The Wall Street Journal ran an editorial in its Saturday edition on the various controversies over Wal-Mart. It makes the point that the attacks on Wal-Mart are led by union leaders who are frustrated that Wal-Mart employees have refused to vote for union representation. The editorial makes some interesting factual points. "Wal-Mart's average starting wage is already nearly double the national minimum of $5.15 an hour. . . . [F]or many workers those wages are only a start. Some 70 percent of Wal-Mart's executives have worked their way up from the company's front lines. . . .The company has also recently increased its healthcare options for employees on the bottom rungs of the corporate ladder. Starting in January, one of those options will be a high-deductible health savings account."
Here, I would contrast Wal-Mart with the currently beleaguered General Motors, where workers have been represented by a powerful and aggressive union, the United Auto Workers, since 1937. The UAW has imposed on General Motors what other unions would like to impose on Wal-Mart: a one-size-fits-all wage and benefit structure. General Motors' starting wages are much higher; but there are many fewer entry-level jobs. General Motors provides uniform healthcare and pension benefits to all its workers; but those benefits are now jeopardized because the company may not be fiscally able to finance those benefits when they go to more retirees than current workers. At General Motors, there is an impenetrable barrier between management and labor. Nobody moves from the assembly line to management positions. The union represents workers in adversarial bargaining and grievance procedures. No one can cross the line.
The adversarial labor-management arrangements were arguably justified in 1937. Management micromanaged workers according to the work-study principles of Frederick W. Taylor, who saw workers as mechanical cogs who should have zero initiative and instead should perform their jobs in the way that time-study experts determined was most efficient. (On Taylor, see the excellent biography by Robert Kanigel, The One Best Way: Frederick Winslow Taylor and the Enigma of Efficiency.) Workers and union representatives argued, plausibly, that these experts were demanding too much work per hour or minute. The workers, union leaders argued, again plausibly, needed someone to represent their interests against the demands of the efficiency experts.
But as Wal-Mart executives might argue, Toto, we're not in Taylorite America anymore. Wal-Mart certainly isn't. Wal-Mart does a superb job of keeping track of inventory and sales and putting on its shelves products consumers want. But it also encourages employees to go out of their way to help customers—to show initiative in their work. Those who do a good job can hope to get management jobs.
Wal-Mart critics look back to post-World War II America and express nostalgia for what they call the family wage. It was assumed that all workers were men who were the heads of families, who needed and wanted a job that would pay enough to raise their families, who sought to retire as soon as possible (remember, workers hated those Taylorite jobs) on a decent pension. A much smaller percentage of working-age Americans were in the labor force in those days, and very few of them were women. At the same time, the divorce rate was much lower, and so there were very few women in need of a job to support their families. Also, much lower percentages of those above 65 worked or wanted to work. There were many more jobs involving hard physical labor, and many men were physically worn out even before reaching 65.
We live in a different America today. Many men in their older years and many women of all ages want part-time work; Wal-Mart has jobs for them. Many adults have not done particularly well in our schools but still want a chance to rise in their jobs; Wal-Mart has opportunities for them. Many workers don't need expensive health insurance, because their spouses have it, or because they're eligible for Medicare; Wal-Mart doesn't force them to forgo wages in order to pay for an expensive healthcare package.
So the Wal-Mart flexible model is more responsive to the needs and desires of the work force than the one-size-fits-all General Motors model. Certainly, Wal-Mart provides a lot more jobs than General Motors does. And, of course, Wal-Mart has done yeoman work of providing low prices for consumers—and especially for low-income consumers. You may not like Wal-Mart—and, remember, no one can force anyone to shop there—but it does seem more in sync with the way America works today than does General Motors.
Wednesday, December 07, 2005
"The Wal-Mart controversy"
U.S. News & World Report Senior Writer Michael Barone made some good points on his blog about Saturday's Wall Street Journal editorial on Wal-Mart, comparing non-unionized Wal-Mart with unionized General Motors: