Minimum Wage, Literally
From Newsweek (HT BoingBoing):
Wal-Mart is Mexico’s largest private-sector employer in the nation
today, with nearly 150,000 local residents on its payroll. An
additional 19,000 youngsters between the ages of 14 and 16 work after
school in hundreds of Wal-Mart stores, mostly as grocery baggers,
throughout Mexico—and none of them receives a red cent in wages or
fringe benefits. The company doesn’t try to conceal this practice: its
62 Superama supermarkets display blue signs with white letters that
tell shoppers: OUR VOLUNTEER PACKERS COLLECT NO SALARY, ONLY THE
GRATUITY THAT YOU GIVE THEM. SUPERAMA THANKS YOU FOR YOUR
UNDERSTANDING. The use of unsalaried youths is legal in Mexico because
the kids are said to be “volunteering” their services to Wal-Mart and
are therefore not subject to the requirements and regulations that
would otherwise apply under the country’s labor laws. But some
officials south of the U.S. border nonetheless view the practice as
regrettable, if not downright exploitative. “These kids should receive
a salary,” says Labor Undersecretary Patricia Espinosa Torres. “If you
ask me, I don’t think these kids should be working, but there are
cultural and social circumstances [in Mexico] rooted in poverty and
scarcity.”
on August 2nd, 2007 at 7:16 pm
Eduardo: Thanks for this post. I am not sure what to make of it, however. If paying the young workers a salary would also necessitate many, if not most, of the positions being eliminated, then it is not clear to me that this is an unjust, or even undesireable situation. Your post leaves no reason to believe that there is low demand for these jobs. Presumably, then, people need the money. If pressing for a salary means that some get more money, but many others get no money, then I do not think the current situation is clearly wrong.
on August 2nd, 2007 at 11:04 pm
For the purpose of discussion, it might be useful to know about the minimum wage in Mexico. Apparantly, the country is divided into three regions, and each region has its own minimum wage, based on local conditions. All the wages are reset yearly.
In 2006, the three minimum wages were 48.67 pesos/hr., 47.16 pesos/hr., and 45.81 pesos/hr. — or roughly US$4.44/hr., US$4.31/hr., and US$4.18/hr., respectively. That’s an average of 47.21 pesos/hr., or US$4.31
http://www.mexicanlaws.com/Minwages2005.htm
on August 3rd, 2007 at 8:02 am
Color me absolutely confused as to why this is automatically considered exploitation.
This may come as a surprise to some, but this exact scheme is how grocery baggers are paid at US military commissaries (basically grocery stores) world wide. Growing up as a military brat, you actually needed to know someone to get in on it. It was among the most coveted jobs you could have as a young teen. Why? You typically made more than the minimum wage. It was easier than doing yard work or delivering newspapers at 5am. You got paid in cash. The hours are flexible – if you don’t want to go on a particular day you don’t have to. You can make more maney by working harder than the next guy.
My son has been doing this for four years, and he typically makes about $10 an hour – sometimes only $5 sometimes as much as $15 or 18.
We are slowly destroying the chances for young people to learn how to work and develop skills, including things as simple as how to serve customers, in the name of avoiding “exploitation.” As Joe points out, we insist on protesting people to the point that we eliminate their jobs. We sitting in our comfortable homes and offices may feel good about ourselves, but won’t do much for these kids.
A few weeks back, a German exchange student at my son’s high school made a speech in which she was making observations about the differences between her home and the US. One of the things she said was she was surprised at how hardworking Americans were, and in particular how so many (she said most) of her American high school friends worked at paying jobs. She said in her home town no one worked until they graduated from high school unless their parents owned a business.
Kids like these are the ones that will be founding Wal-Mart’s next competitor if we let them alone.
on August 3rd, 2007 at 9:32 am
Oh, please, enough of the Scrappy Young Entrepreneur crapola. Save it for Michael Novak, who no doubt considers bagging for nothing an imitatio Christi.
What’s confusing is that people like Hannaway and Petit can’t see this for the glaring injustice that is. Apparently, the bottom line now constitutes the standard of justice in this country, shrouded in concern about the jobs Wal Mart is “providing” the kids. (I always love that “providing” in business-speak, as though a corporation is a philanthropy.) And that “Superama thanks you for understanding” is an especially unctous touch. Thank you for understanding, in other words, that our shareholders demand as much profit as can be squeezed out of adolescent labor.
If everyone here is so concerned about the impact on employment of actually paying wages, why not go all the way: eliminate wages for everyone at Wal Mart, and let everyone work for gratuities? Now there’s a paradise of Customer Service.
on August 3rd, 2007 at 10:09 am
A different view of the “regrettable, if not downright exploitative” practices of Wal-Mart:
“Chris Tilly, a University of Massachusetts-Lowell economics professor, and Jose Luiz Alvarez Galvan, a London School of Economics sociologist, published a study of Mexican retail workers’ wages and benefits in May…
“Mexican law requires employers to provide paid vacation, annual bonuses and medical coverage for full-time workers. Those laws are widely broken, Tilly observed.
“Walmex and two Mexican chains, Comercial Mexicana and Gigante, offer full-time workers 30 days’ pay as an annual bonus. Wal-Mart International spokesman Amy Wyatt said the bonus is twice what Mexican law requires.
“Thousands of Walmex baggers work for tips only, no salary.
