Job Creators or a Tale of Two Big Boxes

There are job creators, and then there are job creators.

Debates about economic policies tend to center on concerns about job creation. Corporate CEOs often argue that raising tax rates or the minimum wage will suppress hiring. (I’ve often wondered why we can’t just offer a tax credit for each job created, rather than keeping rates low and hoping that will translate into additional employment. But I digress.)

The question that is too seldom addressed is: what kind of jobs do we want to incentivize? Because all jobs are not equal–not from the standpoint of the employee, and not from the standpoint of the taxpayer.

A recent study released by Congressional Democrats underlines the issue. According to that study, Walmart’s wages and benefits are so low that many of its employees are forced to turn to the government for aid, costing taxpayers between $900,000 and $1.75 million per store. As Mother Jones reports,

Walmart’s history of suppressing local wages and busting fledgling union efforts is common knowledge. But the Democrats’ new report used data from Wisconsin’s Medicaid program to quantify Walmart’s cost to taxpayers. The report cites a confluence of trends that have forced more workers to rely on safety-net programs: the depressed bargaining power of labor in a still struggling economy; a 97 year low in union enrollment; and the fact that the middle-wage jobs lost during the recession have been replaced by low-wage jobs. The problem of minimum-wage work isn’t confined to Walmart. But as the country’s largest low-wage employer, with about 1.4 million employees in the US—roughly 10 percent of the American retail workforce—Walmart’s policies are a driving force in keeping wages low.

Businesses do not have to be conducted this way. Good jobs that don’t require public support are not inconsistent with  healthy profits. A recent Business Week article reports on the very different business approach taken by Walmart competitor Costco.

Despite the sagging economy and challenges to the industry, Costco pays its hourly workers an average of $20.89 an hour, not including overtime (vs. the minimum wage of $7.25 an hour). By comparison, Walmart said its average wage for full-time employees in the U.S. is $12.67 an hour, according to a letter it sent in April to activist Ralph Nader. Eighty-eight percent of Costco employees have company-sponsored health insurance; Walmart says that “more than half” of its do. Costco workers with coverage pay premiums that amount to less than 10 percent of the overall cost of their plans. It treats its employees well in the belief that a happier work environment will result in a more profitable company. “I just think people need to make a living wage with health benefits,” says Jelinek. “It also puts more money back into the economy and creates a healthier country. It’s really that simple.”

Despite its higher wages and more generous benefits, Costco nets more per square foot than Walmart.

I have increasing numbers of students who believe that all business enterprises are at worst evil and at best unconcerned with anything but the bottom line. They look at Walmart and the many businesses that emulate its rapacious approach; more recently they point to the employers who are cutting workers hours in order to avoid having to provide health insurance under the terms of the Affordable Care Act, and they note the huge disparities between the salaries of CEOs and their employees, and they see those behaviors as an inevitable result of market capitalism. It isn’t.

Costco and many, many other enterprises demonstrate that concern for workers’ welfare is entirely consistent with a healthy bottom line. The problem is not with our markets, it is with our culture, and with public policies that enable and reward despicable behaviors.


  1. I joined Costco in Indy about 3.5 yrs ago and have never regretted it. I boycotted Walmart about a decade ago because I had read about them pushing employees to work off the clock.

    I like that Costco has employees that make a liveable wage and have paid holidays and vacations and health care options. They make happy employees as well.

    I will never step foot in a Walmart again and have avoided Hobby Lobby for their anti-women stance regarding their objection to providing birth control in their health care policies to their employees. When Chik-filet and Papa John’s pulled their stunts last year, I added them to my boycott list.

    Ask yourself, how much have your local taxes gone up to support those walmart (and other corp) employees that don’t have enough to pay for food, housing and use medicaid when they get sick? Our food stamp, section 8 and medicaid funding has risen because these greedy corporations only look at the bottom line and not the lives of the people they employ. Those corporations won’t get another dime from me and I encourage all of you reading this to do the same. Stop corporate welfare.

  2. Yeah, I don’t want to be “greeted” when I come into a store. I don’t like that.

    As far as Wal-Mart demanding people work off the clock, if they’re doing that, that’s illegal as heck. It is a slam dunk winning case that entitles you to treble damages and attorney’s fees. An unfair wage claim is of the best cases you can get as an attorney.

