves.

I don’t really understand your comment about if we were from different backgrounds. I really don’t. What would make me think that Wal mart was terrible? I think that our basic difference is that I see people in charge and responsible for their own well being while it sounds as though you believe that someone should take care of them. Both of us have had bad jobs and we have both decided that they weren’t good enough. If all people can do is work at Wal Mart, that really isn’t Wal mart’s problem, is it? If someone chooses to stay there, playing by their rules, whose fault is it that they have a shitty job? No one is entitled to anything… I’m going to put up a companion piece to my demand curves one, this’ll be on supply curves and how the two interact. I am going to use Wal Mart hiring as my primary example…

Isaac

“The point I’m trying to make is that the reason Wal-marts prices are cheap are because they take advantage of their employees. Take advantage of the fact that they can’t get a job elsewhere.”

See here’s the thing. The only reason Walmart would hire people that couldn’t get jobs somewhere else (because of low skill/low experience) is because they are less expensive. The primary reason people work at Walmart is because they don’t have the ability to work someplace else. Take one group out of this equation and they’re both screwed. If all that was available was highly skilled employees, walmart would not be able to operate they way it does now. They would have to pay higher wages to compete for the workers. If Walmart wasn’t around, those people with little to no experience and few skills would have even fewer opportunities. The key is that they are made for each other, both groups get what they want from each other. This is what markets do, buyers and sellers can come together and make exchanges of goods and services for money at an agreed upon price. Sellers get as much as they can for the service they sell while buyers try to pay the least they can. Of all the jobs out there, even if there is only one more, the people that work at Walmart chose to work there because it was as good a job as they could get. If we try to “force” walmart into doing something else, these people will be made worse off because another door will be closed to them, either through less hiring or no hiring at all. I’m not trying to argue, but I fail to see any exploitation, I fail to see anyone being taken advantage of. All I see are people working a (admittedly crummy) job that they applied for and agreed to the terms. It makes no difference what other grocery stores are paying, THEY COULDN’T GET A JOB THERE. I bet that as soon as they get a chance they’ll work at Giant, be a bank teller, work for CVS, or any number of other jobs that have better benefits. They will be able to do that because they have acquired some skills and are now experienced, so employers that want to hire them have to offer more than Walmart does.

Isaac

So what happened before WalMart was such a huge presence? Have they really made that much of a difference in the countrys unemployment rate? If they really employ the previously unemployable, then that’s one thing. If they employ the people who would have been working at Safeway, if one was still open, they’re not filling a gap.

“So what happened before WalMart was such a huge presence?”
Everyone paid more for the same things and therefore couldn’t buy as many things like groceries, tvs, tires, TP, etc.

“If they employ the people who would have been working at Safeway, if one was still open, they’re not filling a gap.”

Umm, if they would have been working at safeway, why would they work at walmart. Safeway either wasn’t there or they weren’t hiring. Moreover, because safeway, Giant, etc are forced to pay more to their employees, they do not hire as many people (see my explanation of demand curves). This is why people work at walmart for less than giant pays their employees, they couldn’t get a job at giant for whatever reason. It isn’t very useful to say that people could have worked someplace else before walmart opened or if walmart didn’t open. They had that choice all along and yet when walmart opens up, they choose to work there. Why? Ask them, ask all 1.7 million people why they didn’t go work for Safeway instead…

“Have they really made that much of a difference in the countrys unemployment rate?”

That’s a really complicated question and I’m not really sure what the answer is. Obviously, any business that employs that many people has a big effect on employment, but I don’t think that’s what you were asking. If you’re wondering if walmart has added jobs, I bet the answer is yes but I can’t prove it. Let’s look at some of the employment figures for the other companies that are being adversely affected by walmart’s competition.

Safeway 191,000 employees in 2004
Royal Ahold Parent company of Giant food. 206,441 employees worldwide
Sears holding corporation. Parent of both Sears and Kmart. 380,000 employees in 2005. Incidentally, this is Walmart’s closest retailing competitor behind…
Home depot 325,000 in 2005.
United Food and Commercial workers, one of the largest grocery unions in north america. 1.4 million.

