Masters of the Minimum Wage

This past month has to have been one of the toughest for people earning the minimum wage. The constant bombardment to buy, buy, buy puts a strain on most wallets, but when you have to settle for a game of checkers instead of the Game Boy, parents must wonder how they will get through the holiday season without discouraging their children. It would be a nice time to receive a surprise inheritance from a distant uncle.

Ever since Uncle Sam, my 43rd cousin twice removed, declared that I was not closely enough related to share in the wealth he created with Wally Mart, I have tried not to shop at his stores. But every once in a while I am lured into his store by the advertised low prices.

Then I whine at my wife for a week about the quality of the goods I bought and swear not to return. Not that Wally Mart has the corner on cheaper goods, but I blame Sam for the slippery slope of lower quality we seem to be on.

Wally Mart has set the standard in low prices. In the beginning they sold same quality goods as everyone else using their purchasing volume to demand lower prices from manufacturers. Other department stores, without the huge purchasing lever that Wally had, fought back by purchasing cheaper goods from countries where there was no minimum wage.

Old Sam replied by going to the same sources, and using his purchasing power, demanded even lower prices. The local manufacturers complied, hoping for more business from the giant of merchandising. But as the competition continued, the quality of the ingredients was reduced to save money. Soon goods made at lower than minimum wage with lower quality were on the shelves. The result is products that lose their shape or colour or wear out just a little sooner than they used to. But they are inexpensive to buy.

The methods used by Wally Mart were not lost on others. Soon brand names were buying all of their product offshore. Even at our low minimum wages in North America, our workers could not compete with India, Hong Kong or China. Manufacturers tried to meet Wally Mart dictated prices, but when there is no profit, businesses close.

For instance, say Sam wanted to start marketing Dill Pickles. They would survey the market and establish that they wanted to sell 4 litres of dill pickles for 2.99 – a dollar lower than the closest competition. Farmers would complain to the pickle plant owners but if they wanted to sell their cucumbers, they had to meet that 2.99 retail price. So the farmers and the packers try, fail, lose their farms and packing plants and Wally gets his pickles from Chile or Indonesia. We can buy the soggy dills at Wally’s for 2.99.

But that is only part of the great Plan. We now have people working at minimum wages to meet the demands of Wally. All they can afford to buy is stuff at Wally’s store because of their low wages. It’s the old Company Store philosophy – workers get a discount for shopping where they work. Since they have to shop at the most inexpensive store, the competition who may have higher quality (at comparably higher prices) cannot stay in business.

Brand name companies try to compete by opening “Manufacturer’s Outlets” to sell their surplus, overruns and seconds. This seems like a good idea until the pencil pushers determine that they are making more at the outlets than at the main stores. So they begin to manufacture product solely for the ‘Outlet’. Guess what? They can get their ‘brand name’ stuff made in China or Indonesia at a fraction of the cost! They close the North American factory and supply their Outlets from China!

The natural progression is that the brand names all move off shore, the quality drops when there is no competition and I end up with Made in China light bulbs from CTC that do not mate with my Made in Canada fixtures!

Even worse, fakes appear – names like Rolex are a prime target, but now even Duracell batteries are being counterfeited! And only the Bunny knows the difference when he stops three drumbeats short or his tail starts to smoke from a leaking battery.

Yet Wally Mart isn’t the only company that uses the minimum wages here and abroad to create and maintains markets. Fast food outlets use the same techniques. Low wages, lowest possible quality and plastic utensils to match their food. People and families earning the minimum wage can only afford to eat at these places and it soon becomes a regular place to eat.

Food outlets that serve prepackaged, precooked servings of meat products imported from plants that also pay minimum wages replace restaurants where the chef actually cooks a cut of meat. And because we are accustomed to the fast food quality, we really don’t miss the fine dining, or perhaps cannot even appreciate it.

Does it matter that we no longer have trades people who can sew dresses and jeans? Do we care if our pickles come from Chile or Indonesia and not Ontario or even the States? Do we care that our sports shoes are not really Nikes even though that is the name on the side? Who cares if we no longer have chefs to prepare a nice meal for us? So what if our electronics are all made in China by people earning minimum wages? Do we care that we are losing minimum wage Call Centre jobs to India?

As long as the Wally Marts and the McFoods can feed and clothe us with the bare essentials they can make a case for the minimum wage. The captains of industry can and will threaten that jobs will be lost if the minimum wage rate is raised, and they only have to point at the hundreds of examples all around us to convince us. They forget that those workers who could use a boost in the minimum wage will spend all of that money and contribute to our tax base.

Most of us do not think that when we buy Wally’s imported stuff we are causing a serious balance of payments problem for ourselves. All the money going out of the country to pay for the foreign goods is not circulating and attracting taxes here at home. The US is facing a fiscal disaster as their balance of payments continues to worsen and their debt climbs out of control. And I blame the Sam Walton’s for much of this problem.

The solution to this problem may be to add a tariff to Wally’s imported stuff equivalent to the American or Canadian minimum wage. If Chinese exporters, for instance, had to add the equivalent minimum wage of the importing country to their stuff, we might see jobs returning to our own countries. (I know this sounds like the Softwood Lumber fiasco, but we all know Free Trade doesn’t work)

Perhaps if the Dalton Gang had to survive on minimum wage for a month they would advance the minimum wages much sooner. They might even crank it up a notch when they recognize all the extra taxes they will reap from a decent minimum wage.

I must ask my wife if there was a Samus Waltonius in Rome just before the Empire crumbled. It seems to me that they were importing cheaper grain and goods, relying on the distraction of games and hiring minimum wage warriors just about the time the barbarians arrived at the gates.