2015 February 21 Saturday
Wal-Mart Needs Higher Quality Workers To Compete

Megan McArdle argues Wal-Mart is raising its wages above minimum wage because it needs higher quality workers in order to compete in a changing competitive retail market.

So here’s a third possibility: Unlike many of the people who write about Wal-Mart, Wal-Mart understands how efficiency wages work. It is treating its workers better because this will enable the company to get better workers.

Alas, I think she's right. Why "alas"? Because it signals a further shift of demand away from the least skilled and least able workers. Already there is a 30% labor force employed participation rate gap between high school drop-outs and college graduates. Most high school drop-outs are not employed. If they aren't good enough for Wal-Mart then where does that leave them?

Online ordering is reducing the demand for retail workers. Automated delivery systems will eventually reduce it much further. I'm at a loss to see where the new big sources of demand for the left hand side of the IQ Bell Curve could come from. In 20 years time our homes will be more robotic, retail purchasing and delivery will be much more automated, and long haul trucking won't be done by humans. Fast food joints will use few human workers.

Share |      By Randall Parker at 2015 February 21 06:55 PM 

Wolf-Dog said at February 21, 2015 10:06 PM:

We are talking about an expoential growth in robots. Maybe not all robot maintenance worker will need to be a programmer, many people might still need to have only limited skills to do maintenance work on Skynet robots.

Moreover, in order to prevent Skynet from becoming a threat to humanity, it is possible that legislation will require that these robots should not be too interconnected, and that they should be compartmentalized so that it is not too difficult for human intervention to be overridden by the robots. For instance, if the robots are given very little control of the design and modification of the future generation robots and their own software programming, it will be very difficult for Skynet to take over its own destiny to become independent of humans. For this reason, it is possible that at least for a while, there will be a lot of low level work that human workers will do to service or baby sit the robots.

But seriously, not only the industrial revolution in England not cause unemployment, but on the contrary a lot of new jobs were created even though productivity increased dramatically. Moreover, if robots become very efficient, then maybe a small percentage of the total capacity will be enough to feed and take care of 50 % of the population. Maybe the euphemism for unemployment will be "career development". Because people will have more time to study and learn skills, even less intelligent people will be able to learn someting useful, as long as they work hard at their own pace.

That being said, it seems to me that one reason the robot maintenance jobs are not trickling down to the middle and lower classes is international labor arbitrage that is exporting the technical jobs to foreign countries. Many of the electronics factory jobs in Asia are repetitive and manual tasks that are performed by relatively less educated workers who don't have any college education.

Wolf-Dog said at February 21, 2015 10:10 PM:

I hope that you have noticed the gramnmar error!!! I wrote: " in order to prevent Skynet from becoming a threat to humanity, it is possible that legislation will require that these robots should not be too interconnected, and that they should be compartmentalized so that it is not too difficult for human intervention to be overridden by the robots. " . Naturally I meant the opposite, and it SHOULD be difficult for robots to override human intervention.:)

Nick said at February 22, 2015 1:50 AM:

@Wolf-Dog I think you overestimate the capacity and desire of many low class people to "learn something useful". In an interview once Richard Lynn commented on what the lowest IQ people were capable of for work, he said garbagemen, and not even the drivers, just those that dumped the can into the truck.

I welcome the type of robots seen in "Elysium" or the upcoming "Chappie" that can be used to crack down on rampant loitering, littering, public urination/defecation and assorted street crime perpetrated by the lower classes, which the police is unable or unwilling to do. Maybe whats missing in project housing is a constant robot police surveillance presence. In exchange for heavily subsidized or free housing and food, the lower classes can live in supervised environments. For whatever reason (genes, environment, etc.) many poor people are poor and dyfunctional despite their best efforts and the efforts of society to help them. We need to use technology to at least ensure that they don't disrupt the lives of productive people.

Where I live in Eastern Europe there are a lot of beggars. Many are able-bodied men who simply don't want to work and would rather sit with their dog and a donation box or play guitar and drink, alternating who holds out the hat to passing tourists. At a minumum these people should walk around the streets and pick up garbage in exchange for some food vouchers (they will buy cigarettes and alcohol with cash).

Audacious Epigone said at February 22, 2015 3:19 PM:

There's a saying in retail that when the economy is good, the quality of applicants is poor. The worse the economy becomes, the better the applicants becomes. The latter scenario appears to have become the new normal.

Steve said at February 22, 2015 6:34 PM:

"This chart shows why Wal-Mart had no choice but to raise wages"


"This chart, first flagged by Bloomberg's Joe Weisenthal, comes from the monthly JOLTS report — which shows the number of job openings in the economy — and shows the quits rate for workers in the retail trade industry.

On Thursday we noted that as labor market slack diminishes and the balance of power swings towards employees from employers, companies would be pressured to either compensate their staff better or see people leave for better paying jobs. "

Seth W. said at March 2, 2015 2:42 PM:

I think workers need a higher quality Wal-Mart. Same goes for any other corporation.

In the end, corporations come down to people; working people. No company is indispensable.

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