Tuesday, March 10, 2015

Level Playing Field

Interesting to note is that while employers like Walmart and TJ Maxx are now being required to raise wages to retain employees, they are also seeking to raise wages for every other business out there.


We might ask, "Why does Walmart have to pay so much to retain employees?" The very obvious (and correct) solution is that, like the article states, retail is a low paying, thankless job, with few prospects for advancement, and many sources of stress. While it does not require much skill or knowledge to work at Walmart (implying a large supply of workers), that doesn't mean that those workers are willing to put up with working at Walmart for low pay. An employee can make the choice to work somewhere else for lower pay if they believe that they benefit from that decision.

So Walmart has to raise wages to retain employees in order to make it worth it for the worker. Why then would Walmart support a federal minimum wage increase? Perhaps the answer is that its only fair that everyone pay the same amount, although this ignores entirely that there is a difference between the low-paying, low-stress job and the slightly-higher-paying, high-stress job.

Or, more likely, Walmart seeks to crush its competition and attain a larger market share. The reason that those low-stress jobs are paying low wages in the first place is because the owner of the business decided that it could still make money doing so. By increasing wages, businesses' costs increase, which mean less profitability. Some may become entirely unprofitable, some may need to reduce personnel to stay in business, some will have less capital to invest in themselves, and some will demand that their employees do more to earn their wages.

In every case everyone loses. This is good for Walmart, who was already losing anyway, because it "levels the playing field" and harms their competition as well, allowing for Walmart to avoid the disadvantage of an undesirable job (higher wages) when compared to the competition.

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