“‘This may seem like rank exploitation, but our research showed the baggers often earn more than the full-time salaried clerks next to them,’ Tilly said. ‘Baggers are mostly high school students.’”
http://www.uml.edu/Media/News%20Articles/Tilly_Walmart_Arkans.html
August 2006
on August 3rd, 2007 at 10:28 am
Mr. McCarraher:
I have quite an interest in reducing economic injustice; in fact, most of the small pieces of published writing I have are intended to advance this goal. However, I suspect I have even more of an interest in avoiding references to “crapola” in public debate about injustice, as such rhetoric does nothing to clarify what should be done differently. If ideas really do matter, and if certain ideas that you affirm are so clearly correct, then there is no need to hide them behind such tactics. Rather, a clarification of errors made seems called for. I am always happy to have others show me the errors of my ways.
I suspect Sean was as surprised as anyone to find my post, as he and I rarely agree when we are both responding to a thread. In this case, I am trying follow what seems to me a very clear line of argument:
1) These bagger positions are not necessary for the successful running of the business. Most grocery stores I go to in the U.S. either have me bag the groceries, or the person who rings them up bags them. Grocery baggers seem to have gone the way of those who help load groceries into cars.
2) If the jobs are not necessary, then there is little motive for Wal-Mart to keep them if they become a significant cost.
3) Thus, I conclude that if forced to pay even minimum wage, Wal-Mart will eliminate the positions.
4) The demand for the positions seems high; that is, the kids seem like they and their families need the money.
5) I assume that without the money from the positions that the families will be worse off.
6) I also assume that most of these kids come from low-income, even impoverished, families.
7) Solidarity with the poor thus seems to require NOT insisting that the baggers be paid a minimum wage.
Any assistance you could provide in reviewing this line of reasoning would be greatly appreciated.
on August 3rd, 2007 at 10:31 am
Sean said: “We are slowly destroying the chances for young people to learn how to work and develop skills, including things as simple as how to serve customers, in the name of avoiding “exploitation.” ”
Unagi says: I haven’t noticed any severe shortages of high school kids working in service jobs in America. Or are you saying that the fact that US teens tend to work for pay is somehow keeping them from acquiring skills?
On a lighter note, the corrupting impulse in capitalism is the tendency and desire of capitalists to transfer their risks and liabilities to other people, something noted by Adam Smith himself. This is why capitalism is and always will need to be regulated. These Mexican teenagers may be making more per hour than, say, the checkers, but Walmart gets out of all kinds of other liabilities (not to mention risks), including a need to provide any other benefits and probably the need to comply with other laws regarding the treatment of paid workers. It seems that were the government to require Walmart to pay these people, Walmart would not eliminate the jobs outright. So Walmart is indeed passing on a liability to other people and is at least exploiting the labor situation in Mexico.
You may argue that Walmart has no obligation to take on these liabilities as a matter of ethics and you may even argue that there is an “ethic” in capitalism that makes it a good thing if a company maximizes profitability at all costs. But there we would get in to the real question of “what is a business’ moral responsibility to the community?”
Regarding your implication that these Mexican kids are being turned into capitalists by working as baggers for tips, working hard does not make one a capitalist, and working in what is in effect piece work has no relationship whatsoever with being a capitalist.
on August 3rd, 2007 at 10:41 am
“1) These bagger positions are not necessary for the successful running of the business. Most grocery stores I go to in the U.S. either have me bag the groceries, or the person who rings them up bags them. Grocery baggers seem to have gone the way of those who help load groceries into cars.”
This assumption isn’t reasonable. First, stores may compete on a level of service itself, so baggers may be part of the successful running of the business. Your experiences are anecdotal and would depend on where you live and what the competitive environment is. I can tell you that baggers are the rule where I live. Second, baggers keep the lines moving quickly. It is likely that more baggers mean fewer check out people.
“2) If the jobs are not necessary, then there is little motive for Wal-Mart to keep them if they become a significant cost.”
The test for this is whether Walmart uses baggers in places where they have to pay them. What do they do in your home town?
“4) The demand for the positions seems high; that is, the kids seem like they and their families need the money.”
This point could apply to any case whatsoever where a lot of people are competing for positions, especially in the Third World. It is a common argument (at least among expatriots that I have known) for underpaying people. Point number four could even apply to child brothels. Saying that people want to do things as a reason for saying that it is good that they do them does not distinguish between cases where they have to do them and where they don’t.
“7) Solidarity with the poor thus seems to require NOT insisting that the baggers be paid a minimum wage.”
NO, but it does not follow that we can’t look into whether Walmart is not exploiting people. Or to put it another way, should Walmart be allowed a different standard of behavior when dealing with the poor?
on August 3rd, 2007 at 1:34 pm
Can you guess the name of the city I have removed from the first sentence in this excerpt from a newspaper article?
********************
Long Treated as Volunteers, Tips-Only Supermarket Baggers Take Up Fight for Hourly Wage
By STEVEN GREENHOUSE
They are a fixture across __________, giving shoppers a welcoming smile and a helping hand as they assist cashiers in packing everything from apples to zucchinis.
In many supermarkets, managers treat these baggers as volunteers, not paying them wages and making them rely on tips.
But now, in a new front in the wage-and-hour wars, many baggers are speaking up, insisting that they are employees and should be paid like other supermarket workers. Call it the baggers’ rebellion — a rebellion that involves lawsuits, street protests and a boycott.. . . . .