    I think you need to look at the other side of the equation – spending. If a couple spends $200 a month at Wal-Mart and would have to spend $280 to buy the same products someplace else, that’s $80 a month, nearly a $1,000 a year to that couple. Wal-Mart, like it or not, is one of the best anti-poverty programs out there. You can’t just look at the employee side without looking at the spending side which is much bigger. No one is making those people work at Wal-Mart anyway.

  3. A usual, Paul’s points are a bit off the mark, as it were.
    A lot of people like to be treated in a friendly manner when they enter a store. That aside, the last time I was in a Wal-Mart, there was a “greeter” at the door.
    Unfair wage claim lawsuits have been filed against Wal-Mart. You know how difficult litigation against a well-capitalized defendant is. Wal-Mart litigates and, if necessary, settles. In these corporation-dominated times, even fault for a rear-end collision in a personal injury case, formerly a “slam dunk,” is taken past summary judgment and to jury.
    And let’s look at another side of the equation. Wal-Mart employees are paid such low wages that oftentimes during orientation they are given information for application for food-stamps. That’s nifty for taxpayers. We subsidize the Walton family as it destroys local merchants. We provide them subsidies for their health-care because their employees can qualify for Medicaid.
    I agree that private employers should not be hit with payment of health insurance as a “bennie” for their employees. We should have single-payer—i.e., socialized medicine—and many of our problems would go away. Maybe the Waltons would like that. Maybe they would not. I don’t care. I don’t do business there or at Papa John’s (don’t like their pizza) or a Chik-Fil-A (don’t like their food, either). Kudos to AgingLittleGirl for her approach to choice of merchants with which/whom she does business. Buy local: as in Good Earth in Broad Ripple.

  4. I am a Wal Mart shopper because the prices on many items are lower than K Mart, Kroger, CVS and other stores. My disability prohibits driving to Costco which is in Castleton – a nighmare drive at all times – K Mart is much closer but Martha Stewart’s name has jacked up their prices. There are many low-paying jobs throughout this country; food servers probably top the list. The disparity between salaries of CEO’s and low level workers is where profit levels are decided and the workers have no say in this decision. Customers have the final word by either shopping at Wal Mart or Costco or going elsewhere…workers have the same option. How many large companies shorten employees work hours to avoid paying benefits? How many offer ridiculous health benefits such as the only option my son and daughter-in-law have through the Indianapolis Catholic Diocese; Anthem Blue Cross/Blue Shield which is operated by WellPoint whose CEO’s annual salary and benefits are in the millions? The family policy costs $450 monthly but has a $9,000 annual deductable. Lord knows, the Catholic church has enough money to pay good wages AND provide decent benefits for employees.

    My friends LInda and Dick worked at a Wal Mart in Florida to supplement their Social Security income. When Linda was diagnosed with cancer and during treatment could no longer work, employees held a benefit among themselves to keep her insurance paid as long as possible. When she had to move to southern Indiana for full-time care by her daughter, Wal Mart found a position to transfer Dick to in the nearby Wal Mart so he could be with her. After her death, they told him to take all the time he needed to be ready to move back to the Florida Wal Mart where he worked for an additional 6-7 years. What big company, paying high wages, would provide this loyalty and assistance to employees? Wal Mart’s and other companies low salaries are a good starting place and begins a work history for many who move on to higher positions and salaries, using experience and training in varied positions. For many, it is the only place hiring in this depressed job market. Don’t any of you hold your breath waiting for CEO’s to give up their annual millions or their expensive benefits to help either the job market or financial conditions in this country – it ain’t gonna happen folks, it ain’t gonna happen.

  5. Please make the issue global corporations and not forcing them to address labor and justice issues….we all know that if global corporations are allowed to take all business opportunity in America labor will lose all of its ability to effect change. The problem is global corporations will lead to totalitarian society. We have tens of trillions of dollars in corporate fraud that if we reinstate Rule of Law and recover…..that will downsize these corporations into regional businesses. That is the solution!

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