Walmart to save France

Good article:

The French have effectively banned McJobs by requiring employers to be more generous. The unfortunate result is not middle class comfort for all. Often, it’s no jobs.

Companies That Can’t Fire Don’t Hire

The reason has to do with an economic concept called “marginal product of labor”, which is a fancy way of saying that firms will not voluntarily pay you more than you’re worth. If Wal-Mart believes that you add $5.15 an hour to the bottom line by stocking shelves, and you demand $8, the manager will politely point to the exit. If you don’t have any skills that are worth more than $5.15 an hour to some other employer, you won’t use that exit. You’ll take what Wal-Mart is offering. McJobs tend to pay workers what they’re worth, which, sad though it may be, is not always a living wage.

The French alternative — admittedly oversimplified — is to require that firms pay low-skilled workers more, whether their productivity justifies it or not. If an employee adds $5.15 an hour worth of value to a firm, the government might require the firm to pay him $10. As you can imagine, firms are not keen on paying someone $10 an hour for $5.15 worth of work, not even in France. The best business decision in that case is to hire no one at all.

5 thoughts on “Walmart to save France”

  1. I think the following thought experiment illustrates the tradeoffs in the two approaches: Is it better to have a community were 100% of the people who can work employed at $10 an hour or is it better to have %50 of those that can work employed at $20 and hour?

    The money flowing into the community is the same in both scenarios but the %100-$10 community would most likely be a much better place to live than the %50-$20 community. A community where everyone works is a much happier and hopeful place than one in which only a few get the non-material rewards of work.

  2. One of the most harmful, irritating attitudes is modern liberals’ characterizations of jobs as “dead end” and “burger flipper.” Our generation was taught work confers dignity. My experience was that pay wasn’t a great indicator of work – some people had a work ethic and worked hard no matter what; some did not. Of course a hard worker was likely to find a better job sooner than the lazy one, but even on that last day, the hard worker worked – with a certain pride & joy.

  3. At present, I work at something akin to a McJob. I make 8 bucks an hour (minimum wage is $7.15 out here, I think) teaching at a museum. There are several others who work with me — some are retired teachers who don’t need the money, and some are college students who can barely pay the rent if their hours drop a little.

    This job would likely be classified as “dead end” by many of the same people Ginny mentions, because there’s little room for promotion and even less room for making a high wage. But nobody at the museum thinks of it that way — to us, it’s either a step on the way to some related career or a service to the community. I’m a unique case — to me, it’s a needed break from school before I become a full-time engineer. One thing we all have in common, though, is that we all get something out of working here beyond what we’d get working at McDonalds or even working elsewhere for a higher wage.

    As long as people view PAY as the sole indicator of work, they’d view teaching at a museum as a job for losers. But I think it’s one of the coolest jobs ever.

    As for the original point… the museum doesn’t have the money to hire a bunch of $15/hour educators. If it came to that, we simply wouldn’t have education programs; we’d instead buy more artifacts and hire more janitors to keep them clean. If the minimum wage came up too much, the right decision for the museum (not so much a “business decision”, but more like a decision guided by the museum’s mission) would be to cut most of our education programs so we can continue to acquire more artifacts.

    That, I think, is what “higher minimum wage” advocates don’t understand. If you make the minimum wage more than I’m willing (or able) to pay to hire somebody, I’m not going to hire them. I’ll either find someone who’ll work for less under the table, or find a way to squeeze that work out of someone who adds value to the company in other ways, or just not have the work get done. If someone is going to add $11.28 an hour of value to my company, even if I’m greedy and would prefer to hire them for $5.15, I’d be willing to hire them for $11.27 minus overhead because that penny of profit is more than I’d get if I didn’t hire them. But I won’t hire them for $11.29. Raising minimum wage by a few cents might force employers to pay some employees more because they’re still worth it, but it’ll force employers to fire others because they’re not worth it.

    Viewed from the worker’s perpective: if you find you’re not able to make a livable wage, that means you need to develop either better skills or a better work ethic. Just about anybody who can show up to work on time every day can convince somebody to pay them a livable wage. Those who can’t… their problem isn’t the minimum wage being too low, their problem is their VALUE to employers being too low. Make yourself valuable enough to some company and they’ll be willing to pay you.

  4. You left one very important factor out of your excellent piece: You cannot fire anybody (unless the guy is virtually a criminal), which means to business that nobody but family gets hired. Grab any French newspaper and see if you can find any help wanted ads. The wage doesn’t mean as much as the right to fire.

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