Now if we assume that Walmart pays less than any of these groups and that people would rather work for these groups than walmart, it leads to some interesting conclusions. In other words, walmart is employing 1.7 million people that were not and could not work at those other jobs for whatever reason. In addition, the next two largest retailers combined (sears holding company and Home depot) employ less than half the number of people that walmart does. There’s no question that walmart has eaten into those companies reach, but I doubt that explains the huge (1 million) discrepancy. These are just some numbers that I pulled off the web in 10 minutes of research so they aren’t conclusive by any means, but they sure are suggestive.

Isaac

Sorry, just one point

“The point I’m trying to make is that the reason Wal-marts prices are cheap are because they take advantage of their employees.”

Actually, the main reason that walmart’s prices are lower is because of their supply chain. Not only do they have the most bargaining power, but their entire supply chain is by far the most efficient out there. This is because all of the suppliers can tell whenever someone buys a product of theirs from a Walmart from anyone in the world. They have real time updates of all of the sales all the time. Walmart has made the shipping of these products into an art, maximizing efficiency and keeping track of everything that is being sent all over the place. Trucks that are used to deliver goods to stores are also used to bring things to the distribution hubs so that they never run an empty truck for long. Because of this, neither Walmart nor their distributers have to keep excess inventory, it is made and brought in as it is needed. It is estimated that Walmart’s prices are between 10-15 percent less than their competitors just because of their supply chain. I have a hard time believing that they pay their employees much less than Kmart does. It’s true that their corporate culture is one of cost savings and this no doubt trickles down to the wages they pay, but they have little control over what they have to pay people to work there whereas they have almost complete control over their supply chain.

Isaac

Re: Sorry, just one point

Walmart must pay the going rate for labor, otherwise no one will work there. The fact that they do not pay the minimum wage to everyone shows that they are not in control of what people earn. Walmart must compete for workers by offering competitive wages. I’m sure that many do work there at minimum wage, especially in more rural areas. But when people guess at the median wage of Walmart employees, it is inevitably in the 7 to 10 dollar an hour range (the spread due to who you listen to, walmart bashers or walmart themselves). The truth is probably somewhere in between, well above the minimum wage. If walmart is the evil, all controlling monster that many people make it out to be, then surely they would pay as little as than could. In fact they do pay as little as they can (like any other profitable business), but that level is determined by the market’s value of that particular type of labor, not by walmart.

Isaac

Re: Sorry, just one point

I’m tired of talking about this with you. There’s no point. I’m not even trying to convince you that you’re wrong, I’m just trying to get you to see that it’s not an academic game, with black and white issues. Your mind is made up and I don’t have the education or the patience to fight with you anymore.

Re: Sorry, just one point

“I’m just trying to get you to see that it’s not an academic game, with black and white issues.”

This is what upsets me the most, I am accused of living in a fantasy world or playing a game whenever I defend Walmart. I’m on my own plane of existence when I don’t believe:

That Walmart somehow hypnotizes or controls people and forces them to work at a wage less than they deserve.

That walmart makes all of it’s money by mistreating employees.

That Walmart eliminates all other jobs that people of that skill level can work.

That the 1.7 million people that work at Walmart are somehow worse off by working there.

That the competition that walmart gives it’s competitors is bad for consumers.

That the competition that walmart workers give to other workers is bad for all workers.

That walmart is bad for this economy and nation.

That walmart is causing standards of living to decrease in China.

That Walmart is causing standards of living to decrease in the US.

That walmart ruins local economies.

That walmart causes more harm than good with their low prices.

That walmart controls the wages they give employees.

Whenever I try to refute any of these things, people just shrug and say, “You don’t get it.” What is offered in rebuttal is pure fantasy (as in it doesn’t exist). “Walmart should pay their workers more, they could do it. Walmart should give all of their employees health care, they could do it.” Whenever I ask someone to look past the immediate consequences (or even click on a fucking link), they throw up their hands and say forget it, I don’t understand, I’m in an ivory tower, I’m so far removed from reality that I’ll never get it. What many of you don’t seem to know about me is that I am concentrating on making this actual life better for everyone. I live, breathe, and worry about reality, and I wish to God people would stop telling me that MY mind is made up when they won’t even acknowledge that I have something to say.

I don’t want to fight, but I will argue my point until someone can tell me why I’m way off base. As far as the education needed to follow this, I am trying to offer you one!:-) Please please please click on Bastiat and Williams links to see where I’m coming from. Seriously, none of the links that I have posted are difficult to understand. Any high schooler should be able to get it, there isn’t even any math involved, just rigorous common sense.

Isaac

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