Wal-Mart: An Evil Company or A Market Success?

When I lived in Nigeria, one of the great cultural myths that I observed was that wealth was like a pie. In other words, there’s only so much of it. When one person gets a big piece of the pie, it means that he must have cheated or stolen from another person. It’s the view of economics that one person’s gain is another person’s loss.

The way this worldview worked out practically in Nigeria was in a culture of corruption. In several rankings of the world’s most corrupt countries, Nigeria has ranked in the top ten. A person in Nigeria would rather sabotage their neighbor’s car or business than see him succeed. When a rich person drives by in a big car, people assumed that he got there by oppressing others.

The United States, by and large, has been proof that the opposite is true: when one person succeeds, it is to the benefit of everyone around them. When an innovation is made, the whole society reaps the benefit. While one person’s innovation may make them rich, it’s not to the detriment of everyone else. And, in the United States, we have (for the most part) a culture that applauds those who succeed.

There are those that stubbornly say otherwise, though. There are those, even in America, who believe that if you have succeeded, the only way that you could have done so is by clawing at others, trampling them on your way to the top. Now, I’m not saying that no one gets to the top by clawing their way there or by trampling people on the way.

One corporate example that many people argue about is Wal-Mart. Wal-Mart has been trying to open a store in Chicago for many years, and has been rebuffed each time. The detractors’ argument goes like this:

  • Wal-Mart abuses its workers. It doesn’t pay them a “living wage,” has horrible benefits, makes them work unpaid overtime, etc.
  • Wal-Mart abuses its vendors. It squeezes them, forcing them to take lower prices, and forces them to ship jobs overseas.
  • Wal-Mart abuses local businesses. When it opens a store, it forces thousands of already-existing stores out of business.

All of this is done in the name of lower prices, so the argument goes (Oh no! Not the lower prices evil monster!).

The problem is… those who make this argument don’t understand economics. Let me give a few counterarguments from economics:

  1. Pricing: individual wealth creation happens in one of two ways. First, it can come from higher wages (you can get a job that pays a higher hourly wage; you can get more education which leads to a higher salary, etc). Second, lower prices. If a person makes $50,000/year, and the price of everything he buys decreases by half, his income has not decreased, but his real income has doubled. Wal-Mart has increased the real income of each of its customers (mostly poor and middle-class people, by the way) by delivering to them low prices.
  2. Productivity: Wal-Mart has made some of the greatest innovative advances in productivity in history. The reason why Wal-Mart has lower prices is that it is more productive—or more efficient—than its competitors. It was one of the first companies to have its own central distribution centers, and its own trucking line. It was one of the first companies to adopt EDI as a method of payment. It helped develop the Universal Product Code (UPC). It has one of the most sophisticated supply chains in the world.
  3. Jobs: Wal-Mart does create a shift in the workforce. When a Wal-Mart store is opened, it does displace workers in other companies (though not as many as some critics have stated). The problem with the argument, though, is that these shifts do not cause long-term unemployment. A more productive society can actually create more wealth. Those that are displaced by Wal-Mart can be put to more productive and higher-paying jobs. If the society only needs 80% of the people it used to need to be in retail jobs, those extra 20% of people can be freed to be the next innovators of the society. When the automobile was invented, it put many in the horse-and-buggy industry out of business. There was some temporary heart-ache, as people pined for the days of the horse-and-buggy. But, it turns out that we didn’t need to dedicate such a large portion of our workforce to maintaining horses and buggies, and our society is better off as a result.
  4. Wages: Does Wal-Mart abuse its workers by paying them low wages? No, Wal-Mart does what any competitive business does. A rational company seeks to pay its employees the least it can to adequately perform the job. If the company doesn’t offer enough money to a potential employee, than the employee will not choose to work for that company. If a Wal-Mart worker is unhappy with the wages that he is being paid, then he is not obligated to work for Wal-Mart. In fact, in a suburb of Chicago, when Wal-Mart opened a store, there were 300 applicants for each job opening in the store, which shows that people are more than willing to work for the wages that Wal-Mart is offering. The same can be said for Wal-Mart’s vendors. As a competitive company, Wal-Mart seeks to pay the lowest amount for goods that it can. If a vendor cannot make its product for what Wal-Mart is willing to pay (or if another vendor can make it for less money), then they are not obligated to do business with Wal-Mart.

