PBS News Hour has a piece Why employees earn more at big-box chains than mom-and-pop shops.
Contrary to widespread belief, big-box stores and chains have increased wages in the retail sector as they have spread, according to “Do Large Modern Retailers Pay Premium Wages?” (NBER Working Paper No. 20313). Retail wages rise markedly with the size of the chain and the individual store, according to the study by Brianna Cardiff-Hicks, Francine Lafontaine and Kathryn Shaw. As retail chains’ share of establishments has risen from one-fifth in 1963 to more than one-third by 2000, the number of jobs that pay better than traditional mom-and-pop stores has proliferated.
Half of the difference in wages between large and small retailers appears to be attributable to differences in the average skill level of workers in the two groups of firms. On average, better workers find their way to the bigger companies. With more levels of hierarchy than small stores, larger establishments also allow better workers to move into management positions, increasing their pay even more.
“The increasing firm size and establishment size that are a hallmark of modern retail are accompanied by increasing wages and opportunities for promotion for many workers,” the authors write. “While retail pay is considerably below that in manufacturing, pay in retail is above that found in service jobs… [These results] contradict the image of the retail sector as one comprised of the lowest paying jobs in the economy.” ...
An anti-consumerism Dickensian narrative frequently emerges among critics of big box stores. Walmart (or another big box) moves into an area, drives out virtuous small businesses and their owners, drives down wages, and throws people into the cold, uncaring machinery of the greedy behemoth. The narrative is wrong at several levels.
First, considerable nostalgia and romance are built into the preference for small businesses. In reality, relative to big box stores, small businesses vary widely in the quality of management. Management and personnel policies are often subject to the quirky whims of the owners. Cross-training to improve skills and opportunities for advancement are minimal. Family nepotism frequently triumphs over meritorious performance. Wages are lower. Big box stores are better on all these fronts.
Second, stores like Walmart do not tend to drive out small businesses. Walmart’s major disruptive impact is on other discount store chains. In fact, Walmart can be a boost to small businesses. By creating high-traffic areas, small specialty businesses can open nearby and draw from the traffic generated by Wal-Mart.
Third, rather than drive down wages, these stores actually pay better wages than the mom-and-pop enterprises. They also offer substantially greater opportunities for learning and wage growth, even management opportunities. And if you think the stores are monolithic soul-sucking monstrosities, I’d invited you to read about Charles Platt’s experience as an editor for Wired, who went to work for Walmart to find out what it was like. See Life at Wal-Mart.
Finally, there is an additional indirect but significant, Walmart impact. Your standard of living can improve in two ways: Increased wages and lower prices. The article makes clear that big box stores like Wal-Mart raise wages. But Walmart also offers a wide range of quality goods at low prices. It particularly does so for food, clothing, household goods, and medicine. These items make up a much higher percentage of the monthly budget for low-income people. Through low prices, big box stores positively impact living standards that disproportionately benefits low-income people.
When Walmart stores open, it is not uncommon to have ten times as many applications as jobs. Wal-Mart tried to open a store in Chicago five years ago, and one source published a map that shows support for the idea by Ward (See here.) The strongest support came from the poorest wards, and support decreased as you moved up the economic scale. The big box stores offend the aesthetic and ideological sensibilities of the wealthy, but low-income people overwhelmingly embrace them.
I do not give a blanket endorsement to the big box stores, but if my wealthier and more intellectual friends are truly concerned about justice and poverty, they may want to dig a little deeper than their moralistic, anti-consumerism narratives take them.
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