********************
ANSWER: New York City
Article published February 11, 2007, The New York Times
on August 3rd, 2007 at 2:04 pm
unagidon: I am a little confused. In your analysis of 1) you accuse me of being anecdotal. In your analysis of 2) you ask me to be anecdotal. Clearly, this whole argument turns on whether or not the positions would be eliminated if Wal-Mart, or Walmex was forced to pay an hourly wage for them. I have tried to provide reasons for why they easily could be. My comparison is with my own experience. I do not find baggers anymore at most stores. Your only counter argument is speed of checkout. However, this never seems to be a pressing concern for most companies at which I shop where the norm is lots of unattended check out lines, and only a few attended ones.
The comparison to brothels is simply unhelpful. To compare bagging groceries to child sex seems to throw all reason out the window.
Finally, this is not a case of a negative externality, as you suggest in your previous post. If it is not the case that the cost and risk of baggers needs to be part of the cost of bringing goods to market, then there is no cost being assumed by the public. Moreover, the idea of negative externalities (liabilities, as you call them), only works if the consumer does not bear the cost of the good or service. In this case, the consumer does bear the cost through tips.
David Nickol: Please explain how the New York example helps us to think this through. The coverage you provide is incomplete. Do New York supermarkets find these to be necessary jobs? If the baggers just walked away, would business be clearly affected? If, instead of bringing on new volunteers (strike breakers), the supermarkets just banned volunteer baggers altogether, what would the grounds for protest be?
I consider myself squarely on the side of poor and low-income employees. However, it has been my experience that many who march next to me on these issues, and especially those who write about them, have no idea what they are talking about. The economic sophistication of anti-poverty advocates seems comparable to a geologist or cosmologist insisting that the earth is flat. That is, it turns out to be laughably ill-informed.
I once accompanied some outraged academics to a confrontation with a construction employer on behalf of some employees who were fired by the employer and who were seeking to form a union. We all had our argumentative posteriors kicked left, right, and center by the employer. His responses to our claims were polite, although clearly frustrated, and entirely convincing. I resolved after that to make sure I had a much better idea of what I was talking about before I got involved in debates about economic matters.
I fail to see how I can be off assistance to the poor, otherwise.
on August 3rd, 2007 at 2:48 pm
Joe said: unagidon: I am a little confused. In your analysis of 1) you accuse me of being anecdotal. In your analysis of 2) you ask me to be anecdotal.
Unagi says: I think you have this reversed. You used an anecdote at one point and I suggested that you test your argument with an anecdote at another point. The standard of using anecdotes as evidence is yours and you have just done it again. So should I assume that your local Walmart uses paid baggers?
Joe said: Clearly, this whole argument turns on whether or not the positions would be eliminated if Wal-Mart, or Walmex was forced to pay an hourly wage for them. I have tried to provide reasons for why they easily could be. My comparison is with my own experience. I do not find baggers anymore at most stores. Your only counter argument is speed of checkout. However, this never seems to be a pressing concern for most companies at which I shop where the norm is lots of unattended check out lines, and only a few attended ones.
Unagi says: Walmart seems to think that the service is needed/wanted in Mexico. You are coming from a personal assumption that Walmart could do without baggers (since you can), so you assume somehow from that the Walmart paying a minimum wage to their baggers would cause them to have to cancel the service.
My argument about checkouts was not so much about speed as about efficiency. It is more efficient to have baggers at high volume checkouts. Checkers are more highly skilled than baggers. This is why they earn more at baggers when both are paid wages. Perhaps if you had ever worked at a store like that you could understand it better.
Joe said: The comparison to brothels is simply unhelpful. To compare bagging groceries to child sex seems to throw all reason out the window.
Unagi says: And had I done this you would be correct. But what I actually said was that the argument you put out could apply to any case, even that outlandish one. You argued that people trying to get the jobs because they need the money badly and that this is a sign that they are not being exploited. I argued that especially (but not only) in the Third World there are millions of people who are competing for low paying jobs because they need the money who are nonetheless being exploited.
Joe said: Finally, this is not a case of a negative externality, as you suggest in your previous post. If it is not the case that the cost and risk of baggers needs to be part of the cost of bringing goods to market, then there is no cost being assumed by the public. Moreover, the idea of negative externalities (liabilities, as you call them), only works if the consumer does not bear the cost of the good or service. In this case, the consumer does bear the cost through tips.
Unagi says: You seem to be saying that service costs are not part of the costs of bringing goods to the market. But they are. And I believe your description of liabilities (or negative externalities, as you call them) has nothing whatsoever to do with the costs borne by the consumers. The consumers always bear the costs. It is Walmart’s costs we are talking about. They are passing those costs away from themselves to the baggers. They are getting more from the baggers than they are supplying. Or are you going to say that it’s the other way around?
on August 3rd, 2007 at 3:12 pm
Mexico may want to imitate New York policies. We’ve successfully averted any threat of Wal-Mart baggers working for tips.
“Wal-Mart to New York: fuhgeddaboudit.
