It’s no surprise when you think about it using economics and reasoning. But liberals aren’t known for their understanding of either. And so it is that a new report as detailed in Forbes has found that Wal-Mart (and big box employees in general) are better, not worse-paid than their peers in smaller retail establishments.
In this paper, we characterize the wages that have accompanied the growth in retail. We show that wage rates in the retail sector rise markedly with firm size and with establishment size. These increases are halved when we control for worker fixed effects, suggesting that there is sorting of better workers into larger firms. Also, higher ability workers get promoted to the position of manager, which is associated with higher pay. We conclude that the growth in modern retail, characterized by larger chains of larger establishments with more levels of hierarchy, is raising wage rates relative to traditional mom-and-pop retail stores.
It only makes sense that in the world of retail, more efficient, bigger players will pass on some of the savings to customers and will pass along some of the higher profits to workers. But the fantasy among many is that retail jobs will somehow receive the pay associated with jobs further up the economic ladder.
Maybe next time our friends on the left won’t try so hard to keep Wal-Mart from opening a store here in Albuquerque…ha!