Wal-Mart's Wages Too Low?

The New York Times reports today on the latest criticism of Wal-Mart's wages:

Jason Mrkwa, 27, a high school graduate who stocks frozen food at a Wal-Mart in Independence, Kansas, maintains that he is underpaid. "I make $8.53, even though every one of my evaluations has been above standard," he said. "You can't really live on this." ....

With pay that brings him about $20,000 a year, he said he could not afford a decent apartment or a vehicle better than his 1991 Dodge Dakota. "I don't see why Wal-Mart can't pay more," Mr. Mrkwa said. "Unfortunately, in the market we live in [Independence, Kansas] there just aren't many jobs available."

Wal-Mart says its full-time workers average $9.68 an hour, and with many of them working 35 hours a week, their annual pay comes to around $17,600. That is below the $19,157 poverty line for a family of four, but above the $15,219 line for a family of three....

[C]ompany executives dismiss [suggestions that they increase pay], saying they would largely wipe out Wal-Mart's profit or its price advantage over competitors. Wal-Mart had a profit margin on sales last year around 3.5 percent. If "we raised prices substantially to fund above-market wages, as some critics urge," the company argued in a recent two-page ad in The New York Review of Books, "we'd betray our commitment to tens of millions of customers, many of whom struggle to make ends meet."

Here in Bentonville, Mr. Scott pursued that theme. "If you're telling me because you're Wal-Mart and you're going to pay $12 an hour and this other retailer is going to pay $5.15 an hour, the federal minimum wage, and they're not going to provide any benefits at all and somehow the consumer is rewarded in all this, all you're doing is perpetuating the status quo," he said. "You're driving inefficiencies into the system. It doesn't make any sense."

Wal-Mart argues that, as retailing companies go, it treats its workers better than average. It says 74 percent of its employees work full time, compared with fewer than 40 percent at many other retailers. But critics note that a leading competitor, Costco, pays $16 an hour - 65 percent more than the average wage at Wal-Mart stores and 33 percent more than the $12 average at its Sam's Club stores. At Costco, 82 percent of the workers are covered by company health insurance, compared with 48 percent at Wal-Mart.

Fast Company comments:

[T]he article begs several questions. First, to what extent is anyone entitled, per se, to drive something better than a '91 Dakota? As Mrkwa observes, the labor market in Independence doesn't afford him a whole lot of options. So, is Wal-Mart therefore obliged to pay him more--or is it up to him to move someplace where he can find better work?