“Frustrated by a bruising, and so far unsuccessful battle to open its first discount store in the nation’s largest city, Wal-Mart’s chief executive said yesterday, ‘I don’t care if we are ever here’…H. Lee Scott Jr., the chief executive of the nation’s largest retailer, said that trying to conduct business in New York was so expensive — and exasperating — that ‘I don’t think it’s worth the effort’ …
“Speaking about what he sees as snobbish elites in New York and across the country, Mr. Scott added, ‘You have people who are just better than us and don’t want a Wal-Mart in their community.’”
http://www.nytimes.com/2007/03/28/business/28retail.html?ex=1332734400&en=b30c447b539f3b45&ei=5090&partner=span%20class=
In other unrelated news stories
“Every New Yorker has seen it happen. A group of teenagers enters a subways car, talking loudly, perhaps cursing or using other epitaphs. Once in the car they expand to fill all space, sprawling across available seats, extending their arms as they hang onto the poles. The other passengers stare at the ground, peer resolutely at their newspapers, trying to avert their eyes from what many see as a threatening presence in their midst.
“For decades if not longer, many older New Yorkers have viewed teenagers, particularly those of a different ethic or racial group, as dangerous. The youth gangs of the 1950s, the reports of so-called wilding in the late 1980s and the often-profane shouting of today’s teenagers have reinforced that notion.
“For their part, teenagers complain of being harassed by police and others for simply being there. School guards shoo students away from their own schools upon dismissal. Community boards debate how to keep them off the sidewalks (see related story) , and parents of younger children wish the older ones would stay away from playgrounds and even parks. Stores post signs warning students away, particularly during schools hours. ”
http://www.gothamgazette.com/article/issueoftheweek/20070730/200/2249
on August 3rd, 2007 at 3:52 pm
The only time I see baggers in any store at which I shop is at especially busy times. Even then, the baggers are always employees with other responsibilities such as other cashiers, or stockers, etc. I cannot remember shopping at a store with designated baggers. One good reason for this is precisely that much of the time in store is not busy and so employees could be doing other things than bagging.
If anyone could give any good reason to believe that forcing companies to pay these baggers would not cause the positions, and therefore the income from the positions, to go away, I will be the first to line up in favor of supporting such an effort.
However, I have experienced too many arguments where those I am arguing with show very little concern for the actual consequences of the positions that they take. The whole point of my initial post (a post which included genuine expressions of uncertainty) was that this situation risked being exactly the kind of situation where the ultimate consequences of positions taken would be entirely unintended and unwelcome.
on August 3rd, 2007 at 4:23 pm
Joe, I am getting the impression that you yourself are not in business.
You are making an assumption that these volunteer baggers are only bagging and when not doing that they are just sitting around. I think that you will find that they are doing other things as well. I think that Wal-Mart is getting more value from them than they are giving and that these baggers are doing free work for Wal-Mart. You seem to put them on par with some sort of truly independent and unrelated worker, say, like someone shining shoes. But these people are working for the store. We don’t know what else Wal-Mart is making them do; maybe they are sweeping the floor, running errands or whatever. But it is very likely that they are being put to unpaid labor for the store as part of the price they pay for being allowed to bag there.
Your point about whether people who disagree with you are showing proper levels of concern is an irrelevant argument typical of a certain American political position that places great store in one’s attitudes about things. You started your post claiming a desire to work from a rational presentation of an argument and you have ended in a strange emotionalism. I too am interested in the plight of the poor and these people are better working at this “volunteer labor” than they would be doing nothing whatsoever, just like a kid in Cairo picking up cigarette butts off the curb to recycle into cheap cigarettes is better off doing that than starving. But it does not follow at all that these people are simply fledgling capitalists and that their situation is something other than atrocious.
on August 3rd, 2007 at 4:26 pm
Joe,
I am not sure the New York City story helps in any way in deciding what is appropriate for Wal-Mart stores in Mexico. The complete article (which appears to be the only coverage of the situation in the Times) is in the Archives at the Times (requiring paid access), but one of the organizations involved reproduces it on their site, so it can be read here:
http://www.maketheroad.org/article.php?ID=235
The baggers, according to state a official quoted in the article, must be considered employees and are entitled to the minimum wage.
When I first began my career in publishing in New York (1970), the company I worked for began using a keyboarding (typing) service run by Americans but operating on one of the Caribbean islands. My co-workers and I (all right out of college) were appalled at what the workers were paid, all the more so because they were paid in “biwis” (which didn’t even sound like real money to us). However, our boss took a trip to the plant, and she reported back that the jobs were considered to be some of the best on the island, and the workers were extremely proud to work there. So then we didn’t know what to think.
The company I work for now outsources various kinds of work to India. I just had occasion to pay an Indian vendor a rate of $10 an hour when the going rate for our US vendors is three times that.
I suppose one question to ask is whether a practice is contributing to economic growth and development. I suspect the work we sent to the Caribbean island (I don’t remember which one it was) or the work we send now to India is providing employment where there otherwise wouldn’t be any, and is improving the lives of the people and growing the economy as well.
I assume that Mexico is better off with Wal-Mart than without it, but It seems to me that Wal-Mart could afford to pay at least some salary to these packers and let them work for tips as well (like most waiters do in the United States). That way they’d have the dignity and experience of real jobs.
on August 3rd, 2007 at 4:34 pm
The volunteers are doing something that benefits the store. They should be paid.
Minimum-wage laws are made with the understanding that people need the work, and that they are going to take some job no matter how much they are paid. The market will bear a lower wage. The workers will work no matter what. But the government steps in to demand a certain minimum rate of pay.
And that’s regardless of how much gumption and know-how they stand to gain by the experience.
Does Mexican labor law have exceptions for under-16s, or for workers whose gratuities often make up the bulk of their wages? I believe there are such exceptions in the US.
on August 3rd, 2007 at 4:56 pm
I’m not familiar with Mexican labor laws but in this country, doesn’t every employee carried on the firm’s books. whether part time or full time, cost the company money in terms of Workers Comp, Social Security, payroll and other administrative overhead?
