Sunday, October 30, 2005

Scary: Wal-Mart CEO Calls for Minumum Wage Increase

By Mark Moore (click "comments" below for article).


Blogger Mark Moore (Moderator) said...

"Wal-Mart chief executive Lee Scott says Congress should raise the minimum wage.

Scott says the national minimum wage of five-dollars-15-cents per hour is too low. Scott says he can see first-hand that many Wal-Mart customers are struggling to make ends meet."

Does it scare anyone else that the CEO of Wal-Mart does not seem to understand economics 101? A lot of us in NWA and throughout the state are counting on a successful Wal-Mart. I get a little nervous when someone with that much juice makes statements that indicate they don't understand basic economic principles.

A short refresher: Congress cannot legislate around the laws of economics. Setting a higher minimum wage will invariably have undesirable consequences- to wit INCREASED UNEMPLOYMENT. And it won't be only the lower end jobs that are lost.

Say a business employees one hundred workers at the minimum wage of $5.15 an hour. Each worker nets the employer 50 cents an hour. The costs include two formen who make $20 an hour and a plant supervisor who makes $30 an hour.

If the minimum wage is raised to $5.85 an hour instead of each worker making the owner 50 cents an hour they each now cost him 20 cents an hour. He must either a) lay off the least productive employees, or b) raise his prices, or c) shut down the factory.

Option "A" may not be possible. The higher the minimum wage is raised the more likely it is that NONE of his employees can make him a profit, or that the number is so few that his overhead will eat up the profits at his new and reduced volume.

Option "B" is often not possible either, because the people who run India and China understand that minimum wage laws are idiotic and unburdened by them they will make the same product cheaper- and Mr. Scott's Wal-Mart will drop the American supplier in a nanosecond once that happens.

That leaves option "C", which is what is happening right now to America's industrial base. Notice that when the business shuts its doors it is not just the minimum wage worker that loses. The foreman and the plant super also lose their good jobs, and the owner loses his great job.

I know people are hurting, but is causing them to lose their job and go on welfare the answer? Of course not. A lot of people do not have the attitudes, habits and skills needed to be worth anymore than $5.15 an hour. They don't need a change in mandatory wages, they need new attitudes, habits, and skills. They need to learn to serve people better.

I have to think that Mr. Scott does understand, but that he thinks for some reason a raise in minimum wage would be good for Wal-Mart even if bad for the economy as a whole. If I could figure out how that would work, I at least would not be as nervous as I am thinking that he really believes that it would be good for the country.

9:16 PM, October 30, 2005  
Anonymous Harvey Edwards said...

All you have to do is to walk down main Street of a town such as Stuttgart, Where there was once small shops that provided quality merchandise at a fair price there is now WAL-MART. Main Street is barren.I would lead the way in Boycotting Wal-Mart if I thought it would help. The public cant seem to see past the cheap pop-tarts and see that Wal-Mart is destroying our small business and with it our American dreams. I have worked in the third world Nations that now send us cheap goods. I have seen Chinas pullcarts with dead bodies from the days manufacturing toils. are we as Americans going to allow ourselves to be sold to the third world? Look around, we have already allowed it in the name of cheap products. I will be glad to talk to anyone who cannot see our predicament.

10:47 PM, November 01, 2005  
Anonymous Anonymous said...

It is greed of the American people - they are willing to buy "imitation" stuff made in China. Just look at the Christmas items - traditional prestigious European or American items are made in China for a much cheaper cost although the quality is being sacrificed. But the greed of the American people drives them to say "That would do, no one can tell. That way, we have more money to spend on more Chinese trinkets!"

7:00 AM, November 02, 2005  
Anonymous Anonymous said...

That's a great story. Waiting for more. film editing classes

5:10 AM, March 16, 2007  

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