This quote (via ALDaily) from a synthesis piece in the New York Review of Books (it mentions, for instance, Liza Featherstone's book) puts Wal-Mart's low wages into perspective:
For a two-hundred-employee Wal-Mart store, the government is spending $108,000 a year for children's health care; $125,000 a year in tax credits and deductions for low-income families; and $42,000 a year in housing assistance. The report estimates that a two-hundred-employee Wal-Mart store costs federal taxpayers $420,000 a year, or about $2,103 per Wal-Mart employee. That translates into a total annual welfare bill of $2.5 billion for Wal-Mart's 1.2 million US employees.This is more or less a subsidy that benefits both Wal-Mart and the low income employees, at the expense of taxpayers. For the employees, it's the equivalent of a higher minimum wage, although they probably have to fill out some nasty paperwork. For Wal-Mart, it means workers can be hired at less than market price, since some workers who otherwise could not afford to work at Wal-Mart are able to (this is especially the case if there's a no-work welfare alternative, but presumably it also equalizes all wage rates under some threshhold).
You can make an argument for subsidizing low income employees, and you can make an argument for subsidizing small business, but it's hard to see an argument for subsidizing Wal-Mart! This is might just be the strongest case for a higher minimum wage I've seen, since a minimum wage transfers the costs of those subsidies to the employer, rather than the taxpayer. (The employer passes these costs on to the consumer, and market forces should make the process more efficient.)
The whole discussion kind of drives the point home that we should be thinking about minimum wage increases not in a vacuum, but in contradistinction to the EITC and other seemingly invisible "welfare" programs in place already. I'm not necessarily arguing against the EITC (which has benefited me in the past), but it's imperative that we look at the (perhaps) unintended winners and losers these kinds of policies create.
This is a great piece. We ought to index the state's minimum wage (now at $6.50). I think we should ramp up some Illinois blog activity to try to help make that happen.
It does seem like many more things should be indexed than currently are. But doesn't this introduce political questions into how inflation is calculated? I wonder how much controversy there is on that question now.
Well not much I guess, but I wouldn't mind having some. There'd be some neat tangents to riff off of in that discussion...
I think in general the bureaucracy-hating right is not going to want things indexed beceause 1) it means the government grows on autopilot and 2) it leaves some decisionmaking power with a bureaucratic body. But having a nonpolitical board (a la the Fed) that decides rate increases once a year might not be such a bad solution. Sometimes things work best when they're depoliticized, because political actors don't generally have the long term interests of their constituents in mind.
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