Besides, when jobs are scarce, and so-called volunteers are cadging for tips it may also be the case that the ‘volunteers’ are under the thumb of someone who gets a cut of the take and decides who works and who doesn’t — just the pimp or madam in a bordello.
The fact is those on the lower rungs of the ladder pretty much get screwed. This shouldn’t surprise anyone.
on August 3rd, 2007 at 5:05 pm
dear joe,
i dont know what kind of grocery you frequent but Stop and Shop New England has paid baggers. they are usually disabled but they try very hard. perhaps you should try not shopping at walmart usa, where , i presume, you bag your own groceries.
on August 3rd, 2007 at 6:37 pm
Wow. I think my ability to contribute to this discussion has been fatally undermined by my lack of business experience, my emotionalism, where I shop, and, let us not forget, my penchant for crapola.
The following claim struck me as rather straigthforward: anyone concern about the actual poor people who work these jobs should at least also be concerned that efforts to change the current situation not result in an outcome where the jobs and the income no longer exist.
Since no one (except perhaps David) seems interested in addressing this issue, I guess I was mistaken in thinking it to be relevant.
on August 3rd, 2007 at 7:36 pm
Let’s remember the statistics. Wal-Mart in Mexico has 150,000 on the payroll, and then there are 19,000 young “volunteers” working for tips. I work for moderately sized company within a large conglomerate, and headcount is very carefully monitored and controlled. Even when we’re doing quite well, there is usually a hiring freeze during the last few months of the year for budget purposes. Is anyone really suggesting that Wal-Mart should add 19,000 people to their payroll? That’s an increase of 12.6 percent. Even when my company isn’t in the middle of a hiring freeze, when one person leaves, it’s difficult to predict whether the powers that be will hire a replacement. I can’t imagine my company increasing headcount by 12.6 percent in one fell swoop!
on August 3rd, 2007 at 7:41 pm
Joe said: “Anyone concerned about the actual poor people who work these jobs should at least also be concerned that efforts to change the current situation not result in an outcome where the jobs and the income no longer exist.”
Since you brought it up, what do you propose? Because so far, all you have implied that for Wal-Mart to hire these people and pay them will result in them being laid off. So you seem to be arguing for the status quo and hiding it behind your “concern for the poor”.
on August 3rd, 2007 at 7:51 pm
David said: Is anyone really suggesting that Wal-Mart should add 19,000 people to their payroll?
Yes, I’ll suggest it.
There seems to be an assumption on the part of some people that since these people are working for free they are not providing any value for Wal-Mart. But I can assure you that these people are managed, trained and supervised. Wal-Mart is absolutely famous for its high level of micromanaged operations. They will know exactly what value these kids provide to them, how many they need, and how to get as much out of them as possible. These kids have job descriptions. They are not free lancers. And you can be totally sure that the job description isn’t just “Pack bag; say gracias”.
What Wal-Mart does is factor all of the parts of production and then work to subtract expense wherever they can and this includes jimmying local laws and conditions. Your company couldn’t absorb this kind of additional labor because you don’t have a mass of free workers providing you with unpaid labor that falls to your bottom line in the first place. But this is not the case with Wal-Mart. They are taking this free labor to income. They would have to stop doing it, at least with these workers.
Yes, they would have to reduce their profits. But regulation is a bitch.
on August 3rd, 2007 at 9:52 pm
With reduced profits there would be less incentive for Wal-Mart to invest in Mexico and thus fewer bagger jobs, whether paid the minimum wage with fringe benefits or through tips. There’s no way to force the demonized Wal-Mart to increase investment in Mexico.
A good rule of thumb is that regulation is good for organized groups, less so for those in most need.
on August 3rd, 2007 at 9:53 pm
Joe, if the baggers had to be paid, and then were dismissed, the result would be that more cashiers would have to be hired. If cashiers do their own bagging, it slows them down. In order to keep up with the same sales volume, more cashiers would be needed.
Similarly, if in these stores the customers would otherwise be responsible for their own bagging, the checkout process would also be slower than it is with baggers. So more cashiers would be needed in order to keep up with the current pace of business.
on August 3rd, 2007 at 10:01 pm
First I am surprised that the minimum wage in Mexico is over $4.00 an hour. So they are doing better than fifty or a hundred dollars a month which is a figure I have fixed in my brain for some reason?
Second, I would like to say that this thread exhibited a very good example of meaningful dialogue. I understand Joe that it is alarming to be accused of something you dedicate your life not to doing. Gene, may also be acting out of frustration which happens to all of us.
For the most part, all gave solid reasons for their positions which seem well thought out in all cases. And each counter was also impressive. I felt educated in the process.
Shaw said that he does better than most people because he thinks at least once a week. A lot of nice thinking on this thread.
Marvelous, if I may write so.
on August 3rd, 2007 at 11:36 pm
Patrick said: With reduced profits there would be less incentive for Wal-Mart to invest in Mexico and thus fewer bagger jobs, whether paid the minimum wage with fringe benefits or through tips. There’s no way to force the demonized Wal-Mart to increase investment in Mexico.
