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Why Big Box Retailers Are Good for Worker Wages
Some people really don’t like “big box” retailers. The openings of new stores, particularly in cities, are frequently accompanied by protests. Recall that Occupy Wall Street targeted retailers, including Wal-Mart, Target, and Best Buy. Critics knock these companies for a variety of reason, including low wages, meager benefits, and their effect on local “mom and pop” stores.
But a new study suggests the big boxes are good for wages and upward mobility. From the new NBER working paper “Do Large Modern Retailers Pay Premium Wages?” by Brianna Cardiff-Hicks, Francine Lafontaine, and Kathryn Shaw:
Over the last forty years, modern retail firms, those with the modern products and processes that support large chains, have become a large segment of the retail sector. Using worker-level panel data on wage rates, we show that the spread of these chains has been accompanied by higher wages. Large chains and large establishments pay considerably more than small mom-and-pop establishments. Moreover, large firms and large establishments give access to managerial ranks and hierarchy, and managers, most of whom are first-line supervisors, are a large fraction of the retail labor force, and earn about 20 percent more than other workers. A good part of these wage gains are returns to ability – large firms and large establishments hire and promote the more able.
True, the retail sector pays less than manufacturing. But employment in that sector has declined because of offshoring and automation. That means more workers have flowed into retailing. And thanks to the growth of modern big box chains, retail wages and promotion opportunities have increased.
The authors also suggest an alternative to the current obsession with boosting manufacturing employment (either by bringing back outsourced factory jobs to the US or by improving worker training for modern manufacturing jobs).
First of all, advances in automation will make it hard to counter the long-term and global decline in manufacturing employment. Second, as the authors note, retail managers actually make more than manufacturing workers:
Managers in retail are more highly skilled than operatives in manufacturing: managers have some college education and likely have unobserved personal skills, such as people management skills or organizational skills. But expending resources on education to increase preparation for managerial jobs in the retail sector could be a viable alternative to expending resources on education for manufacturing work, because wages are higher for managers in retail than they are for non-managers in manufacturing … retail firms employ a larger proportion of managers than manufacturing firms do. Also, large firms, who need managers, have been growing fast in the retail sector.
Published in General
Interesting post James.
That’s an apples-to-oranges comparison. Sure, managers make more than the people they manage. I didn’t need a study to tell me that.
Now pay attention to the “% Manager” column: 25-30% of retail workers are managers. Non-managers in manufacturing cannot all become retail managers — whom would they manage? Most of them will end up as non-managers in retail, and that means a pay cut.
I don’t know whether to laugh or cry. So much wrongness.
The politics. Go ahead and run a campaign based on telling Walmart workers how good they have it. I dare you.
My lying eyes. I once worked at a “big box” retailer- union, too. The top union rate for my job classification went from about $12 an hour to about $8 in my time there. It was a long time ago, but this study and its higher wages go back 40 years, right?
Obsession with boosting manufacturing employment. Really? I get the impression that no one in the political class cares much if Americans have jobs or just collect welfare, so I see no obsession there. But I know what they’re worried about. The folks in flyoverland have stopped believing in globalism so we get studies like this one, to tell us how good we have it, and how our eyes are lying.
…
“Managers in retail are more highly skilled than operatives in manufacturing: managers have some college education and likely have unobserved personal skills, such as people management skills or organizational skills”- wait, what?
Isn’t this just a swarm of assertions? Is it possible that “operatives” in manufacturing might have unobserved personal skills too- or would that wreck the narrative? How about managers in manufacturing? By the theory of this study our best bet should be to make everyone a manager in manufacturing, because they make the most. There’s a chart, so it must be true.
Apples to oranges, as Joseph Stanko aptly notes. Plus, it’s interesting that it’s a wonderful idea to “expend resources on education to increase preparation for managerial jobs in the retail sector”- but “improving worker training for modern manufacturing jobs” is just crazy talk.
This so-called study is shinola, intended to provide cover for the present policies imposed upon the country by the globalist political class.
How ’bout we just make everyone a CEO?
Fabulous idea! That would be awesome!!
What could go wrong?