The bottom line: the high productivity of a company like Wal-Mart contributes to the overall wealth-building of our society. Wal-Mart, and companies like it, increase the real income of everyone in America (by offering lower prices), contributes to huge productivity innovations, and allows the economy to continue to grow.

The businesses and workers that are displaced by Wal-Mart when it opens a new store can move to new or larger industries that have jobs that are in high demand.

The employees and vendors of Wal-Mart are all in consenting agreements with Wal-Mart. None are required to do business with Wal-Mart. Employees are not bound to work for Wal-Mart. Neither are vendors required to sell their goods to Wal-Mart.

Our economy is not a pie that is divided between its citizens. A person who succeeds does not do so at the expense of another. Greater productivity in our economy means that everyone gets wealthier. Wal-Mart helps that to happen.

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  • http://brocmiddleton.blogspot.com/ Broc

    Check out this study conduct by UC Berkley in 2004.

    http://www.dsausa.org/lowwage/walmart/2004/walmart%20study.html

    Perhaps the jury is still out on Walmart.

  • http://brocmiddleton.blogspot.com/ Broc

    The actual conslusion from the UC Berkley Study in 2004.

    Conclusion
    Wal-Mart workers’ reliance on public assistance due to substandard wages and benefits has become a form of indirect public subsidy to the company. In effect, Wal-Mart is shifting part of its labor costs onto the public. We estimate the cost of the subsidy to Wal-Mart in California for state taxpayers to be $86 million a year. Other retail firms that carry their own weight by providing self-sufficiency wages and employer-sponsored health insurance are placed at a competitive disadvantage, which can result in a downward cycle for wages and benefits across the industry. As we have shown, Wal-Mart’s long term impact on compensation in the retail industry has the potential to place a significant strain on the state’s already heavily burdened social safety net. We estimate the cost if large retailers throughout the state adopted Wal-Mart’s wage and benefits standards to be an additional $410 million a year in public assistance expenses. The public cost of low-wage jobs should be taken into account by policy makers
    at all levels as they make decisions about the kinds of economic development we should encourage in California and in our communities.

    • Bob

      So, the question in response to this study is this: should WalMart reform itself so that it’s less efficient/productive, or should the healthcare industry reform itself so that it’s MORE efficient/productive? That would also solve the problem of Walmart employees using public assistance for healthcare.

  • http://www.papuagirlindallas.blogspot.com Kacie

    Totally agree with you. I’m a fan of Walmart. Also, I don’t buy the arguement that they just use slave labor overseas. No – while the wages they pay overseas seem like a pittance to us, in Indonesia factory jobs were GOOD, steady jobs that benefitted the community.

    Also – I’m currently reading Half the Yellow Sun, historical fiction about Nigeria and the Biafran war. Fascinating stuff.

  • http://brocmiddleton.blogspot.com/ Broc

    Wait….hold on Bob lets not change the focus quite yet, you stated…

    “…Wal-Mart, and companies like it, increase the real income of everyone in America (by offering lower prices)”

    This study found that on many levels Walmart’s business practices do NOT benefit its workers or surrounding society.

    “Wal-Mart workers receive lower wages than other retail workers and are less likely to have health benefits. Other major retailers have begun to scale back wages and benefits in the state, citing their concerns about competition from Wal-Mart.”

    No doubt Walmart has been successful for its shareholders and has been generally innovative however this study creates serious doubt about the beneficial effects of Walmart in a community’s growth.

    • Bob

      This is a perfect time to interject my question. I’m arguing with the premise of their study. They’re saying that BECAUSE Wal-Mart pays its workers less, those people have to rely on public assistance to get healthcare. I’m saying that, if the healthcare industry were to do the same thing that Wal-Mart has done (i.e. create efficiencies and make themselves more productive), then healthcare would be cheaper, and Wal-Mart’s employees would not have to receive public assistance in order to receive healthcare. Why is the study about Wal-Mart having low wages? Why isn’t the study about healthcare costs being so high? Why isn’t there a Wal-Mart of healthcare? Why is so much angst leveled at Wal-Mart for being efficient, and not at other companies for being inefficient?

