[Vision2020] wages and inflation

Sun Jan 15 09:25:19 PST 2006

Andreas,

 If you want to try to win an  argument by making a cheap shot at my character by putting words in my  mouth, I guess that is your choice. That is one way to try to win an  argument if you do not want to debate the economic realities of  Wal-Mart. However, I never said that Wal-Mart employees did not deserve  a livable wage.  I am simply arguing that:

 1) A large  number of workers at Wal-Mart do not want to work more hours because it  will kick them off their government benefits. Some of these benefits 
  are as much as $120,000 a year in medical expenses.

  2) If Wal-Mart raises its wages it will result in inflation (which  hurts the nonworking poor). That might not be true in many cases, but  it will with Wal-Mart. 

 3) If Wal-Mart raises its wages to a  livable wage, of say from $7-$8 to $10-$12, skilled and semi- workers  will apply for the jobs and displace the non skilled workers at  Wal_Mart pushing them out to other jobs like Taco Bell/KFC ($6.50), The  UI, student jobs ($6), or another minimum wage job of ($5.15). Wal-Mart  pay of $7 an hour, believe it or not, is the highest non-skilled  workers with no experience make on that Palouse. The economic reality  is, paying Wal-Mart workers more will only displace them with higher  qualified workers that are making less elsewhere.

 If you  truly want to help the disabled, senior citizens, and poor, write you  legislatures and congressmen and ask them to reform medicaid, medicare,  and increase government assistance for those making between   $850-$1200  a month that make to0 little to live on and too much  to get any financial assistance. 

 Ask your County  Commissioners and State Legislatures to alleviate outrageous property  taxes from be placed on low income housing, trailer parks, and  retirement communities. That would do more to improve the lives of  minimum wage workers and the low income than any other action. 

  Over-regulating businesses almost never yields the desired result to  help the poor unless it is safety regulations, which I almost always  agree with. 

  Take Care,

  Donovan J Arnold   

Andreas Schou <ophite at gmail.com> wrote:  Typical. 

Donovan,  we were speaking about how to make minimum wage into a living wage  without causing undue inflation. I pointed out a way to do so. Now,  suddenly, the issue isn't how to make sure people can support their  families, it's whether the unskilled proles working at Wal-Mart deserve  to be able to make a living. So you don't believe that people deserve a  living wage -- that's fine. Say so. Don't pretend to make an economic  argument that resolving income inequalities is impossible. 

-- ACS

On 1/14/06, Donovan Arnold <  donovanjarnold2005 at yahoo.com  > wrote:"this  means that one of several things are happening: profits are soaring,  large amounts of capital investment is occurring, or that management is  soaking its labor pool for as much as it can get."-AS 

  Productivity as I understand it is "real wealth" being generated. I guess that sort of meets your definition.

  However, Wal-Mart has had a loss in real wealth growth, as is reflected  in its stock value dropping. So Wal-Mart increasing its wages beyond  the 40% over minimum wage that it is currently paying would contribute  to inflation. 

 Second, even if a company has had an increase  in productivity, it is not always due to the skill of the labor force.  It could be due to another innovation, such as adding a bar code to  each item in the store to reduce labor and transaction costs. I would  argue, that most of the increases in productivity are more due to  innovation then the hard consistent physical labor of an unskilled, or  semi-skilled labor force employed by Wal-Mart. I doubt that Wal-Mart  employees work any harder than ShopKo employees, and since they are  paid similar wages. . .

  Take Care,

  _DJA

Andreas Schou <ophite at gmail.com> wrote:    

On 1/13/06, Donovan Arnold <    donovanjarnold2005 at yahoo.com> wrote:   "But  indexing the rise in minimum wage to yearly estimated productivity  gains would not in fact cause inflation."-Andreas Schou 

  Really? Humm, I find that surprising. Especially considering that the  retail market had a 48% gain in productivity in 2004 over the yearly  average since 1987. I would think an increase of nearly 50% in wages in  retail would cause inflation through the roof. Especially since those  gains were not the result of the unskilled labor force, but because of  technological and business model innovations in the retail market  created by Wal-Mart. 

Donovan --

Productivity,  as it's commonly expressed in the United States, is the amount of value  produced through non-farm labor per man-hour.  When real wages lag  behind productivity growth (as they have in retail for a long while, or  has they have in virtually every sector since 2000), this means that  one of several things are happening: profits are soaring, large amounts  of capital investment is occurring, or that management is soaking its  labor pool for as much as it can get. 

Wage growth is not  necessarily tied to inflation because productivity increases actually  increase the total value produced by the economy. 

-- ACS

P.S.  I am not an economist. Since Stephen's commented on this thread, I  assume he can slap me around a little if I've gotten this totally  ass-backward. 

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