I knew it was a costume party; I was just trying to give you a hard time. Thanks for not putting your Pj’s up though; I wouldn’t want to see you in anything more than G rated.

First, about In N Out (Btw, I eat there atleast once every other day, LOVE the place), it is not a valid comparison because In N Out has a different business model. For example, look at In N Out compared to Mc Donald’s, both have a wide difference in quality and a wide difference in pay. Secondly, how many In N Out’s do you see in the hood? In Compton, I don’t remember there being a single one, but there definitely were Mc Donald’s.

The difference in business model is what is commonly missed when people compare Wal-Mart to another company (like Costco, to give another example), and that difference in business model makes all of the difference in the world. Wal-Mart, as opposed to In N Out and Costco, has the poor as their primary market share, and poor areas.

Which is why I constantly come to the defense of Wal-Mart. With regard to wages, Wal-Mart is not doing anything different than any other company. In N Out, Costco, Mc Donald’s, Wal-Mart and all other companies, want to pay their employees as little as possible. But each company is restricted by their business model and market forces, if for example, they cater to the higher levels of society, they will have to pay their employees more to get the quality of service that they need to satisfy that level of society. This is not their choice; this is dictated by market forces, given their preferred business model, their preferred market share, and their preferred operating areas. If In N Out could get the same quality service paying a lower wage, trust me, they would. All of capitalism, all of economics, is based on the simple premise that companies want to pay as little as possible and employees want to get paid as much as possible, the equilibrium point is set by these two forces, along with market forces and business model.

So if Wal-Mart is no different than any other company when it comes to how it sets its wages, what is different about Wal-Mart? As I alluded to above, Wal-Mart is unique, not in its wages, but in its business model. Wal-Mart, unlike In N Out, unlike Costco, has a business model that both, allows it to offer cheaper prices and allows it to operate in high crime, high poverty areas. When you look at it from this angle, from the angle that makes Wal-Mart truly unique, Wal-Mart comes through in a very different light. As someone who has lived in such high crime poor areas, who has witnessed the high unemployment and the lack of businesses and with them job opportunities in these poor areas, I see Wal-Mart not as a curse, but as a blessing. We need more companies with this business model, not less.

As economist Arnold Kling says, “I always say that what low-skilled workers need are not fewer Wal-Marts, but more of them”.

My Pj’s wouldn’t get a G rating from gravatar.

Take a company like In-N-Out (Which I personally love for purely appetite reasons). In-N-Out has historically paid its employees above-average wages & provided performance based rewards that are also above-average for its industry. These have not been gov’t enforced (not min.wage so that you can be happy), but they have had a net effect on the profit & economic growth of In-N-Out.

I believe that In-N-Out is combining good business practice with “charity” (if you want to call it that - I would use the word “conscience”) to the effect of economic growth & profit.

Also, though you are right in pointing out that Wal-Mart & the Walton’s are seperate entities, the wealth of the Walton’s IS directly linked to the profits of Wal-Mart, ie. they didn’t get rich from some other business. The enormous profits that they’ve been able to turn into a personal wealth base only supports the profitability of their company to provide more “charitable” (again, your word, not mine) rewards to their productive employees.

Loving the gravatar brother, but I must say, when I asked you to add one, I didn’t think you would add a picture of you in your pajamas, but hey, whatever floats your boat. LOL.

You’re telling me that they are so hard pressed to make a profit that they can’t change their pay scale? Pahlease!!…Why can’t the Walton’s share their profits more equitably with their employees? They don’t work a longer work week. In their life-time they won’t spend all of the money they are making.

The Waltons are not synonymous with Wal-Mart, just because they are rich, does not mean that Wal-Mart is, and just because Wal-Mart tanks, does not mean the Waltons would. Pushing Wal-Mart to pay for higher employment would not hurt the Waltons, but would hurt the stockholders, often middle class citizens themselves, of Wal-Mart.

But here, lets address the core of what you’re saying. The question one must ask is, why, in the first place, are the wages as low as they are? The short answer is that Wal-Mart knows that at its current wage rates it got as many workers, of the quality desired, as it needed. So in essence, to pay more would be an act of charity to the workers and not an act of commerce.

Well, if you look at it from this perspective, than a whole range of problems come in. For example, how much charity should they give? For example, lets say there were two workers doing the exact same thing, however, one was a single mother of two, and the other was a student at the local college, living perfectly fine with his parents. In this case, should they both receive the same extra wage in salary, or should the single mother receive more? Or to ask the question a different way, if charity is what we are doing, is it really a good use of charity money to use it on people in industrialized countries when there are people starving to death in underdeveloped countries who need it much more? For example, why give extra pay to those in the United States when Wal-Mart could use the money for extra pay in Mexico? Or why give extra pay at all, why not instead give it to seriously poor people in sub-Saharan Africa?

I think you are seeing where I am going with this. The point here is that charity is a good thing, but charity should not be a part of corporations, or atleast handled separately (see here and here).

To incorporate it in its wages, or in its daily work activity, is to make both, charity and commerce, less efficient, something that on net balance doesn’t accomplish either the goal of charity or the goal of commerce.

The Walton family [Walmart owners] makes up 5 of the top 10 wealthiest people… and not just wealthiest in America. You’re telling me that they are so hard pressed to make a profit that they can’t change their pay scale? Pahlease!!

You’re argument will follow that gov’t enforced minimum wage laws aren’t the solution. Why can’t the Walton’s share their profits more equitably with their employees? They don’t work a longer work week. In their life-time they won’t spend all of the money they are making. I’m all for competition & profit-rewards, but excess & greed (see earlier comments here) is unjustified by economic logic.

In the same way that the constitutional framers identified certain “inalienable rights” - there exists a moral code for humanity that does trump this kind of individual profit or even the “HP-swears-by-it” value for economic growth.

“But if you visit the Wal-Mart and the Sam’s Club stores here, you hear shoppers who have been without power for weeks marveling that there are still generators in stock (and priced at $304.04). You hear about the trucks that rolled in right after the hurricane and the stuff the stores gave away: chain saws and boots for rescue workers, sheets and clothes for shelters, water and ice for the public.

Generousity? Maybe. Earning a little good will? Probably. They will likely be rewarded in spades by the loyalty of those who benefitted from the availability of much needed supplies.

“But if you visit the Wal-Mart and the Sam’s Club stores here, you hear shoppers who have been without power for weeks marveling that there are still generators in stock (and priced at $304.04). You hear about the trucks that rolled in right after the hurricane and the stuff the stores gave away: chain saws and boots for rescue workers, sheets and clothes for shelters, water and ice for the public.

Thanks for highlighting Roberts’s clear and concise column.

One could make the argument that it is because of those laws that the market becomes unjust. The minimum wage, for example, primarily hurts the poor, not the wealthy. etc etc…etc.

But I wont go there, and instead ask you this question, “What would you do to make the circumstances of the poor better”?

To quote from the article I linked above, “Thomas Sowell likes to say that reality is not optional. But we oh so want it to be. We want to change outcomes without consequences with the ease of adjusting the thermostat on the wall of our house. We want to dial incomes upward and gasoline prices downward. We want to blame Wal-Mart for the fact that its employees earn below the national average. We want to blame China (or Mexico or Japan or India) for our trade deficit. We want to blame or honor the occupant of the White House for whether new jobs are high-paying or low-paying. This worldview that flies in the face of reality and that ignores the inherent complexity of the real world is the bread-and-butter of journalism and the breeding ground for unintended consequences”.

In other words, if we followed your suggestions, the problems would be worse, not better.