Unagi says: Profit as an incentive doesn’t work this way. It’s not like a five percent profit margin will make them want to invest fifty percent less than a ten percent profit margin. In the operation of a business, it works more like this: what can one do now? While Wal-Mart in the long run wants to dominate its local market, they are still short term thinkers. Right now, they are taking advantage of a situation in Mexico to carve out some extra margin for themselves. If this dries up because they are forced to hire these workers, they will definitely try something else.
This might give us some insight into the relationship between Big Business and the current Republican administration they have had in their back pocket. They have had a few remarkable years of profiteering and graft. They are smart enough to know that this will not last forever. But it is particularly American of American big business that they don’t think in terms of forever. They think pretty short term (say, compared to East Asians) and like the locusts that they basically are, they not only will move on, they expect to.
In the case of Mexico, since Wal-Mart is using their US model there as they do everywhere else, it would probably be most productive for people to think of what their US operation looks like and then think about what that operation would look like (in terms of opportunities to cut costs) in a place like Mexico, with laxer laws in many areas and a poorer population. THAT is what they are doing. And they are doing it in ways other than exploiting bag boys.
on August 4th, 2007 at 9:04 am
Foreswearing anecdotes Unagidon ascends to the heights of metaphor. He analyzes American business as locust-like, wanting to dominate in the long run but too dumb to focus on anything other than the short run. Exploiting bag boys is far from the only exploitative tool in their bag.
If we accept this jaundiced view the best solution for Mexico and the bag boys would be to encourage more competition. Those far-seeing East Asians will easily cast their American peers into bankruptcy. If hat happens it’s fine with me. But the last things Mexico needs are increased hostility to foreign capital and more detailed labor regulations aimed at Wal-Mart.
on August 4th, 2007 at 12:14 pm
Patrick said: He analyzes American business as locust-like, wanting to dominate in the long run but too dumb to focus on anything other than the short run. Exploiting bag boys is far from the only exploitative tool in their bag.
Unagi says: All too true.
Patrick said: If we accept this jaundiced view the best solution for Mexico and the bag boys would be to encourage more competition. Those far-seeing East Asians will easily cast their American peers into bankruptcy. If hat happens it’s fine with me. But the last things Mexico needs are increased hostility to foreign capital and more detailed labor regulations aimed at Wal-Mart.
Unagi says: No.
We businessmen in America do focus on the short term, and in my opinion we do it too much. Does this make us dumb? Hard to say. But it does add an additional dynamic to the analysis that is often missed by people working out of their old econ texts.
You have to tell us more why this “jaundiced view” leads to the best solution being more competition. I didn’t say that East Asians were more far seeing. I said that they took a longer view. All that this means is that they will do business differently in the short term than we do.
You talk about hostility to foreign capital. This is the old capitalist complaint when they can’t get their way. In fact, what foreign capital does is look at what local conditions are and then look to see if they can make a profit. One of the games they naturally play is to try to relax any rules that would add risks or costs to them, typically by making big scary statements like yours about “hostility to foreign capital”. Wal-Mart invests in lots and lots of countries that would not let them use volunteer bag boys. People might remember that.
Reading the threads on this board for six months and on First Things for a year, it seems to me that we as Catholics have not really come to grips with capitalism as an ethical system. Capitalism casts itself as operating by objective laws. But that is a facade. And not only is it an ethical system, it is an ethical system that competes with Catholicism as an ethical system. It is not something that we exist with side by side in some sort of neutrality. The Mexican bag boys are being exploited. For Wal-Mart to not exploit them (and they would have to be forced to not exploit them, just as they always have to be forced not to exploit their workers) would mean somewhat lower profits. But there is no neutral ground of “foreign capital” or “free markets” where one is obliged by some abstract amoral logic to rip faceless people off in the name of other faceless investors.
on August 4th, 2007 at 2:12 pm
I agree that economic textbooks offer little in the way of ethical guidance. I prefer Adam Smith, Ricardo, Keynes, Friedman and many others of all tendencies. I believe that one can find much that is compatible with Catholic Social Thought in their writings. In none of them do I find support for your caricature of capitalism as a system in which “one is obliged by some abstract amoral logic to rip faceless people off in the name of other faceless investors.”
But apart from theory empirical results should matter. If the article I cited above can be trusted and ”our research showed the baggers often earn more than the full-time salaried clerks next to them” then I have difficulty in persuading myself that Catholicism requires the condemnation of a “tips only” practice. And Unagidon’s ruminations only increase my skepticism.
But perhaps U has a good recent example of an underdeveloped country that has prospered by tightening labor regulations and reducing the profitability of foreign companies.
on August 4th, 2007 at 3:00 pm
Patrick said: But apart from theory empirical results should matter. If the article I cited above can be trusted and ”our research showed the baggers often earn more than the full-time salaried clerks next to them” then I have difficulty in persuading myself that Catholicism requires the condemnation of a “tips only” practice. And Unagidon’s ruminations only increase my skepticism.
Unagi says: You have this upside down. Perhaps we need to wonder why the baggers are making less than the checkers or why the lower paid checkers are not trying t get jobs as baggers. Wouldn’t this unregulated capitalism you are celebrating argue that the checkers should be working to become “volunteers”?
Something is missing from the picture.
Patrick said: But perhaps U has a good recent example of an underdeveloped country that has prospered by tightening labor regulations and reducing the profitability of foreign companies.
Unagi says: This is also upside down. Labor regulations, environmental regulations, etc. present themselves in the world of capital as impediments to profitability, pure and simple. This is an ethical position. But capital always talks about these things as though they are extraneous and unnecessarily put in the way of the serious business of economic development. They are presented as frills, in fact; something that should they exist at all are only for rich countries.
