Must We Subsidize Walmart?

living wageAs we do our shopping this holiday season, let’s ask this question:

Is a living wage a good thing?

  • Do higher wages cost jobs because businesses fire workers?
  • Or, do higher wages create spending? Leading to more sales and profits and a stronger economy?
  • And will a living wage usher in a $10 hamburger?

First, stop worrying about $10 dollar burgers.

Prices won’t rise much

Some estimate that a living wage would entail a 17% surcharge at McDonald’s. So a meal could rise from $5.49 to $6.38. I’m personally willing to make the sacrifice so that someone can have a living wage.

Besides, In-N-Out starts their workers at $10.50 an hour and a “Double Double” (2ce the meat and cheese) meal deal costs less than a Quarter Pounder meal deal at poverty-wages McDonald’s.

Economy is better, long term

On the other two questions, time frame makes a difference in the answer you get.

Initially, some companies can’t afford higher wages and fire workers. So short-term, unemployment can rise.

But most companies either pass costs onto customers or absorb the costs.

And that’s not so hard to do when:

The worker-to-CEO pay ratio has increased 1,000 percent since 1950.

So CEOs have a little wiggle room to dock their own pay so that workers can afford to live.

And, if Walmart paid a living wage they wouldn’t need to hand out food stamp applications to new hires. Since we taxpayers fund food stamps, we end up subsidizing the Walmart family fortune.

A living wage is a moral value

A living wage is a moral value

Meanwhile, a living wage helps the whole economy.

You can’t spend money if you don’t have money, so sales stall or slide when a community has low wages.

Low pay increases political and business instability

Even the Wall Street Journal has posted articles fearing that the rising gap between rich and poor will lead to political and business instability.

When the poor have extra money they buy more clothes and food, and they fix appliances… Businesses hire to meet the increased demand. The new hires then spend more money, and the economy spirals upwards.

Meanwhile, when San Jose, California voted to raise its minimum-wage opponents predicted doomsday. But a year later business grew and unemployment dropped.

So living wages tend to boost economies in the long run.

Even better, they are humane.

And no one who works full-time should be living in poverty.

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About BroadBlogs

I have a Ph.D. from UCLA in sociology (emphasis: gender, social psych). I currently teach sociology and women's studies at Foothill College in Los Altos Hills, CA. I have also lectured at San Jose State. And I have blogged for Feminispire, Ms. Magazine, The Good Men Project and Daily Kos. Also been picked up by The Alternet.

Posted on December 19, 2014, in politics/class inequality and tagged , , , . Bookmark the permalink. 21 Comments.

  1. So I think our pay should be increased overall and I feel bad, because things are right, the cost of living is so high. Yet the pay many people are getting is not up enough to have a living wage like you said and people who make more, still struggle with bills and paying for their kids, with today’s higher cost of living and the higher costs of everything. They can’t partially fix this though, if pay is going to be increased, it needs to be increased across the board.

    • “if pay is going to be increased, it needs to be increased across the board.”

      Luckily that’s what happens because we are all interrelated:

      1. higher pay for one sector’s workers creates pressure to pay other workers more. That’s why strong unions tend to raise the pay of everyone else.
      2. it helps the whole economy — as it did in San Jose — for the reason I describe. Raising wages increases consumer demand, Which increases hiring, which increases consumer demand even more, which adds more hiring — and pressures pay increases — and the economy spirals upward

  2. I hope so, but minimum wage was just increased to $8 recently. People who started at $7.25 a few years ago and worked up to 8 or 9 dollars are now having new hires make the same as them or just one dollar more. And it didn’t bump up other workers pay that started below that and worked up to more, so hopefully that will actually happen.

    • I’m surprised it hasn’t done that. Do you have any links that explain this? If so, I’d like to take a look.

      The main reason why the ratio of worker to CEO pay has increased 1000% since the 1950s is that corporate heads have found ways to decrease worker pay and increase their own. It used to be that as profits rose so did the pay of both workers and CEOs. Now upper management pay has skyrocketed as everyone else’s has stayed stable — because upper management pockets of all the extra profits.

      There is plenty of room for CEOs to dock their own pay in order to pay workers more. But you need pressure to do that, which can be nonexistent when CEOs give big campaign contributions to government officials who then block unions, min wage, etc. Like what happened in Wisconsin when the union workers were protesting. People don’t get how raising union pay pressures corporations to raise the pay for everyone else. They tend to think that raising union pay will just raise the price of things. But really what it does is decrease the gap between worker and CEO pay.

