Real life is an untidy, somewhat chaotic thing. And
economics is part of real life.
For example, we’re a couple of weeks since the passage of
the Tax Cuts and Jobs Act. In the wake of that, many companies
have offered bonuses to the employees and other investments in the business. Among
them, Walmart this week announced raising their starting wage to $11 an hour, which is more than $3 above the
national minimum wage.
No law was required to force them to do this. The free
market did it. Entry workers are in short supply, so much so that they need to
offer more money to entice the workers of the level they want. That’s a good
thing for every entry-level worker willing to do the work Walmart wants done.
One of the Sam's Club locations closed in Houston image from KHOU |
But then, this morning, without prior warning, the Walmart corporation
closed about 100 Sam’s Club
locations across the country. Sam’s
Club, if you’re not familiar, is the big box store branch of Walmart. It
requires a membership fee, and quantities and sizes of products tend to be
large. But prices are typically better than you can get elsewhere. Three of
these closed stores were in and near Houston.
When I heard the news, I immediately went to the internet to
find out if our nearby store was among them, and breathed a sigh of relief. The
closed ones are far away enough that I’ve never been to them.
But employees weren’t even given a heads up. The
announcement apparently went out overnight. The company explains,
After a thorough review of our existing portfolio, we’ve
decided to close a series of clubs and better align our locations with our
strategy. Closing clubs is never easy and we’re committed to working with
impacted members and associates through this transition.
The suddenness seems harsh. But employees will get pay for
next 60 days and are eligible to apply for transfers to other Sam’s Club locations
or Walmart stores.
If you see the sudden upheaval that these employees face —the
untidy chaos—as a problem that needs to be solved, you might forget that the
free market solves this “problem” better than government or any other way.
In France there are guarantees that you can’t lose your job
for life. That’s security. But there are steep costs for that, in money and
freedom. I met an exchange student during recent travels. She was studying here
to avoid, or postpone, some requirements from her high school in France. She was expected, by
age 16, to have decided on her life’s work. From that point on, all education
and opportunities would be limited to that decision—assuming she qualified for
her choice. She would have a job waiting for her after graduation, but no
opportunity to change her career once she realized, at age 19 or 23, that what
she loved at 16 didn’t still interest her or fit who she grew up to be.
That kind of limitation might work for people who are raised
from birth to believe job security is everything, and choice and flexibility
are overrated. But here in America, that kind of control over life choices bristles
with tyranny. And we won’t stand for it.
Does that mean we don’t care about workers at Sam’s Club who
just lost their jobs? Of course we care. But the solution is in the market. We
know—and it’s also evidenced by Walmart’s raise in wages—that there’s something
of a shortage of workers right now (at last). So those workers will be in
demand elsewhere.
It’s a general rule of thumb that, the lower the pay rate,
the quicker a worker can find a job. Over a certain level, you add a month of
searching for every $10,000 in annual pay. Except for management, most of the
laid off workers are in the under $20,000 a year range; that means they’re very
likely to find new work within the two months of their severance pay. If they
get work very quickly with a different company, that severance is actually a
bonus.
Lack of control, and that sense of insecurity, may feel
uncomfortable while you’re in a moment of upheaval. But this is America, where
opportunities abound when government gets out of the way. There’s always a good
chance that change will lead to something better. There’s a reason we still
talk about the American Dream.
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