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Obviously, Walmart Pays Double The Minimum Wage On Average – So Abolish The Minimum Wage

That Walmart pays low wages is true. That Walmart averages twice the minimum wage is also true. There is no conflict between these two statements either. The thing connecting them being that the mean wage in retail is near twice the minimum wage. Yet retail is also a lowly paid occupation. Given that Walmart is competing in the market for retail workers – it’s the largest such competitor too – then its pay levels are going to be around and about the industry norm. That’s just how markets work:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Walmart, the nation’s largest employer, pays its U.S. store managers an average of $175,000 a year, according to a new company report. The retailer’s inaugural Environmental, Social & Governance Report released Wednesday says all of Walmart’s 1 million-plus U.S. workers earn more than the federal minimum wage of $7.25, with the average wage for full-time hourly workers $14.26 per hour. [/perfectpullquote]

Walmart’s actually pretty good at taking people on at entry level and enabling them – if they’ve the talent and the aptitude for the hard work necessary – to climb that management tree. But it’s that average hourly wage which interests here:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Walmart, the largest U.S. employer, promoted hundreds of thousands of its workers to higher-paying jobs last year — and the average earnings of full-time associates are nearly double the federal minimum wage.[/perfectpullquote]

Yes, that’s around and about true too.

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]The report also said the average wage for full-time, hourly employees in its stores is now $14.26 an hour as of March 2019, up from the $13.79 the retailer reported in 2018.[/perfectpullquote]

So, why? For, as we know, Walmart always pays low wages. The company’s famously castigated for doing so all the time at least.

Well, what’s going on here is that we’ve a market going on here. And useful proof that there are no monopsony issues in the American labour market. For, what is the average wage in retail?

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]2018 Median Pay $24,340 per year $11.70 per hour[/perfectpullquote]

Median pay is going to be lower than mean pay – that’s just the way these averages work:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Mean hourly wage $13.20[/perfectpullquote]

Both those numbers are for retail workers across the country. So, Walmart pays a little better than the average for the industry it’s in. Not really a surprise. Should be a well known fact that large companies pay a little better than smaller employers.

So, why does Walmart pay that average wage? Because that’s the average wage for the employees it hires. That’s just how markets work, there’s going rate for a job and you either pay it or you don’t get the staff. All of which usefully shows that Walmart doesn’t have monopsonistic power over its employees. If it did it would be paying less than that industry average.

All of which is most doleful for the minimum wage argument. For within economics – not politics, but economics – the only feasible argument in favour of a minimum wage at all is that there are monopsony issues. If there ain’t there ain’t no intellectual justification left for a minimum wage. And as Walmart paying a tad above the industry average shows, there ain’t no monoposony issues here. Thus we can junk the minimum wage.

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