      Here’s my study: “The Hidden Costs of Inefficiency in the Healthcare Industry of California”
      Executive Summary: The healthcare industry in California is the largest in America, serving over 36 million people. The state government spends over $39 billion on healthcare each year, of which the $32 million that is spent on Wal-Mart workers is less than one tenth of one percent. My study finds that there is much more money to be saved in the state of California by rooting out waste, fraud and abuse in the healthcare system than there is in wishing that Wal-Mart would pay their workers more.

      There are other problems with the study done at UC Berkeley. First, they do not have actual data about Wal-Mart’s compensation policies, either nationwide or statewide, so they’re relying on guesses to compute this. Secondly, they’ve taken a reported number (44% of Wal-Mart’s employees are enrolled in their health plans), and they’ve made an assumption that the rest do not have benefits, and are therefore in need of public assistance for health benefits. That is a false premise to make, because many of those that are working at minimum wage are young people who are on another person’s health plan. Third, they never state what other retailers they are comparing Wal-Mart to, which could be very prejudicial data.

  • http://brocmiddleton.blogspot.com/ Broc

    Yes but by addressing your question of inefficiencies of Healthcare in California you are ignoring the question is Walmart good for the community which your post was originally about…the economic effect Walmart has on its surrounding community. You stated that Walmart business success was beneficial for those around it, however this study has brought evidence showing it may actually have a negative effect. Quickly about the Healthcare, I am all for reform in healthcare however your post was not about healthcare, if you want reform in health care start by supporting Obamacare…lol j/k, did your head just explode? Of course you are going to have problems with this study it directly contradicts the idea that Walmart is good for communities.

    • Bob

      I was both arguing the implications of the study, and also arguing with the legitimacy of the study in the first place. I don’t think that the study came the right conclusions (based on their methodology), and I don’t think that the implications of their findings (based on those misguided methodologies) are as severe as they claim to be.

      I do not concede that this study is correct in stating that WalMart isn’t beneficial. I think that WalMart is beneficial to its employees, since the employees have chosen to work there. I think that it is beneficial to the communities that it serves, as evidenced by my statment that WalMart increases the real income of the people it serves.

      Also, regarding healthcare, I do not have a problem with government regulating the healthcare industry (at least, in a limited sense). However, I do have a problem with what ObamaCare does: it is forcing people to get health insurance. It doesn’t even deal with the problems with the healthcare industry! It doesn’t do anything about high costs! I believe that any healthcare reform must do something to deal with the high cost of care, like allowing people to work more directly with their healthcare provider when it comes to financing (i.e. making personal healthcare premiums deductible, and not just employer premiums).

    • Bob

      BTW, I support the idea of all employers getting rid of their healthcare benefits. This would go a long way to bringing down the cost of healthcare for everyone, because it would force individuals to have insurance by themselves, instead of hiding the cost of healthcare through an employer-driven benefit.

  • http://brocmiddleton.blogspot.com/ Broc

    Clever idea but there is no way to do that without government involvment which i know you LOVE….how would that work all companies going to shake hands a promise not to offer a benefits package….lol

    • Bob

      No, there is a way… right now, the government makes all insurance premiums deductible… IF the employer pays for it. However, if we instead made all insurance premiums tax deductible for INDIVIDUALS, then there would be greater incentive for individuals to get their own plans. Furthermore, if we allowed healthcare policies to be carried from one job to another, and from one state to another, that deals with the problem of pre-existing conditions, and the problem of non-competition, etc.

      Right now, there’s a HUGE incentive for employers to offer a health plan as a fringe benefit (it’s a byproduct of another failed attempt at central planning in the 50s).

      • Andrew Smith

        I think you are missing the real problem in the health care debate…Insurance.

