• Monday, December 16, 2019

Raising The Minimum Wage Would Be Good For Wal-Mart, And America

Discussion in 'Americas' started by Dubious, Feb 12, 2014.

  1. Dubious

    Dubious MODERATOR

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    This guest article is by Ron Unz, chairman of the Higher Wages Alliance

    During the 1950s peak of America’s post-war prosperity, Detroit was our wealthiest city, General Motors our biggest employer, and GM CEO “Engine Charlie” Wilson delivered the famously misquoted claim that “what was good for our country was good for General Motors, and vice-versa.”

    Times have changed. These days retail giant Wal-Mart is our largest corporation, employing 1 percent of all American workers, but rather than being praised for its achievement is routinely vilified by political activists and the media. In its defense, the company has released studies claiming that its low price approach to consumer goods annually saves American shoppers vast sums of money, with much of those savings going to families of lowest income, and although specific figures have been disputed, the general point is conceded. But if Wal-Mart has been such a great business success and saves its customers at least ten or twenty billion dollars each year, why does it continue to attract such widespread hostility?

    The main charge leveled against Wal-Mart is that its wages are too low, and critics have a point. Berkeley’s Labor Research Center has estimated that almost a million of Wal-Mart’s American workers earn less than $12 in hourly pay, with 300,000 averaging only $8.75. Surviving on such low incomes is difficult in America, and a few months ago a local store’s campaign to persuade Wal-Mart workers to donate food to other Wal-Mart workers became a national media scandal. Each year Wal-Mart’s struggling employees receive billions of dollars in government social welfare benefits, with the costs borne by the general taxpayer. Just as General Motors was the national symbol of America’s high-wage manufacturing economy, Wal-Mart has come to represent our low-wage service sector, which many Americans equate with the decline of our middle class society.

    So why doesn’t Wal-Mart just improve its public image by raising its wages?
    Those same Berkeley researchers estimated that the company could boost its pay to a minimum of $12 per hour and cover the additional expense by a one-time price hike of just 1.1%, costing the average Wal-Mart shopper only an extra $12.50 per year. Surely if hundreds of thousands of the company’s lowest-wage employees were given immediate raises of one-third or more, they’d sing Wal-Mart’s praises, while performing their jobs with greater diligence and lower turn-over. One hundred years ago, Henry Ford doubled the wages of his assembly-line workers, providing them incomes high enough to buy the cars they themselves produced and helping to create the great American middle class of the twentieth century. Wal-Mart workers are also Wal-Mart shoppers, and many of the extra dollars they might receive would go right back to the company that paid them.

    The difference is that while Ford’s industrial breakthroughs had given his company a near-monopoly on mass-market automobiles, Wal-Mart’s absolutely rock-bottom prices represent its chief selling point, allowing even a small markup to be easily exploited by the company’s able competitors. A general increase in wages and prices across the entire retail sector might greatly benefit companies and workers alike, but any attempt at organizing such collective corporate action would obviously run afoul of America’s strict anti-trust laws.

    Fortunately, what some government restrictions prohibit, other government regulations might also enable. Consider the consequences of raising the minimum wage to $12 per hour.

    Not only would Wal-Mart and its competitors suddenly be able to do what was best for both shareholders and employees, but the same large hike in wages and disposable income would also go to tens of millions of other low-wage American workers. McDonald's might need to raise the price of its cheeseburgers by a dime and American-grown agricultural products would cost 2% more on the grocery shelves, but some $150 billion of extra income would flow each year to the sort of households that spend every dollar they earn, producing an enormous, ongoing economic stimulus program, a stimulus program funded entirely by the private sector. And a large share of those tens of billions in additional disposable income would go toward boosting the revenues at Wal-Mart, McDonald’s, and the other corporations that employ those same workers.

    Corporate executives have sometimes recognized these facts over the years. In 2006, Wal-Mart CEO Lee Scott testified before Congress in favor of a large hike in the minimum wage, arguing that even then Wal-Mart shoppers were becoming too poor to shop at Wal-Mart.

    In recent years, the growing impoverishment of non-wealthy Americans has become a major drag on the consumer spending that drives our economy, and a hefty rise in wages and disposable income would be a tonic for our continuing economic stagnation.

    Economists have traditionally feared that a much higher minimum wage might cost workers their jobs, but today the vast majority of low-wage Americans are employed in the non-tradeable service sector, usually involving personal contact. These jobs are completely insulated from foreign competition and also very difficult and expensive to automate. Such workers would keep their jobs, but their incomes would rise by 30 or 40 percent, and most companies would cover the higher costs by a one-time price hike averaging much less than 1% across all our goods and services.

    The American taxpayer would also be a huge beneficiary. Each year, over $250 billion in social welfare spending goes to working-poor households via government programs such as Food Stamps, EITC checks, and Medicaid. As millions of those workers became much less poor, they would automatically lose their eligibility for anti-poverty assistance, saving taxpayers many tens of billions of dollars each year. Government programs often function as very leaky buckets, with a substantial fraction of the money spent never reaching its supposed beneficiaries. But wages paid by an employer go straight to the recipient, except for the portion withheld in government taxes.

