Two Steps Forward, Three Steps Back

This week, it looked like there was some good news from Wal-Mart as they both announced support for an increased minimum wage and introduced a new health care benefits program. Unfortunately, even these minor steps forward are quickly falling apart in the face of new evidence from internal memos.

Now, neither of these steps forward was that great. The minimum wage move was precipitated by the fact that Wal-Mart thinks an increased minimum wage poses more of a threat to its local competitors than it does to its own operation. The new lower cost health plan has a high deductible, exactly the sort of thing that is tough to pay on Wal-Mart wages.

But as if these minor steps were too much for Wal-Mart to handle, The New York Times soon revealed an internal memo (available online here) that outlines Wal-Mart's aims to increase turnover and change job requirements so that fewer elderly and sick people can take the jobs while also having fewer full-time workers who receive benefits.

On top of that, Wal-Mart has a company policy that prohibits their pharmacies from stocking Plan B.

My friend Ezra Klein makes the important point that our employer based health care system provides incentives for particularly this type of behavior. Unfortunately, he also makes the apologist case saying that we should expect Wal-Mart to exhibit precisely this type of behavior.

The problem here is that the world functions largely because many of us choose to ignore what the market supposedly demands. Anyone who sits down to a shared meal and tries to eat all the food or drink all of the beverages on their own is rude, whether an economist would call it a free-rider problem or not. At the end of the meal, adults often argue over who will pick up the tab because generosity of spirit is something our civilization appreciates.

There is much that is untasteful that can be done in the name of market demands. It doesn't make it acceptable when individuals do it. And it doesn't make it acceptable when retail giants do it, either.

Of course, we should change the incentives here and we should restructure our society and our economy so that it achieves more of the goals we desire. But leadership is possible without laws. In fact, it's ideal.

--Matt Singer

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