        Like those of us in Illinois subject to the whims of the insurance lobby when it comes to owning a car, shifting the burden from the collective bargaining power of employers to the individual will only create chaos, and exacerbate the inappropriate practices of the insurance industry.

        Riddle me this, how do you create a profit oriented business model around people paying into a common fund to off set the risk of potential high costs?

        The insurance model is to take money and not pay out, even in the face of an appropriate claim. I can’t tell you how often I see this play out in car accident cases. On the medical end of the spectrum, the insurance companies do everything they can to avoid paying for anything they deem to be unnecessary from the perspective of the bottom line. It almost makes the British system of rationing health care look humane.

        Reform the insurance model and you will see huge price cuts in the cost of health care, starting with cutting down the red tape. Too bad the idea of a not for profit health insurance company never got off the ground…

        • Bob

          I disagree that employers exercise a large amount of collective bargaining power. I think an employer is more likely to look at the plans that are offered by the insurance company, and select the plan that best fits their budget, with a lesser priority on the level of coverage for their employees.

          The main problem with employer-sponsored insurance plans is that it masks the cost of healthcare to the individual. Most employees don’t care how much a certain procedure actually costs. All they care about is how much it costs them. They don’t care if the procedure costs $100 or $1000, as long as they only pay their co-payment. They don’t look at the insurance statements that come to them; they don’t care.

          If insurance were employee-sponsored, instead of employer-sponsored, then the cost of both insurance and the care provided would receive much greater scrutiny. Scrutiny is one of the things that drives costs down.

          Another thing that drives costs down is competition. There are very few insurance providers located in any one area. They basically have a monopoly in certain areas. If the law allowed that insurance could be provided across state lines, then costs would also be driven down, because there would be options available.

          Even if you reform the way that insurance is done–reform fraud, as you are advocating (though I don’t concede to you that insurance fraud is widespread)–all that’s going to happen is insurance is going to cost more. Making insurance companies pay out more does NOT cause prices to go down. It causes insurance prices to go up, and actual medical costs to stay the same. Again, the problem is the same… people don’t care how much things cost unless it costs THEM something.

  • http://brocmiddleton.blogspot.com/ Broc

    Yet another study this one conduct by a “more local” source.

    http://luc.edu/curl/pdfs/Media/WalMartReport21010_01_11.pdf

    You can read the summary and conclusions on page 24 of the study, however if I may pull out a few details….

    “These estimates support the contention that large-city Wal-Marts absorb retail sales from other city stores without significantly expanding the market….
    Retail employment levels in Wal-Mart’s own zip code rise modestly (presumablybecause of Wal-Mart own employees), but retail employment trends in neighboring zip codes show a negative effect after Wal-Mart’s opening. These findings like those from our survey are consistent with but somewhat more muted than findings by Neumark, Zhang, and Ciccarella (2007) which suggest that nationally every Wal-Mart worker replaces about 1.4 non-Wal-Mart workers.”

    • Bob

      Without even reading the study, I can respond to the things you’ve pulled out… I think that these are good things, and they support the things that I was saying in my post. Wal-Mart is doing the same thing as other stores, except doing it more productively and efficiently, thus freeing up labor resources to focus on bigger an better things. The fewer people we need to be grocery baggers and cashiers, the more people we have to be scientists, lawyers, economists, mathematicians, writers, etc. It’s just like before the industrial revolution. We would not have had enough workers to fuel the industrial revolution had it not been for innovations in agriculture that allowed many farmers to leave the fields to become factory workers. Does the study say it’s a BAD thing that Wal-Mart reduces the number of workers needed to be grocery baggers and cashiers?

      • http://brocmiddleton.blogspot.com/ Broc

        Are you seriously saying that Walmart is doing a good thing by putting people out of business…b/c it gives them a chance to be…”scientists, lawyers, economists, mathematicians, writers, etc.”

        • Bob

          Yes, that’s exactly what I’m saying. In any study of history, this has happened over and over again, always to the benefit of society as a whole. Are you saying that this is a bad thing?