    Transforming millions of net tax recipients into net tax payers would also have a salutary impact upon American politics. During the last election campaign, Republican Mitt Romney was vilified for pointing out that 47% of all Americans paid no income taxes and hence were deaf to his message of reducing wasteful government spending and cutting taxes. But a $12 minimum wage might shrink that non-taxpaying total by ten or fifteen percentage points, giving millions of additional voters a direct stake in demanding government efficiency.

    Wal-Mart has become a national symbol of the poverty wages paid to millions of ordinary working Americans, who can only survive because of their taxpayer-funded social welfare subsidies. But Wal-Mart is actually a great American success story and those economic problems are merely a consequence of the mistaken government policies of the last forty years, which have allowed a collapse in the real value of the minimum wage despite the simultaneous doubling of American labor productivity.

    Boosting the minimum wage to $12 would be good for Wal-Mart workers, Wal-Mart customers, and Wal-Mart shareholders. And what’s good for Wal-Mart is good for America.

    Ron Unz is a Silicon Valley software developer and chairman of the Higher Wages Alliance, which is sponsoring a California ballot initiative to raise the state minimum wage to $12 per hour.

    Raising The Minimum Wage Would Be Good For Wal-Mart, And America - Forbes
     
  2. livingdead

    livingdead ELITE MEMBER

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    currently the difference in payment is paid by tax payers(wealthier people), if it will be paid by shoppers, it will mean it will be paid by poor people.(hike in price of goods is an indirect tax on everybody equally).
     
  3. Hakan

    Hakan RETIRED MOD

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  4. Dubious

    Dubious MODERATOR

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    Who said tax payers are "wealthier people" Did you miss line:

     
  5. livingdead

    livingdead ELITE MEMBER

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    47 percent are not eligible to pay tax is what author wants to point out in that paragraph.
     
  6. TruthSeeker

    TruthSeeker PDF THINK TANK: ANALYST

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    I read (see reference below) recently that only about 2.8% of all active US workers are paid the federal minimum wage or less (because of various exemptions from the rules). So this issue is a phony political one used by Democrats to try to make Republicans look heartless. Probably all Walmart workers make more than the federal minimum wage.

    Who makes minimum wage? | Pew Research Center
     
  7. Dubious

    Dubious MODERATOR

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    So you think wealthy people are paying all their taxes and 47% is only made of the poor?

    Thanks
     
  8. TruthSeeker

    TruthSeeker PDF THINK TANK: ANALYST

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    I just did my USA income tax return and I do not have to pay any Federal tax because my 2013 income was too low after my deductions for medical expenses, non-federal taxes, charitable giving amounts and business expenses. On the other hand I would be considered wealthy in terms of my assets. However, because my financial assets do not right now produce very much current income, I am part of the 47% who pay zero federal income tax. I did however pay about $6,000 in state and county taxes. When I turn 70 years old I will be required to withdraw, each year, about 1/26 th of my assets from the tax-sheltered accounts I have. These annual withdrawals will be taxed as ordinary income each year so I will then have to pay a substantial federal tax, about 15%, on these funds for the rest of my life. (After that, any taxes are my heirs' problem. :yahoo:)
     
  9. livingdead

    livingdead ELITE MEMBER

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    those who are paying taxes are relatively better off than these wallmart employees who are paid below minimum wage hence get support from tax payers. If wallmart pays minimum wage and asks every customer to pay 12.50 usd per year extra (average), it will ask everybody, tax payers, non tax payers and among them who cant pay tax coz they dont earn enough (but buy from wallmart anyway coz its cheap there).
    Also as wallmart try to sell cheapest, its customer profile will be more towards poorer, which means they pay for the minimum wage.
     
  10. Dubious

    Dubious MODERATOR

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    Do you even read?

    So wall mart shoppers cant afford and extra $12.50/ yr? to make sure that the workers get at least a decent wage?

    So if it is food coupons and stuff...it is taken from tax payers to enable them to buy....and those who are working at the walmart get their minimum 12/ hr min wage...I think it is a fair deal! Those who are working also end up paying taxes....those who are shopping at walmart are everyday men like those at Morrisons rather than Tesco!

    But if those who are working at walmart and still poor then it is not that they are unemployed...govt and tax payers still have to look after them...
     
    Last edited: Feb 13, 2014
  11. livingdead

    livingdead ELITE MEMBER

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    why do you think its more like morrisons rather than tesco... Its price point are more near to tesco (ASDA a wall mart company, always matches tesco in prices here btw)..
    the main USP of wallmart is rock bottom price and competing with competitor for every penny, and as its a massive group can drive down prices better than others, however minimum wage can kill that USP something author hints in para 5( the one that mentions anti trust law if done with others)
     
  12. Dubious

    Dubious MODERATOR

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    ASDA is almost always cheaper than Tesco...I used to prefer it as a student!

    Yes but does it mean save a company's image by killing its workers or denying them basic wage?
     
  13. livingdead

    livingdead ELITE MEMBER

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    see... thats what I was saying. imagine you pay extra 12.50 yearly for asda employees which actually till now paid by mostly waitrose type customer( in form of personal tax which they pay higher precentage typically 40 percent bracket)
    So a price hike in asda products is like an indirect tax, and Indirect tax is always unfair to poor.
    I rest my case.
     
  14. Dubious

    Dubious MODERATOR

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    Well, keeping the poor (Asda workers) poor is also not fair esp when it is not only the poor who shop there but anyone seeking cheap prices! I rest my case