No its not a myth, its the way people operate. Make something more expensive and people buy less of it. Minimum wages (unless they are low enough not to matter much) make labor more expensive.
Walmart could pay more and still make a fine profit.
You know they could (although maybe not to the extent some people think).
But that's not really the question. Companies are not charities. (They contribute to charity, and there operations do a lot of good (more good then their charitable contributions), but neither of those things is the same as the company being run as a charity. There incentive is to increase profit, not to exhaust or even just reduce their profit by paying employees more under every circumstance even when it reduces there profit.
If you disincentive them from employing people then over time they will employ less (even if they don't let anyone go right away, which they would for sufficiently large increases in the minimum). The fact that they have the ability to pay employees more is not all that relevant. Walmart isn't a "lets funnel every penny we can to the employees" corporation its a profit making corporation. And they want each store to be profitable. Even if the company as a whole makes a profit the marginal new store won't get opened, the marginal existing store might be closed.
And yes (as Combjelly points out) if they stop buying back stock they could give employees a raise but that's pretty irrelevant. The stock buybacks are what they think is in the interest of their owners. There isn't any good reason for them to stop that (as long as they still believe its in the owners interest and as long as they are still profitable). Its not about the ability to spend more on employees, its about the incentive. Even if they have the ability to pay more its not in their interest to do so.
No one brought up executive pay in this conversation, but it is often bought up when discussing wages for the low end employes. Yes they could cut such wages and use the money to pay the low end more, but again they have no incentive to do so. Walmart has been a well run company, why would they want to jeopardize that by reducing the compensation of those who run the company (if the contracts even let them do this)? And even if you think that the company is overpaying and would get just as good or better senior management by paying less, you still have to consider incentives. If that was the case then either the company is operating under a mistaken belief (but as long as they believe it they are going to keep operating on it), or its being run for the interest of senior management more than the owners (in which case its in the senior management's interest to keep running it that way and they aren't going to hurt themselves just to funnel every last penny they can to the employees on the bottom).
Beyond that Walmart is hardly the only relevant employer. A lot of less profitable employers employee low wage workers. A number of these companies would not be profitable with some "living wage", or even some smaller increase below what gets called a living wage. In their case its not just that they have no incentive to pay more, they have no ability to pay more.
The real minimum wage is always zero, because marginal employees and potential employees can and will be fired or not hired. |
