Making Low Wages at Wal-Mart
On Tuesday, Sept. 24, 2002, the Census Bureau is expected to release its 2001 data on poverty and income. No doubt we will see an increase in the number of families living below the so-called poverty line, and no doubt part of the explanation that experts will give for this is the continuing shift in our economy away from high-paying manufacturing jobs and toward low-paying service jobs.
We are supposed to believe that making hotel room beds, waiting tables, running cash registers, and caring for the sick and the young and the old are inherently low-paying professions, whereas assembling parts on an assembly line is an inherently high-paying profession. But why? Is this supported by an argument about the value of these jobs to a society or the value that they can obtain from any market? I would like to suggest that there is no inherent or permanent reason why service jobs cannot be high paying, that in fact the causes that make more jobs today low paying have little to do with the type of work, and that imagining a radically different economy might help us create it.
But first, let's address the matter of the "poverty line."
Here's how it's calculated. The government decides what it costs to achieve minimal nutrition through food purchases and multiplies this by three. That gives you the poverty line for a given sized family. There is no adjustment for region. However, families' food expenses tend to be one-seventh of their total expenses, not one-third. This means that you can be living well above this misleading "line" and still have to choose between paying the rent and putting food in front of your family, or between buying medicine for your children and purchasing child care for them.
Of course, you may believe that you are in this situation because you work at Wal-Mart and Blockbuster, and that these are "low-wage service jobs."
No, they aren't. They are service jobs that these and many other companies have managed to keep low-wage through legal and illegal union-busting practices. Wal-Mart shows job applicants anti-union videos before even hiring them and forbids not only talk of organizing but any non-work-related talk at all. It also shuts down any store that succeeds in unionizing.
Eighty percent of organizing efforts at companies across the country meet with illegal resistance in violation of the internationally recognized right to organize. Then there are the legal techniques of mandatory anti-union meetings and intimidation, not to mention right-to-work laws.
In 1953, 35 percent of the workforce was unionized, compared to 13 percent today. Back then, over 40 percent of the private workforce was unionized, compared to less than 10 percent of public employees. Now those numbers are roughly reversed. The percentage of private employees who have a union has been cut by 75 percent. As a direct result, the tendency of average compensation to rise with increases in productivity ended in the mid-1970s, since when productivity has continued to climb, while average wages and the legal minimum wage have dropped off. There are 50 million workers in the U.S. who want a union and don't have one, according to polls.
OK, you say, but how can retailers and fast-food shops pay unskilled service workers $40 per hour? They can't even pay $8 an hour without going broke.
That's not even true today. The growing fast-food chain called In & Out Burger starts part-time workers at over $8 with paid vacation and pension payments, benefiting from reduced turnover, increased productivity, and increased purchasing power. These workers can afford to sleep at night rather than going to a second job, and they can afford to buy themselves hamburgers if they choose.
There was a time when car production was considered an inherently low-wage job. That was before Henry Ford saw the wisdom of turning employees into customers and before the UAW made that idea a reality by organizing industry-wide -- the way organizing needs to be done today.
Factory work is still not a consistently high-paying job. That's why meat plants are now almost all in union-weak states. That's why factories of all sorts move South, then south of the border, then across the Pacific. High wages follow worker power, not type of work.
Look at the construction industry, where wages commonly vary by 500 percent depending on whether workers have U.S. citizenship and a union or live under the constant threat of deportation. Look at farming, where once prosperous small business people are being turned into serfs and finding they have more in common with migrant day laborers than with the corporations that now run the show.
But, you might ask, how can pay not follow skill? Well, you tell me. Have wages fallen for janitors because 30 years ago they all cleaned better than they do now? And by what measure do you maintain that a receptionist or a preschool teacher's skills are less skillful than the skills of a textile worker? Some might maintain quite reasonably that the people-skills of many service workers are some of the most difficult around, requiring the most experience to perfect.
All right, but how do you organize part-time and temporary workers at shops with 300 percent yearly turnover? How do you organize maids working in separate McMansions isolated from each other? Look at the home healthcare workers recently organized in California and ask the SEIU how they did it. There are new things under the sun, and we sure as hell need some.
Yes, someone will say, but there are market rules, economic consequences. You'll cause inflation, you'll throw the prices of goods out of whack, you'll drive up unemployment. Hogwash. We can't get to a high-wage service economy this year or without a lot of interwoven changes, but we can get there, and unless our economists start using their imaginations to point the way the future will be grim.
As far as throwing prices out of whack, there is no whack to be thrown out of. The relative prices of different goods are in constant flux, often as a result of the relative greed of a small number of people. Recent electricity bills in California had more to do with Ken Lay's taste in luxuries than with any uncontrollable market force. The price of housing has skyrocketed as a result of developers' greed and legislators' indifference. Alan Greenspan doesn't seem to be panicked by this the way he is whenever unemployment gets too low.
It is widely understood now that higher minimum wage standards have much less impact on unemployment than had long been rumored, and that low unemployment does not have the dire effects on the economy that some continue to warn of. The official unemployment rate, of course, is about as accurate a measure as the official poverty rate. Things are generally worse than we are being told.
It's about time we recognized that, and started to think about the reasons why -- and how to change them.