The focus here is always on the money. The faceless people are ripped off because they only exist in the system as units of expense and potential sources of values. Spin this as you well, but this is not a Catholic way to look at people. The faceless investors are the pretended source of what the enterprise does. They “own” the company and the company is only carrying out their faceless “will” in the pursuit of profits. In the end, nothing is anyone’s fault. It is a completely amoral order and I think that even Adam Smith saw that any moral value they produce in only by default and only in the context of far more serious regulation that we allow today. You may believe that you see things in the theories of those economists you mention (who seem to me to rather contradict each other) that are compatible with Catholic Social Thought. I would be interested in hearing about what that might be.
on August 4th, 2007 at 6:09 pm
U gets one thing right about my position - I do not believe that Catholic social thought requires one to condemn as blatant exploitation the Mexican “tips-only” practice for baggers (in which, to repeat, the baggers make more than checkers). In fact I hope the baggers get even greater tips so that they can reduce the hours they have to work and can invest in the skills that will make them highly productive in the future.
There are many serious problems of development, such as how to increase productivity and how to reform institutions that have discouraged competition. It’s ludicrous to focus on this issue as emblematic of capitalist oppression and therefore requiring a stern condemnation.
An alternative path to development would be a system of non-capitalist or state-controlled exchange. Apparently U is unable to cite many (any?) examples of successful and just societies taking such a route. But perhaps he prefers a non-tipping, underdeveloped and Wal-Mart-free society.
I am surprised that U has to ask for topics that might be compatible with Catholic social thought from the writers I named. I had thought U’s economic education was sufficiently advanced that he would know about, for example, Adam Smith’s Theory of Moral Sentiments. Any one who’s looked at that book knows it has a great deal on elements beyond self-interest, e.g., the development of sympathy, conscience and a sense of justice in society, that would be of profound interest to Catholics.
Of course that’s just one book but those interested won’t find any difficulty in discovering much else in the writers I mentioned that differs from U’s lurid pictures of a capitalist system where, in his words, “faceless people are ripped off because they only exist in the system as units of expense.” Karl Marx himself was more positive regarding capitalist developments than U is. If he is so extreme in his economic views I conclude that it’s only prudent to resist U’s ukase on the tipping issue.
on August 4th, 2007 at 8:13 pm
Patrick said: There are many serious problems of development, such as how to increase productivity and how to reform institutions that have discouraged competition. It’s ludicrous to focus on this issue as emblematic of capitalist oppression and therefore requiring a stern condemnation.
Unagi says: I don’t think that anyone has been focusing on this as emblematic of capitalist oppression, since as you say it would be ludicrous. However, we have been discussion how this thing works, what it does, and what it’s for. I have been talking mostly from an operational point of view (i.e. Wal-Mart’s). I have been writing against people who look at this situation as beautiful proto-capitalism, or as ordained by objective market forces. As sophisticated as the executives at Wal-Mart are, they are out trying to make a buck, in this case, by getting free labor off these kids.
Patrick said: An alternative path to development would be a system of non-capitalist or state-controlled exchange. Apparently U is unable to cite many (any?) examples of successful and just societies taking such a route. But perhaps he prefers a non-tipping, underdeveloped and Wal-Mart-free society.
Unagi says: So in the end you are presenting us with an ethical but by your own admission unworkable society, or a simply unworkable society as alternatives to capitalism. But the real working alternative that we have is a REGULATED capitalist system where capitalists cannot pass their costs and liabilities to other people. This is a very classical capitalist model. It has to be and can be done politically and the way we decide how, when and where to regulate it is to understand, as I said earlier, that capitalism is an ethical system and as an ethical system it is in competition with Catholicism as an ethical system. We have been brought up to think of markets as somehow neutral and capitalist decisions of profit maximization as simply objective decisions that they have to make in the context of cold hard financial realities. What we inhabit instead is a metaphysics of capitalism that we believe as piously as any relic buying superstitious peasant in the Middle Ages believed the metaphysics of those times.
Patrick says: I had thought U’s economic education was sufficiently advanced that he would know about, for example, Adam Smith’s Theory of Moral Sentiments. Any one who’s looked at that book knows it has a great deal on elements beyond self-interest, e.g., the development of sympathy, conscience and a sense of justice in society, that would be of profound interest to Catholics.
I’m glad that you brought this book up. I read it in a seminar in grad school that considered this book and another one by Max Scheler called The Nature of Sympathy. If you are familiar with that book you might think of the contrast between them. Scheler’s is a book that talks about sympathy as a primary motivator of human behavior and his presentation was compelling enough that the late John Paul 2 wrote his doctoral dissertation on Max Scheler and Catholic ethics.
In Smith’s case, his theory of sentiment and sympathy is nonetheless built on a theory of self-interest. If it weren’t, then the underlying behavioral assumption of Wealth of Nations wouldn’t hold, since he is talking about human nature in both books in the same way.
Patrick said: Karl Marx himself was more positive regarding capitalist developments than U is. If he is so extreme in his economic views I conclude that it’s only prudent to resist U’s ukase on the tipping issue.
