Another left-wing myth busted: Wal Mart raises wages, pays better than “mom and pop” stores

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.

According to the paper:

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!

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13 Replies to “Another left-wing myth busted: Wal Mart raises wages, pays better than “mom and pop” stores”

  1. I’m glad to hear that working at Walmart is such a keen and peachy deal, at least according to Forbes magazine. Perhaps Forbes would benefit from talking to employees about the realities of working at Walmart. If Walmart is such a great place to work, then why is their average employee turnover rate 50%? Why are Walmart employees paid so little that they are driven to apply for food stamps and other public assistance to get by? Why are women so heavily discriminated against that they are paid two thirds of what men doing the same job are paid? Why, in spite of the fact that the majority of employees are female, are they in a distinct minority among managerial, and above, positions? How is it that I can have private conversations with several Walmart employees who tell me that they are told to “clock out” before they have worked 30 hours a week so that Walmart doesn’t have to pay Insurance and benefits? How is it that Walmart employees are told to sign out on the time clock and then report back to their supervisors to work an additional one or two or three or four more hours with the clear message that if they complain, they will be fired? if you think Walmart is such a great place to work then I suggest you fill out an application and find out for yourself what actually goes on. Getting a job at your neighborhood Walmart should be easy since, because it is such a great place to work, they must replace half of their work force every year.

    1. Ken, Although I am curios as to what % of Walmart employees are on food stamps, such is further evidence that the qualification for public assistance is far too low. Also, you may recall that Walmart was not responsible designing or implementing Obamacare. If it were not for government policy like ACA and overtime, Walmart employees could work as many hours as they wished resulting in greater incomes. In such a case, employees would be happier, Walmart would be happy, Walmart stockholders would be happy, and most importantly, I would be happy as I will continue to enjoy low prices and a great selection of merchandise.

    2. I’ve done my time in retail (K-Mart) so I understand what is involved with these jobs. I have an MBA and would be wasting my most precious resource (time) working at Wal-Mart. I don’t know why people who work at Wal-Mart work there, but I do know that it is voluntary, so it must be better than the alternative, including some relatively generous government benefits. I for one am glad that they do and genuinely appreciate people who work hard to support their families and, perhaps, build their skills and experience to move on to better jobs either with Wal-Mart or with other businesses.

  2. I love it when something comes up concerning Wal-Mart, then the Wal-Mart haters come out of the woodwork and yet, the stores seem to stay open and people still shop there. It’s like nobody will admit they shop at Wal-Mart or voted for Obama..

  3. The Walmart debate has been remarkably fact-free. I would like to see a third-party comparison of Walmart and comparable big-box discounters such as Target with respect to wages, hours, employee turnover and advancement. (The only comparison the anti-Walmart folks trot out is Costco, which carries fewer lines of merchandise, employs fewer people and charges customers a membership fee.)

    We know the anti-Walmart campaign gets millions of dollars a year from the unions. If Walmart is compelled to force its employees to join a union, how much money will the unions collect each year in dues?

  4. “Mom and Pop” stores are/were the little family storefronts in old downtowns that were shut down starting with the advent of larger, national chains, right? Like A&P, First National groceries, McClellan’s, McCrory’s, Woolworth, all gone due to population dynamics. Those little stores survived as long as the owners had their kids and relatives working there for nothing.
    Now the Mom and Pops often are the franchises, unfortunately some of which are little chains of their own with one person owning several McDonald’s. But these all require something Mom and Pop did/do not have – capital access and business acumen.
    Wal-Mart, K-Mart, and Target, among others, started in 1963. Time to realize the rules change
    Why does not good ol’ Ken open a little grocery or hardware or general store downtown, if he wants 1880 back again?
    Does he buy only from traders who hire 40 hour/week, provide paid insurance, 8 holidays, 10 sick and 15 vacation days? No? I thought not
    Government did these things, for employees who provide perhaps 50% efficiency or production, and we are BROKE!

    1. I think you make a number of good points about this dynamic. There are still mom-and-pop stores around, but they have to find a way to compete with the big-boxes and other “integrated” enterprises. It’s not easy as there are great economies of scale, but it can be done. Most mom-and-pops do a great deal of business online.

  5. Just a few short months ago, Walmart introduced a new policy that was supposed to give pregnant workers added protections under a disability policy. But it hasn’t taken long to find out that concerns about the new policy’s vague language and possible loopholes were absolutely merited. Candis Riggins, a Walmart worker who lost her job after her managers refused to reassign her to work she could do while pregnant, found that out the hard way.
    Riggins told Bryce Covert she asked her managers to be allowed to work as a cashier during her pregnancy, since her regular maintenance job involved exposure to harsh cleaning chemicals and lifting and carrying cleaning supplies. She had good reason to ask:

    … the effects of the chemicals landed her in the hospital “multiple times,” she said. It got so bad one morning that she passed out at the bus stop on the way to work and was taken to the hospital. “They asked me what kind of work I do,” she said. “They said this is basically the cause, taking in all of these chemicals and fumes you shouldn’t be taking in, basically breaking me down while I was pregnant.”
    But she wasn’t given other work, despite asking again and again and watching the store hire cashiers, passing her over. So she kept getting sick:
    Despite the sickness, she kept going to work as much as she could. “I was really afraid of losing my job,” she said. “I would go in and try to push through it and put on this face like I’m okay.” She didn’t even tell her manager about the pregnancy for a while because she was afraid she would end up fired. “I’ve seen plenty of other women there that were pregnant, but after a couple of months I didn’t see them again… They were basically terminated because of pregnancy,” she said.
    But some days she couldn’t do it. “I called out a couple of times,” she said. “I just couldn’t go in and put myself through that.” She says every time she stayed home she was told by a manager that it was okay to do so. “Every time I would call out I would speak to the manager, they would inform me that it was okay, they understood I was pregnant,” she said.

    And then they fired her for her absences. She and her children were evicted from their apartment recently. A Better Balance, the National Women’s Law Center, and Mehri & Skalet, PLLC are helping her press Walmart to give her back her job and pay her back wages, as well as to comply with the Pregnancy Discrimination Act when it comes to other workers.
    Walmart likes to brand itself as family friendly, but its treatment of pregnant workers is anything but.

    1. No business is perfect, especially a business that employs as many people as Wal-Mart. On the flip side, if Wal-Mart jobs are so crappy and the pay is so poor, surely there are ample opportunities elsewhere?

  6. Walmart pay is fine but don’t expect to retire there. Use it for what it is, a great way to get experience with flexible schedule.

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