These are the odds and ends I promised in the previous post.
Before the debate, I participated in a smaller seminar on why the Wal-Mart business model is so successful. This was something like a preview of the debate, since one of the other participants was Nelson Lichtenstein. During my speaking time, I made some harsh (perhaps too harsh) criticisms of this study from the UC Berkeley Labor Center, which purports to show Wal-Mart causes taxpayers to carry a greater public welfare burden. My fundamental criticism of the study is that it seriously confuses correlation and causation. It finds that Wal-Mart employees and their families rely disproportionately on public assistance, as compared to other retail employees and their families, and therefore concludes that Wal-Mart causes the difference in public assistance costs. All that statistic really shows is that Wal-Mart hires disproportionately from segments of the population more likely to rely on public assistance – specifically, people with few skills, people without education, single moms, immigrants with limited knowledge of the language, and so on. Nothing I could find in the study showed that Wal-Mart increased the number of such people (say, by pushing down wages) or caused them to rely more on public assistance than they otherwise would.
On the contrary, if Wal-Mart increases the employment of the people most likely to rely on public assistance (the study assumes Wal-Mart has zero net effect on employment), then it would actually tend to reduce the taxpayer burden. And of course, the study doesn’t even address the fact that lower prices raise people’s real incomes – presumably reducing the need to rely on public assistance, or at least making sure that each public assistance dollar goes further.
One of the study’s authors was there, and I’d like to have heard his responses. But I got pulled out the seminar early to meet with the debate moderator.
A handful of “smaller” issues came up during the debate but got squeezed out by the major issues discussed in the previous post. During the Q&A period, we delved further into one of them: the allegations of sex discrimination at Wal-Mart. Ted and I both stressed that we simply don’t know the truthfulness of those claims. But as Ted observed, while sex discrimination may occur on an idiosyncratic basis, it simply doesn’t make sense as a corporate policy. If sex discrimination means passing over equally or better qualified women in favor of men, then sex discrimination means sacrificing profits. Wal-Mart has been accused of many things, but insufficient greed has never been one of them!
Lichtenstein responded by pointing to Wal-Mart’s alleged policy of hiring young men as managers to enforce discipline on the workers, who are disproportionately older women. They don’t hire women for these management positions, he said, because women become friends with their fellow workers and are unwilling to crack down on them. We didn’t have a chance to respond to this argument (in our final statements, we chose to focus on the more important issue of low prices raising real incomes). But I wanted to respond, because the argument is so bizarre. If Lichtenstein is right – if women are unable or unwilling to enforce discipline – then women really are lower-quality managers. Now, I’m not saying that; I suspect you can find plenty of women tough enough to be managers. But to the extent that Lichtenstein’s argument is correct, then a policy of (mostly) hiring men does not constitute true sex discrimination, but merit-based hiring.
The issue of unions also came up during the Q&A. I hesitated for a moment, given the audience. But then I decided, what’s to lose? So I warned the audience I was about to stomp on some toes, and then said, “Unions do not represent the interests of all workers. They represent the interests of some workers at the expense of other workers.” The other workers include (1) workers who don’t get hired because hiring them can’t be justified at the higher wage imposed by unions; and (2) all the other workers whose wages are less valuable when the prices of goods go up. In response to the claim that Wal-Mart impedes freedom of association by opposing unionization in its stores, I pointed out that unions themselves impede freedom of association (and, I might have added, freedom of contract) between store management and potential employees. The “freedom to organize” championed by unions typically means the power to prevent firms from engaging in voluntary negotiations with non-members of the union.