One of the complaints that people sometimes make about Catholic social teachings is that they don’t seem very related to “real life.”
For example, the Catholic social tradition often discusses fairness in wages and the concept of “decent work”. Of course, the term “just wage” is hotly debated, as is “decent work.” What would it mean to have a just wage? How would one account for disparities between peoples’ life/family situations? Some have made good choices and some bad.
And “decent work” is, well, “nice work if you can get it.” In the past few months I have been struck by the petulance with which people discuss “collective bargaining” and “those government workers who get all these perks that we’re paying for.” Somehow, in the minds of many, these so called perks are luxuries that ought to be done without (and let us remember, the perks amount to: pension plans, the “good” health insurance, and three extra vacation days on average – so 11 vacation days rather than 8. And even with 11 days, we still are dwarfed by most other nations.)
Strangely enough, though, these “perks” sound quite a bit like what Pope Benedict XVI writes about in Caritas in Veritate:
[Decent work] means work that expresses the essential dignity of every man and woman in the context of their particular society: work that is freely chosen, effectively associating workers, both men and women, with the development of their community; work that enables the worker to be respected and free from any form of discrimination; work that makes it possible for families to meet their needs and provide schooling for their children, without the children themselves being forced into labour; work that permits the workers to organize themselves freely, and to make their voices heard; work that leaves enough room for rediscovering one’s roots at a personal, familial and spiritual level; work that guarantees those who have retired a decent standard of living.
So I’ve been surprised by how often people will look at public sector jobs and exclaim that the situation is “unfair” – when it seems to me that the reverse is true. It is the private sector jobs that are often “unfair” in the sense of being “un-just”. In many private sector jobs, 401ks ask employees to presume that the stock market WILL rise by a certain amount over time, and force employees to gamble on whether there will be enough money for retirement. Health insurance is often non-existent in lower wage jobs and, as many of us know, rising to unmanageable costs for higher paying jobs. Vacation days and sick leave, where available, are often not used for fear of losing one’s job, especially in this economy.
The reasons for the disparity between private and public sector jobs are usually related to profitability (or at least, breaking even). So it really appears to be “our taxes” paying for government workers’ “high living” over against private sector workers and their corporations, both of whom are just trying to make it. It’s an unfair picture in so many respects (on both sides – for example this idea holds true for small businesses, but not for larger businesses) but that seems to be where we are. Some will point out the unsustainability of government wages and benefits given how many states are in the hole – to say nothing of the federal deficit. It is not clear to me that government wages and benefits are the primary problem, though.
Rather, haven’t we lost a sense of what work is meant to be about? Pope Benedict discusses “decent work” as that which aids in development of one’s community. Work is not, after all, for the purpose of furthering corporations’ interests; corporations are meant to serve the needs and interests of human beings.
We ought, instead, all to be clamoring for these “perks.”
Too pie-in-the-sky? Does this mean that the Church advocates something that is too idealistic for the so-called real world of finance and business? Two recent news items have crossed my desk that make me think not. One is with the way Br. Victor Forliani, a business school professor, set out to work against predatory pay day loan lending by recruiting local credit unions to provide loans. These are not free loans but they’re far better than pay day loan places. Another is a study done at Berkeley that suggests that if Walmart were to offer $12 an hour to all of its employees and put the total cost of that on to its consumers, the total cost to the average customer is about $12 per year. Hmmm.
Neither of these things is perfect; neither would totally measure up to the ideal. But at least they’d be aimed a bit more squarely at protecting the life and dignity of all people. And, they’re based on so-called “real” data.
This doesn’t run contrary to your overall point, but I found myself intrigued by the Walmart study, and so spent a fair amount of time reading it last night. One of the things about the way the authors of the study decided to frame their work is that they chose a $12 wage. However, according to Walmart as quoted in the study, that is actually very, very close to their current average wage for full time associates:
“What would the raise to $12 per hour look like for the Walmart workforce? Walmart notes that its average hourly wage is $11.75 for full-time associates.” (page 4)
As they calculate the impact of this increase per customer, they find that it’s pretty low.
Now, the basic point that for those workers who make below (or even right at) this average, the increase would be very helpful stands. And it is certainly the case that once you spread the cost of that increase across all Walmart customers, the cost is not high and there is a definite net benefit to the poorest segment of society. (Poor shoppers are hurt less than poor workers are helped, and much of the money from the price increase comes from middle class shoppers anyway.)
That said, because the authors picked a new wage level so close to the current average, the results of their study end up being “Small wage increases have small costs”, which is true, but not very exciting.
Doing some quick Excel work with the figures in tables 3 and 4, it looks like with a 3% increase in overall prices (cost of about $1.11 per visit per customer) Walmart could set their minimum wage at $15, which would be more of a step towards a living (though lower middle class) wage.
What this helps to illustrate is that very large organizations can absorb cost impacts like this much better than small companies. The fact that Walmart has 19 million customers walking through its doors each day buying an average of $46 each would allow them to pay their workers more than they do much more easily than a lot of “mom and pop” stores.
Which is why, although they fight against legislation to set wages higher by law for big box retailers only, Walmart has actually lobbied in favor of raising the federal minimum wage.
Thanks for doing some of that analysis! I was wondering about the $12, which seems quite low given the study that David Cloutier linked a while back (http://www.nytimes.com/2011/04/01/business/economy/01jobs.html?_r=3&hp) that suggests $14 as a minimum for a single person, but rather higher that $15/hour wages for those with families.
Walmart’s tactics are all too telling, eh?
Just as a little additional color (I work as a pricing manager, so this kind of thing is interesting to me): when I started doing the analysis I expected it to show that it would be a vastly larger negative impact on Walmart’s customers for Walmart to pay $15/hr rather than $12.
The company I currently work for is a fast food chain, and in that environment if you paid labor an average of $0.25 more per hour, the impact would be nominal, but giving an additional $3/hr raise would require huge price increases which would kill your business.
That it wouldn’t at Walmart is probably mainly a testament to Malmart’s business model, in which they intentionally maintain very low profit margins on the products they sell. A few years ago I managed pricing for a company that sold consumer electronics to Walmart (among many other chains) and in that area Walmart tended to set its shelf prices at 5-8% above their cost — which means the money which pays for leases, wages, etc. (as well as actual profits) comes out of that 5-8%. (Obviously, it’s probably more on some products, and less on others.)
Because so little of the price of each product is used to cover wages (they play a volume game, not a margin game) a significant wage increase could be covered by a comparatively small increase in product price.
Even so, I’d tend to assume that the study is being a bit over-optimistic in its assumptions. (I suspect the part time workers are in fact working more than an average of 20hrs per week, and that you’d see at least some decrease in visits per week if they raised their prices 1-3% across the board. At a basic level, if they could do that without ill effect, they would have already done so and pocketed the profits.) But it does look basically credible that Walmart could pay its workers somewhat more without destroying their business.