Washington DC just passed a Living Wage Law and Wal-mart is threatening to walk away from Washington DC. The deal is this, any retailer with more than a billion dollar a year in sales has to pay a super minimum wage of $12.50 an hour. Businesses already in D.C. are grand fathered into the older, smaller minimum wage of $8.50 an hour.
We have discussed Myth #27 that Capitalism is Good For Workers. Well, actually we have discussed how capitalism optimizes corporate profits but since workers around the globe are in over supply their costs (wages) are minimized. Computerization and automation is increasing the supply of available (unemployed) workers as machines take over the jobs done in the past by humans. Detroit is an example of how the story ends if we stay on this course.
I don't like this particular Living Wage Law because it does seem to be targeted at Wal-Mart and it does give their competitors already in the area a legislated advantage. But, a Living Wage Law that treated all retail businesses equally would not unduly affect any one retailer. Small businesses could be exempt, say mom and pop companies, and retailers up to a given number of employees in a given store, or below a certain level of annual sales. Since Wal-Mart is the largest retailer in the world it is very easy if one comes from the top down to specifically target Wal-Mart; that is unfair and will probably not hold up in the courts.
So, old school capitalists don't like any tinkering with the market place, but considering the present system is run by the good old boy club both from a political and big business perspective, we need some counter-forces to level the playing field. If capitalism is to survive, we have to for now save as many workers as we can, pay them as well as we can in order to have consumers to keep the businesses and the whole system functional. If all retailers in a given area play by the same rules, then competition still can flourish. There are also no advantages or way to move most brick and mortar businesses overseas.
Perhaps one unintended consequence of such a law is that there will be more pressure to replace workers with machines (automated tellers, cell phone payment systems, automatic surveillance systems, automated shelf stocking machines, automatic or semi-automatic inventory control systems, etc.). So wide-spread adoption of Living Wage Laws would help in the short run, but on the long run, they are also doomed by the smart-machine-age.
In the long run, we have to change our culture and recognize that there are not going to be enough jobs for everyone and that we can not let everyone starve that does not have a job. Working will be a privilege as it is already becoming. Machines will provide all of our good and services, we simply have to set the output to a high enough level to take care of all the people.
I know, this sounds like science fiction but it is happening all around us, The End of Work.