Unagi said: I think that all my “ukase” demanded was that Wal-Mart hire the kids. I made an argument that the company would not go broke, that it would not transfer its capital out of Mexico, and that it would keep investing in Mexico. This is not based on any high faluting economic theory but only from my own observations from making these kinds of decisions myself. If I look like some kind of radical socialist to you, you look like someone who both thinks that any state interference with a business is tantamount to communism and you look like a person who had never been involved in making the kind of decisions that Wal-Mart made in setting up this situation. I am positive about capitalist developments or I wouldn’t be working in a senior position in a Fortune 50 (yes, 50) company. On the other hand, I also know that capitalist companies have to be watched very closely indeed, which is why I do not make posts like this under my real name.
on August 4th, 2007 at 9:18 pm
For the record, only the looniest anarchists believe in the absence of all regulations and I am not among their number. I do believe that a lightly regulated society is preferable to a heavily regulated society. One of the regulations I would oppose is the banning of the tips only practice in Mexico for bag boys. So for now I’ll save my indignation. I’d be interested if the Bishops or any other ecclesiastical body in Mexico has condemned this practice. I’d also be interested if there are any empirical studies of the bag boys’ opinion.
You’ll understand if I don’t share the same confidence you seem to have in your own insouciant predictions about the consequences of your proposed changes.
Finally, I submit that your comment that “you look like a person who had never been involved in making the kind of decisions that Wal-Mart made in setting up this situation” is more telling about your outlook and attitude than you seem to realize.
I’ll let you have the last word if you want.
on August 5th, 2007 at 3:09 am
All the disciples of the free market should have nothing to say when the teenage grocery baggers in Mexico get a bit older and decamp for the USA, where they can sell their labor at much higher prices. A solution “Adam Smith, Ricardo, Keynes, Friedman and many others of all tendencies” would no doubt approve of.
What;’s more, any added taxpayer burden as a result is simply another form of externalizing costs — a practice that is OK ( at least as long as Wal-Mart does it).
on August 5th, 2007 at 5:49 am
Patrick said: I’d also be interested if there are any empirical studies of the bag boys’ opinion.
Unagi says: Part of the capitalist ethic is a utilitarianism that says that if people are doing it, they must like it. You don’t need an empirical study to get their opinion. They are showing up to work. People always show up to work. And the disgruntled employee is never a reflection on management.
Patrick said: You’ll understand if I don’t share the same confidence you seem to have in your own insouciant predictions about the consequences of your proposed changes.
Unagi said: You have no faith in capitalism. Wal-Mart would cry, scream, groan, complain about the anti-business climate in Mexico, predict the immanent departure of foreign capital, etc. Then they’d hire the kids and go back to business.
Patrick said: Finally, I submit that your comment that “you look like a person who had never been involved in making the kind of decisions that Wal-Mart made in setting up this situation” is more telling about your outlook and attitude than you seem to realize.
Unagi says: Not sure what you mean here. But one telling thing about you is that you don’t seem to have a realistic idea of what Wal-Mart could really do or how they would look at this situation should the Mexican government tell them to hire the baggers. It’s an operational problem, but you would turn it into a theoretical problem and claim all sorts of consequences that really aren’t there.
You support a “lightly regulated society”. Sorry, but this isn’t a principle, it’s an excuse. It’s the same kind of faux principle, as “I believe in low taxes”. How low? How lightly regulated? Regulations should be as light and taxes as low as necessary. How light and how low is that? You haven’t shown us and the reason is that you have half a theory of capitalist incentives and no operational sense. Companies like Wal-Mart operate in all kinds of economies and under all kinds of rules. And the rules (and politics) constantly shift. The capitalist adjusts. They adapt. They are not some hothouse flower, despite all of their whining and the whining of “hard nosed” political conservatives. They still make money; a lot of money. Regulations and taxes, insofar as they are not something required for the technical operation of a business, are extrinsic to that business and the question of what they should be needs to come from an ethic also extrinsic to the operation of the business. The market isn’t some neutral middle ground where the money is made, bound by its own special scientific rules. This idea is our modern fantasy. The market is where economic and political and ethical activity take place all at the same time. The idea that this is not the case and that these things are somehow intrinsically separate is part of the peculiarly capitalist ethic.
on August 5th, 2007 at 9:27 am
Is there a reason we can have a pretty good exchange of ideas about this question of Walmart practices but do not make the slightest extended criticism of America’s farmers contribution to world starvation.
It is openly acknowledged that American farmers insist that all American aid in food come from American farms thereby increasing the cost of feeding the poor in Africa, astronomically and starving the people there. Politicians of both parties agree that this is impossible to change.
Why can’t we raise the decibels about this problem?
on August 5th, 2007 at 9:31 am
Can’t? Or won’t?
on August 5th, 2007 at 11:37 am
unagidon said: Wal-Mart would cry, scream, groan, complain about the anti-business climate in Mexico, predict the immanent departure of foreign capital, etc. Then they’d hire the kids and go back to business.
MAT says: Do you think “going back to business” will require any changes in the capital allocation decisions of Wal-Mart (”WMT”) with regard to Mexico on a forward basis?
on August 5th, 2007 at 11:57 am
MAT said: Do you think “going back to business” will require any changes in the capital allocation decisions of Wal-Mart (”WMT”) with regard to Mexico on a forward basis?
Unagi says: Sure it will. It will be a new expense for them. But will it drive them out of Mexico? Why should it? They face all sorts of up and down expense fluctuations all of the time. They will adjust. The only way that this could fatally hurt them is if the wages of the baggers was equivalent to their margin. Is anyone suggesting that?