Out of Control Policy Blog

Even more Wal-Mart debate post-game

From Glen Whitman:

    I made some harsh (perhaps too harsh) criticisms of this study from the UC Berkeley Labor Center, which purports to show Wal-Mart causes taxpayers to carry a greater public welfare burden. My fundamental criticism of the study is that it seriously confuses correlation and causation. It finds that Wal-Mart employees and their families rely disproportionately on public assistance, as compared to other retail employees and their families, and therefore concludes that Wal-Mart causes the difference in public assistance costs. All that statistic really shows is that Wal-Mart hires disproportionately from segments of the population more likely to rely on public assistance – specifically, people with few skills, people without education, single moms, immigrants with limited knowledge of the language, and so on. Nothing I could find in the study showed that Wal-Mart increased the number of such people (say, by pushing down wages) or caused them to rely more on public assistance than they otherwise would.

Go here for more.

And go here for links to studies that examine the effects of living wage laws.

Here's the bottom line of an NBER analysis:

    Living wage campaigns have succeeded in about 100 jurisdictions in the United States but have also been unsuccessful in numerous cities. These unsuccessful campaigns provide a better control group or counterfactual for estimating the effects of living wage laws than the broader set of all cities without a law, and also permit the separate estimation of the effects of living wage laws and living wage campaigns. We find that living wage laws raise wages of low-wage workers but reduce employment among the least-skilled, especially when the laws cover business assistance recipients or are accompanied by similar laws in nearby cities.

In other words, these laws aren't so much "pro-worker" as they are "pro-some-workers at the expense of other workers."

Ted Balaker is Producer


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