      • http://brocmiddleton.blogspot.com/ Broc

        Thats fine if you want to take that position, I can’t refute it with any facts off the cuff, however I dont want to hear the sob story for small businesses when the tax issue comes up, It will just be giving them a chance to be scientists, lawyers, economists, mathematicians, writers, etc…..lol

        • Bob

          Ha ha. There’s a difference between market competitiveness, and government intrusion in the market via taxes. Here’s the difference… I’ll bet you that by the time we are old and decrepit, Wal-Mart will be no more. There will be some massive slip-up in strategy within the next 50 years, and some other business will overtake Wal-Mart. That’s just the nature of competition. That’s why small businesses are important. Today’s small business is tomorrow’s large business.

          Government, however, does not participate in market solutions. For the most part, they stifle market solutions. If the government forces Wal-Mart to do certain things (because Wal-Mart is evil, of course), they are stifling innovation, and they’re forcing the market’s hand (so to speak).

          When government raises taxes on small businesses, they’re likely preventing competition. By raising taxes on small businesses, government is making it even harder for small businesses to compete against Wal-Mart.

          • http://brocmiddleton.blogspot.com/ Broc

            Ahh I see so when Walmart price gouches and put small business out of business that is called “nature of competition” and we should do nothing, but if the government ever wants to raise taxes that is “preventing competition” b/c that could put small business out of business and we should avoid that at all cost. Hard to keep up with all that republican double talk straight… how do you do it?

          • Bob

            You’re trying to make the argument that government IS part of the market. In order to do that, you have to re-define hundreds of years of economic theory, and then create a definition of “market” that NO ONE in any party adheres to. The government is NOT a part of the market. It does NOT compete with business.

          • Bob

            BTW, no one is accusing Wal-Mart of price gouging. In fact, Wal-Mart’s pricing might well be described as the OPPOSITE of price gouging.

          • http://brocmiddleton.blogspot.com/ Broc

            Actually legal action has been brought against Walmart for price gouging multiple times in different state courts…I dont think ever convicted though…never convicted…there is a great marketing campaign -Never convicted!-

    • Bob

      One more response… I read the first few pages, and it said that there was no significant increase in sales tax revenue for the city. However, Wal-Mart attracts much of its business through lower prices. So, if people are coming to Wal-Mart because of lower prices, and there was no difference in sales taxes (higher or lower), then it logically follows that people were spending the excess money that they saved by shopping at Wal-Mart in other stores in the area, to maintain the same level of sales taxation.

      In other words (in another support of the thesis of my post), Wal-Mart enabled the people in the area to buy MORE with the same amount of money, thus increasing their overall wealth.

      • http://brocmiddleton.blogspot.com/ Broc

        While your thoughts may be logical in nature, which would SEEM to give them credence, the evidence available does NOT support your statements for a few reasons. One is the study that documented the effect that Walmart had on surrounding stores showed a correlation between distance away from Walmart and the likelihood of a store’s closures; thus while Walmart creates job opportunities when it opens a store in a new location it also leads to the surrounding stores to be closed and the loss of jobs by those employed there. Now since Walmart’s job impact as documented is at best a NET 0 gain, as documented in the study that leads us to its “savings” which you profess it provides with lower prices in its stores. Those saving are also offset by the lower wages it pays it employees. Walmart DOES pay its employees at a marked decreased rate than other stores, which again is also documented by study.

        So since Walmart does not create any significant number of new jobs, does not increase economic activity and actually replaces higher paying retail jobs with lower paying Walmart retail jobs, as documented, leading to a DECREASED median wage, I would assert that Walmart is NOT a beneficial company to communities. So while you may personally disagree with findings or the way these studies were conducted, you cannot with any factual support state that Walmart IS in fact beneficial to communities, frankly at best we can state that Walmarts impact has not yet to have adequately been accessed and further research should be done.

