How Walmart Made Liberals Turn Right - Reason.com

How Walmart Made Liberals Turn Right - Reason.com

A couple of weeks ago Walmart announced it would raise hourly wages for half a million employees. The New York Times argued it should be forced to raise pay even further through an increase in the national minimum wage. After all, the paper said, there is “little doubt that Walmart (and other employers) would pay more if low wages were not, in effect, subsidized by taxpayers, who pay for the food stamps and other public assistance that low-wage workers rely on to get by.”

The Times was referring to a study, such as it was, purporting to show Walmart’s low wages cost taxpayers $6.2 billion in public assistance, including food stamps, Medicaid, and housing benefits. Other studies have purported to show similar things about the fast-food industry—which ostensibly costs the taxpayers $7 billion in social-welfare spending.

These tendentious claims have several shortcomings, such as loaded assumptions (PolitiFact has ruled a similar claim, by an MSNBC figure, “mostly false”) and the fact that a slightly smaller percentage of Walmart’s workforce receives public benefits than the average for the U.S. retail sector as a whole.

Imagine, too, what would happen if Walmart and fast-food restaurants went out of business tomorrow. Would other companies snap up all their employees, perhaps even pay them better? Probably not. (In fact, the increase in job applicants might depress wages elsewhere.) It is far more likely that the shutdowns would lead to higher unemployment and therefore even more social-welfare spending. Hence Walmart and other low-wage employers probably reduce the total amount of social-welfare spending in the U.S., rather than increase it.

But forget all that. Assume the company’s critics are right—that Walmart is leaning on public assistance to avoid pay hikes it otherwise would have to make. The criticism here isn’t simply an economic one. It’s also a moral one.

Greed, stinginess, lack of compassion—those qualities that supposedly produce Walmart’s low wages—are character flaws. Indeed, one of the groups criticizing Walmart’s pay scales is Americans for Tax Fairness—and fairness is a question of moral judgment. Another left-leaning group, Demos, lamented in a report on raising Walmart pay that “American workers are working harder for less” even as the rich get richer. Walmart, says The American Prospect, creates “an America where millions of people who get up and go to work each day are nevertheless paid too little to feed themselves.”

You get the idea: Walmart has a moral obligation to pay its workers more—and it would, if not for all the food stamps, housing assistance and medical benefits those workers receive from the federal government.

What is this but the conservative welfare critique applied to a different party? It’s not economic circumstances that have led to Walmart’s low wages, but moral shortcomings. Government assistance has lulled an able-bodied company into dependency and complacency, draining it of the will and the incentive to do the right thing for its workers.

The two arguments continue running in parallel. Conservatives argue that poor people would be better off in the long run if they took even menial jobs, and thereby started to develop the habits of character that are essential for anyone who wishes to prosper.

Liberals argue that Walmart and other low-wage companies would be better off if they paid workers more. As Demos argued two years ago: “Walmart . . . workers earn too little to generate the consumer demand that supports hiring and would lead to economic recovery. . . . If Walmart redirected its current spending to invest in its workforce, the benefits would extend to all stake-holders in the company—customers, stockholders, taxpayers, employees and their families—and the economy as a whole.”