Interesting article on how Canadian Retailers (like Canadian Tire and Shoppers) were able to take advantage of the strong Canadian dollar, achieve new efficiencies and flummox the world's largest chain of retail stores. These retailers are driving productivity in a productivity challenged economy, and are succeeding contrary to the larger trends impacting North American retailers as a whole. American retailers could learn a thing or two, I think.
WalMart killed off a lot of competition with computerized inventory systems, allowing them to focus on high turn over inventory, and customize inventory by store. The remaining competition adapted the same strategies, now a basket of goods from Target is the same price as the same basket from WalMart. You can save even more money by shopping both stores. Many small stores / chains tried to compete with WalMart and failed. Some adapted, carrying specialty products WalMart doesn't carry. With the money people saved shopping at WalMart, they can buy more of those specialty items. The biggest losers are the communities that block "big box" stores. The biggest winners are the adjacent communities that allow them, the jobs, and tax reveneau they bring in. What about WalMarts wages and benefits - ever work for a mom and pop place?
Is there a theoretical reason for this? A large employer (in terms of firm size) should raise wages in a dynamic monosonic labor market. Maybe something about the dynamics of the market switching over to low skill service sector?
3 jobs lost for every two created. Much of it on the government dime, with tax breaks and their employees on government assistance and state health coverage.
Walmart is big enough that it can dictate wages, since they've skirted the law and avoided dealing with labor unions.Once they drive competition out of business, they are safe in setting low wages.
I understand what you are getting at and you are theoretically correct. However, this theory is not EMPIRICALLY correct. We have many studies about how firm size is CORRELATED with wages. Meaning that large firms tend to pay more. This is quite at odds with what you are talking about. However, job search pressures put downward pressure on wages. There is some evidence that this gives firms wage making power. If this theory is true, then a large firm (such as Walmart) coming to town SHOULD actually raise wages, as search pressured as lessened (a low skill laborer can apply to every open position at Walmart at once, for instance).
Please explain how that works. If I have a higher paying job, I won't leave that for WalMart. If Walmart pays more, people will leave existing jobs, forcing the employers to raise wages to retain employees. If there are other opportunities that pay more, I won't apply to WalMart. When WalMart shows up, the competition for employees goes up. Companies that need employees must pay more. If WalMart can't get anyone to work for them, they can't drive the competition out of business.
You need to see the documentary "The high cost of low prices" It is on you tube and documentary heaven and other places.
Wal Mart imports most of their goods driving manufacturing overseas. They also drive the local television shop, grocery store, hardware store, eye doctor, camera shop, toy store, etc. out of business. Then hire the unemployed for lower wages.
Walmart succeeds in paying low wages because there are more people than jobs in this country. When working at Walmart is one of your only options other than unemployment, how high the wages are becomes a somewhat moot point. They know this and it's why they continue to do it and why they resist unionization.
You are assuming that Walmart follows this norm just because it happens to be what other large firms do on average.
Yes. Walmart would be included in samples of U.S. firms, would it not? Keep in mind, other variables, such as education the worker received, where held constant.
They keep their wages relatively uniform across the country, more or less, as a corporate policy. They have their whole corporate mentality built around keeping wages low. And because they come in and drive much of the small, family run stores, or older, smaller and varied markets by offering one-stop shopping, with other stores latching on to WalMart offering other goods in the nearby developement, they can almost dictate wages in any location. Their successful tactics in fighting off unions, with forced anti-union talks to employees, letting go anyone they suspect of organizing or being sympathetic to organizing, etc. In the few successes to organize them, they shut down whole operations to avoid unions, with the one I most remember being meat cutters/butchers working at a store in Florida, and Walmart shut that part of the business down and outsourced meat cutrting as soon as the union was certified.
If Walmart forces your company to lower wages to compete with them, your wages get cut. If Walmart succeeds in forcing your employer out of the local area, because their competition overwhelms everyone else, and stores like Target pay the same range, you're finding less of a chance to hold your wages. Don't forget that they have the money to come in and develop whole shopping complexes around them. If you see a WalMart spring up, you often see other big box stores also develope in the same areas. Home Despot or Lowes, or both will build stores nearby or right next to a walmart. They also have a tendency to pay the same relative rates across their stores. Target often builds nearby. Downtown stores often fold when a walmart sets up near, but not in a town. Not to mention the promise of jobs, campaign contributions and more to local and state officials ease the way with tax abatements, government funding of new infrastructure to help these developments be built, and other taxpayer funded spending.
Walmart also does not rely on high skill employees, for the most part. While I think it's wrong, because a cashier or stockperson is essential to their business, those jobs are not high skill, even though walmart cannot do without them, and they still offer low pay.
The NLRA deals with labor-management relations, along with Taft-Hartley, among others, nationally. And various state laws.