        • Bob

          Broc, I agree with your statements, and I’m not disputing that Wal-Mart doesn’t create net new jobs. Here are the issues that you haven’t dealt with (and what my original post was dealing with):

          1. Wal-Mart’s low prices enables its customers to buy more with the same amount of money.
          2. While Wal-Mart may not create retail jobs, the economic efficiencies created by Wal-Mart actually increases economic activity in other areas. This is something that none of the studies you cited deal with. Yes, one of them dealt with how Wal-Mart creates no net effect on retail jobs. But it didn’t deal with the jobs that are created because not as many people are NEEDED to do retail jobs. Yes, your studies said that RETAIL wages were lower at Wal-Mart, but none of your studies dealt with the the extra production capital that’s generated from Wal-Mart savings, or the non-retail jobs that might be created because of human capital that’s freed up because of Wal-Mart.

          • http://brocmiddleton.blogspot.com/ Broc

            Yes SOME customers in the community will get to buy more b/c Walmart has lower prices on some products however some of this effect is negated by the lower wages that Walmart pays its employees. Also other stores besides Walmart would provide that same type of saving without the monopoly effect of pushing out other business (Woodmans, Aldi) So while Walmart provides goods at a lower cost it also lowers the median wage of the community it resides, leading to a lesser benefit in the community in savings.

            In regards to the “non-retail jobs that might be created b/c of the human capital that’s freed up because of Walmart, “ I believe you are talking again about people getting fired and “thus freeing up labor resources to focus on bigger and better things.” At a different point or time this may be a good thing, however to put MORE people out of work right now when there are so many people already out of work and jobs coming back so slowly after the recession, creating more jobless Americans is not what our economy needs what our economy need is MORE JOBS, not less. So even if that job is bagging groceries, people need to get back to work. Walmart has been documented as NOT creating jobs there is no basis to state that Walmart is beneficial to a community.

          • Bob

            This “negation” that you speak of only applies to Wal-Mart’s employees, which is an extremely small subset of Wal-Mart’s customers. And, if the best that can be said of Wal-Mart is that it doesn’t RAISE the standard of living of some people, that sounds like a good company to me.

          • Bob

            BTW, sorry for taking so long to respond… I’ve not been keeping up with the blog recently.

  • http://brocmiddleton.blogspot.com/ Broc

    Sorry to say my friend it seems lots of people studied Walmart and its effects on communities.

    http://nercrd.psu.edu/BigBoxes/WalMartandSocialCapital2.pdf

    Wal-Mart responds to market opportunities and by definition ignores the local externalities it creates within communities. Our results indicate that the presence of Wal-Mart depresses social capital stocks in local communities, measured here at the county-level. Based on our earlier work, these externalities represent real costs for communities in the form of reduced economic growth. Our results also indicate that community leaders should think carefully about providing infrastructure development subsidies to the chain. Given the measurable impact that social capital has on economic well-being, our findings are important. Less clear is what should or could be done about this. One policy response is to force the chain
    to internalize these effects in its decision-making. Local county leaders should be made aware of the likely adverse effects of the chain on local civic capacity and social capital, and consider implementing policies and programs to help mitigate these effects. Space limitations prevent us from elaborating further, but one example is promoting local entrepreneurship through organized networks. Another is fostering regional cooperation among local firms in related industries, and the strategic development
    of local clusters through partnerships with universities and local community colleges.

    • Bob

      Re: the PSU article that you found… tertiary consequences, like saying Wal-Mart is destroying the fabric of our society by cutting out our “social capital,” is hard to prove, because there are so many intervening variables. This article is brazen in the way that it states that this is a “measurable impact,” because it’s really not. Their premise may as well be “let’s ban all big box stores, because their centralized functions do away with small businesses.” It’s an absurd hypothesis.

  • http://brocmiddleton.blogspot.com/ Broc

    Ok this will be the last study I throw at you…maybe…I hope. This one page rolls up previous studies conduct and lays out the findings in a concise bullet type manner showing why Walmart is NOT a community builder, in fact evidence shows the opposite that it in fact Walmart has NEGATIVE effects on communities it enters.

    http://pubadvocate.nyc.gov/news/2011-01-11/new-study-wal-mart-means-fewer-jobs-less-small-businesses-more-burden-taxpayers

  • http://instigate.me Chris Johnson

    Walmart is evil.

