The Economics of Wage Labor
By Michael Munger
An amazing study was released August 2 by the UCal-Berkeley Labor Center. The conclusion? Wal-mart costs California $86 million a year. The nefarious company does this by cruelly (wait for it) employing 44,000 Californians as workers. Worse, the study points out ominously, Wal-mart actually has plans to hire even more Californians soon.
Here’s an excerpt from the report:
When workers do not earn enough to support themselves and their families through their own jobs, they rely on public safety net programs to make ends meet.
Sounds right. One could quibble with the idea of “make ends meet,” of course. It seems to be based on a Marxian idea of subsistence (to “make ends meet,” I need new $150 sneakers, a plasma TV, and a nice car), and has all the problems of a labor theory of value.
But let that go. The amazing part of the study is the conclusion drawn by the study’s authors from the sentence I first quoted: Employment policies at Wal-mart, the nation’s largest employer, cost California taxpayers approximately $86 million a year in public assistance to company workers. Huh?
The study authors treat the entire amount of public assistance to Wal-mart workers as a cost to the state. But since Wal-mart workers are at the bottom of the economic ladder, why doesn’t it make more sense to add up all the wage payments by Wal-mart to the workers, and count those as a saving to the state?
The question is: what would these workers be doing without their Wal-Mart jobs? I would confidently assert a lot of them would be unemployed, and then the full cost of their subsistence would be borne by the state. The study assumes, bizarrely, that if Wal-Mart would just fire these workers they would be employed in high wage jobs paying full subsistence wages, and the state would pay them nothing. (To be fair to them, the authors say they don’t assume this. To be fair to logic, no other assumption generates the study’s supposed “results”).
Those study authors could be right. Maybe, since knowledge of basic economics is not required, all the Wal-Mart workers could get hired at Berkeley.