      Meanwhile, CEOs don’t want any pressure to decrease their own pay, so they blame middle-class struggles on things like unions and people of color, to distract everyone.

      • The retail place I used to work, was starting minimum at the time $7.25. Last year was it or two years ago that minimum got bumped to $8. People who have been working before the 8 dollars, got slow raises and just past 8 dollars after 3 years. I was 9.50 after 5 years, but just to think new hires coming in 8 dollars. Nothing has changed there and like most retail places. People who worked before the wage bump, might be making the same as new comers or people working longer have not been bumped up. It won’t happen unless companies are legally forced to do so.

      • I think you’re right. And that’s one of the problems with money in politics — big corporations have so much more money than the rest of us to bribe politicians into favoring business interests over worker interests. (I call big campaign contributions legalize bribery.)

        And the money is the bigger problem than the people in office. Some don’t accept the bribes, Lose the money, and then lose elections because they can’t afford advertising. And people are so overworked, or uninterested, that they don’t pay attention to these things and don’t vote people out of office for doing what moneyed interests want them to do.

  3. Excellent post.

  4. Worked 27 years at a factory where the President of the company actually told us at a meeting where to go to apply for food stamps. I already loathed him, but this may have been the most embarrassing thing he ever said.

  5. Well said. A living wage should be a basic right especially when people work as hard as they do to make a living. There can never be too much abundance in the world. Imagine a world where people had enough or even more than. Crime would go down. I may have to reconsider shopping at Walmart.

  6. Absolutley no one working full time should live in poverty, minimum wage should be a living wage. Minimum wage is something like $17 an hour here in Australia and our economy is one of the strongest. Pretty hard to defend poverty level wages when CEOs are on millions annually.

  7. Yes, I wholeheartedly agree. This “new-libertarianism” (which in reality manifests as corporativism because of the bonds between corporations and their bribed politicians) is a disaster for many workers and society in general. In reality it’s a continous downward spiral with no winners in the end, except for those at the very top of the pyramid. You’re right about people in general sponsoring the very few richest and it goes beyond food stamps paid by tax payers. When people are pushed into poverty more of them will be more susceptible to commit crimes to make ends meet, with the associated costs of law enforcement, prosecution and potential medical costs (for severe crimes involving injuries and deaths) that are also paid by tax-payers.

    Not to mention that long-term economic disparities are a strong factor in destabilising societies and can (as a worst case scenario) cause destruction of nations in their entirety.

    Globalism is another cause of these disparities, as workers have to compete with workers in low cost countries where working-conditions are much harder – mildly spoken. It has been a disaster for the U.S middle class among others, where the majority of new jobs are low-wage jobs in the service sector. Let’s just hope that more people will open their eyes before it’s too late and a small fraction of the very richest people own the entire planet. In just a few decades we’re a few steps closer to depictions from various sci-fi books, where corporations that own almost everything on the expense of nations gone broke. So what’s next, when will the corporations start building armies and when will these private forces become superior to the armed forces of the nations?

    • Too bad so many people don’t get this. The irony is that so many people are promoting things they think are in their own interest but which will hurt them in the long run– Or the short run, depending.

      • Yup. I see the same in my own country, a group of relatively poor people voting for the parties that will seemingly benefit them in terms of lower taxes (so that they will achieve greater purchasing power). But on the other side of the coin they “forget” that many of the services on which many of them depend such as public health care or the educational system are funded by taxes so they end up loosing in the long run. And of course focusing on purchasing power entirely doesn’t really help these groups because of inflation as the effective value of your money will decline anyway (as opposed to the nominal value).

        In other words, everyone should vote and invest a minimum of time to find out what the different political parties promote.

      • Meanwhile, some wealthy interests create think tanks that are very effective at selling messages to poor people that get them to vote against their own interests, and in the interests of the wealthy.

  8. So many people nowadays work several jobs just to make a living which is unfortunate. Often times sacrifices end up being made. Losing time with their friends, family, and loved ones just to put a roof over their heads. Not being able to spend time with their children during their most formative years to have food on the table. Workers having no time for themselves to decompress from stress. As well as putting aside further education because it becomes too difficult to balance attending class in addition to going to work; sometimes school even costs too much, putting many in debt, working only to pay off school loans. Most jobs available in Silicon Valley avoid hiring full time employees, choosing instead to contract them out on a 90-day or per-project basis and renewing it several times over to avoid hiring them as full time employees as to not provide them benefits for medical, dental, etc. At some point you have to wonder if it’s considered a way to live or just a way to get by.

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