    Seriously, seriously evil. Now that they have the catbird seat, they are lobbying. Hard. Online retailers are being forced by states to collect sales tax, report to states they shipped to….

    …because Walmart wants it that way. 4 Facts:

    1.) If you support walmart, you have surrendered your salvation.
    2.) Walmart is worse than murbak & hitler’s offspring.
    3.) If you believe in walmart, you believe in socialism, or command capitalism like existed in Nazi Germany.
    4.) Walmart is not a place where good people shop.

  • http://brocmiddleton.blogspot.com/ Broc
    • Bob

      From the perspective of human resources? Or from the perspective of my original argument about the economics of Wal-Mart?

  • http://brocmiddleton.blogspot.com/ Broc

    No from the HR department, is it just a coincidence that women make up ¾ of the work force and only 1/3 of the management and make .77 on the 1.00 compared to men or do women have a legit gripe.; If it is something more than a statistically abnormality how should the problem be corrected.

    • Bob

      That women make 0.77 for each 1.00 that men make is not something that’s unique to Wal-Mart. This is a consistent issue throughout the workforce. That Wal-Mart is the center of this controversy right now is a bit contrived. In Illinois, I think that the average women’s wage is about 0.77. The question is… why do women make consistently less than men?

      If a woman is doing the same job as a man is, and getting paid less for it, there’s a problem there. That’s gender discrimination. Those women have a legitimate gripe with their company. They should have the right to sue the company for discrimination. However, this should NOT be a class-action lawsuit, because not all women in the company would have been given the same treatment; each case is different.

      However, the fact that women make up 75% of the workforce but only 33% of management has other factors involved, and it’s likely that gender discrimination never came into play (disclaimer: it could be that there’s some legitimate gender discrimination going on, but that would be on a case-by-case basis, and is not likely a part of their culture).

      Do you remember the kerfuffle with Larry Summers (the president of Harvard) a few years ago, where he said that the reason that there are so few women in the sciences is because women and men are different? I’m paraphrasing his argument, of course, and stating it as I saw the debate unfold. His basic argument is true… men and women are different. They often take different career paths. Many women take off several years in their early- to mid-career to have and raise children. When they re-enter the workforce, their experience is much less, and they’re less “marketable.”

      My wife, for instance, if she were to re-enter the workforce after spending 20 years raising kids (and this is a totally hypothetical scenario, by the way), she would probably enter where she left off. She would be an extremely competent department admin. If she hadn’t taken 20 years off to raise children, she might have been the Director of Health Services for a large educational institution, but as it is, at 55 years old, she has to start climbing the ladder from the bottom rung again.

      So, when you say that 75% of the workforce is women, but only 33% is management, that could be because women are taking years off from climbing the management ladder. It could also be because men and women are wired differently. This is a less scientific explanation, but could be a contributing factor as well. A behavioral scientist would have to weigh in on the conversation. Men may be wired to be more blood-thirsty in their ambitious pursuits. Women may be more collaborative, which has some good side-effects, but a bad side effect (depending on how you look at it) is that they’re viewed as more compliant, and thus not management material.

      If, and when, a collaborative management style is proven to be more effective than the male-dominated management style, women will start to become a greater percentage of management, AND a greater percentage of senior management. Do you realize that among senior management at major companies (positions starting with C–CEO, CFO, CIO, CRO, etc), the ratio of men to women is something like 10:1? It’s amazing. Is this because women don’t want it, or have other ambitions? Or is it because women have a different management style that isn’t yet accepted by a male-dominated corporate world? Or is it gender discrimination?

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  • Andrew
    • Bob

      This is an interesting study, though it doesn’t address the secondary and tertiary implications of such a move. It only takes into account the way things currently are, not the way things will be. For instance, if Wal-Mart were to increase everyone’s wages, would the resulting increase in prices drive customers away from Wal-Mart? Probably? If their market share declined, would they have to raise prices further to accommodate for the loss in share? Probably. The $12/year per customer is the least of the increase, I think.

      Thanks for the insight, though. It brings up some interesting questions.

  • Dexter Turner
  • chris

    hey