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August 21, 2004
Wal-Mart & The Marginal Labor Market
Sebastian Holsclaw has a great Wal-Mart discussion in which people claim that Wal-Mart takes more than it gives with respect to employee benefits because of the size of the safety net. Is Wal-Mart subsidized and incented to pay low wages and benefits? If there was a minimum wage hike to pay for more benefits would that be a good thing?
I interpret things this way: Wal-Mart is not special with regard to its 'dependence' on the safety net, it just has the wherewithal to respond quicker. This is a quickness that is, in part, enabled by its information technology infrastructure. As the price of this techology goes down, there will be more companies enabled similarly.
In a neighborhood with small businesses who compete for the same labor pool, small incrementals in employee benefits make enough difference for Wal-Mart (aside from its reputation) to tip the scales in its favor. I wonder if those in favor of increasing the safety net would feel more confident taxing those small businesses to the same tune they would Wal-Mart.
Posted by mbowen at August 21, 2004 08:07 AM
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