The False Friends of Walmart Workers

No, this news story did not appear in The Onion: In the city of Newport Beach, California, “of the 14 full-time lifeguards, 13 collected more than $120,000 in total compensation; one lifeguard collected $98,160.65. More than half the lifeguards collected more than $150,000 for 2010 with the two highest-paid collecting $211,451 and $203,481 in total compensation respectively.”  The story goes on to report about a recently retired lifeguard who at age 51, receives a government retirement check of over $108,000 per year for the rest of his life. After thirty years of employment, lifeguards are eligible to retire at 90% of their salary as early as the age of 50.

Brent Jacobsen, president of the Lifeguard Management Association, defended the lifeguard pay as “very fair and very reasonable” and “well within the norm of other city employees.”

Those readers who commented at The Orange County Register newspaper were mostly outraged, but there were dissenters. One reader wrote, “I say, well done to any lifeguard who earned that money. I saw one of these lifers and his team rescue three kids off seal rock in Laguna. Amazing. Worth every penny.” And another added, “Personally, I think they should be paid more, and they should be able to charge each idiot they rescue 25% of their future life earnings.”

Worth every penny? Most readers reacted viscerally to the news of the salaries; they understood that the wages of those with enough political connections to receive a plum lifeguard job are determined by political forces while their own wages are determined by market forces. At a fraction of the current pay, the county could attract many well-qualified lifeguards. Orange County’s median household income is $71,735. Politicians and their appointees determine political wages that bear no resemblance to market wages and are subsidized by the taxpayer. Clearly those earning a market wage for their labor are subsidizing those earning a political wage.

Taxpaying Walmart workers in Orange County are among those subsidizing the lifeguards. If you visit the website  of the Labor Center at the University of California, Berkley, you will find plenty of studies in support of unionized workers as well as studies on the wages of Walmart employees.

A recent study at the Center proposes a solution for low paid Walmart workers: a higher hourly minimum wage of $12 mandated for Walmart and other big box retailers. Ariel Schwartz of Fast Company chimed in in support of the idea, explaining that “chronically underpaid people around the country could benefit.”

Ken Jacobs, Dave Graham-Squire, and Stephanie Luce are the co-authors of the Berkley study. They assure us that the higher wages paid by Walmart would have a minimal effect on prices paid by Walmart shoppers. Further, they forecast the higher wages would have a minimal effect on Walmart since their competitors, other big-box retailers, would also be forced to pay the higher minimum age.

Allow me to pose some questions to Jacobs, Graham-Squire, and Luce:

  • Why stop at $12 an hour? That too is a meager wage in today’s world. Why not increase the minimum wage to $20 an hour?
  • As public employees, could you and your colleagues at Berkley afford to make a little less and send the proceeds from your salary reductions to Walmart workers? Since you assure us that shoppers will not notice higher prices at Walmart, perhaps you will not notice your slightly lower salary either?
  • And the most important question I would ask Jacobs, Graham-Squire, and Luce is, How do you justify using the tax system to force Walmart workers to help pay outrageous political wages for lifeguards and other public employees?

Walmart workers are no more “chronically underpaid” than are Orange County lifeguard salaries are “very fair.” Walmart workers are often workers with few skills. Walmart and other big box retailers actually increase the demand for unskilled labor. Their competition for unskilled workers helps to increase the salaries for unskilled labor.

Our hearts go out to unskilled workers, and there is no reason to doubt the sincerity of many people who passionately care about those who struggle to get by. Yet, a history lesson is in order. In real terms, the unskilled worker of the 19th century earned a fraction of what an unskilled worker earns today. The truth is that if a century ago employers had been forced to pay above market wages for unskilled labor, workers would have been forced out of jobs and possibly into starvation. A century ago, there was no Berkeley Labor Center, and yet, wages for unskilled laborers have risen dramatically.

The happy day will come when—in a wealthier world—workers with few skills will earn, in real terms, salaries of $20 an hour or more. That wealthier world will be generated by entrepreneurs whose future innovations will increase the productivity of unskilled labor and make the world better for us all. Academics like those at the UC Berkeley Labor Center interfere with that entrepreneurial process. The policies they advocate make the world poorer in many ways, not the least of which is by justifying political wages. The supply of capital that fuels the innovations that raise market wages is diminished by money spent to subsidize political wages. Advocates for political wages are wolves in sheep’s clothing and are no friends of Walmart workers.

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One Response to The False Friends of Walmart Workers

  1. Mike L. says:

    I wonder if there is a correlation between this article and California’s $25 billion budget deficit…

    Welcome to Nancy Pelosi’s America.

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