Monday, July 02, 2012

Yes, wages at Wal-mart are awful.

My colleague Marlon Boarnet and co-authors show that they are: in the Bay Area, Wal-mart grocery workers' total compensation is a little over half the compensation of unionized workers (Table 4).  Wal-mart also initially offers grocery costs that are between 8 and 20 percent lower than the stores with which they compete, and lead other stores to reduce their prices by 5 to 13 percent (Table 2).

I am prepared to accept the argument that higher wages are more important than lower grocery prices, although it is not an overwhelming argument to me.  Nevertheless, there are good reason reasons not to like Wal-mart (which is one of the reasons I don't shop there).

On the other hand, it makes no sense to me to bundle a bunch of weak arguments with a strong one, and yet that is what anti-Wal-mart activists often do.  And zoning should be zoning--if one entity has the right to use land for a particular use, others should as well, whether they are liked or not.



Matt Rognlie said...

Ooof, did that paper just compare wages for unionized workers within the Bay Area (one of the highest-wage regions in the US) to Walmart's wages across the entire country?

This is bad on its own terms, and it's even worse when you consider that Walmart has a much greater presence in lower-wage states.

Using the BLS's Occupational Employment Statistics database, it's easy to see the average salary contrast in the two largest grocery occupations ("cashiers" and "stock clerks and order filers") between the San Francisco-Oakland-Fremont metro area, the national average, and Arkansas (Walmart's home base, possibly representative of the lower-wage rural areas in which Walmart is truly dominant):

San Francisco-Oakland-Fremont:
Cashiers: $12.82
Stock Clerks and Order Filers: $13.86

National average:
Cashiers: $9.73
Stock Clerks and Order Filers: $11.66

Cashiers: $8.84
Stock Clerks and Order Filers: $10.40

Not the fairest comparison I've ever seen.

To be sure, some of the disparity probably remains after we control for region -- but that's because the paper is comparing unionized grocers to Walmart employees. I suspect that if it compared the entire grocery and general merchandise sectors to Walmart, the gap would be much smaller still.

Matt Rognlie said...

Incidentally, the paper informs us that Walmart's average wage in 2001 was $9.21 per hour. We can compare this directly to the average wage in the General Merchandise and Grocery sectors (of which Walmart is something of a hybrid) using OES data from 2001.

For general merchandise stores, the mean hourly wage was $9.84, while for grocers the mean hourly wage was $10.01. When you consider the salary disparities between the low-wage regions of the country in which Walmart has the greatest presence and the country as a whole (for instance, the difference in average cashier's wage was $8.84 in Arkansas vs. $9.73 for the entire US), it looks like Walmart is paying wages roughly in line with the prevailing standards.

Keep in mind that the OES "average hourly wage" statistics include non-hourly employees with wages adjusted to fit an hourly scale, while I assume the figures for Walmart include only true hourly employees. If we did a true apples-to-apples comparison along this dimension, the gap would probably be small even before adjusting for region.

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