Free Riders

WalMart, arguably the largest employer in the United States, is frequently the target of criticism for its parsimonious pay and benefits package. And they know it. In a smoking gun type memo from 2005, they look hard at their health care benefits. While the memo is nearly a decade old, most of the observations and conclusions seem current. In particular, they know their reputation suffers:

Wal-Mart’s healthcare benefit is one of the most pressing reputation issues we face because well-funded, well-organized critics, as well as state government officials, are carefully scrutinizing Wal-Mart’s offering. Moreover, our offering is vulnerable to at least some of their criticisms, especially with regard to the affordability of coverage and Associates’ reliance on Medicaid.

They in part blame the health of their workforce. A couple of Plum Liners often note the WalMart is the employer of last resort. You work there because you can’t get a better job somewhere else.

Our workers are getting sicker than the national population, particularly with obesity-related diseases. For example, the prevalence of coronary artery disease in Wal-Mart’s population grew by 6 percent compared to a national average of 1 percent, and the prevalence of diabetes in our population grew by 10 percent compared to a national average of 3 percent. (That said, our workforce is no sicker at present in absolute terms than the national population.)

A segment of our workforce consumes healthcare inefficiently, in a pattern similar to a Medicaid population. Our population tends to over utilize emergency room and hospital services and underutilize prescriptions and doctor visits. This pattern is most evident among our low-income Associates, and one hypothesis is that this behavior may result from prior experience with Medicaid programs.

In remarkable self-awareness, they realize that healthcare is their Achilles heel in the public mind.

Healthcare is one of the most pressing reputation issues facing Wal-Mart. Survey work done last summer shows that people’s perception of our wages and benefits is a key driver of Wal-Mart’s overall reputation. Several groups are now mounting attacks against Wal-Mart focused on our healthcare offering. These increasingly well-organized and well-funded critics – especially the labor unions and related groups, such as Wal-Mart Watch – have selected healthcare as their main avenue of attack. Moreover, federal and state governments are increasingly concerned about healthcare costs, and many view Wal-Mart as part of the problem (a view due, in part, to the work of Wal-Mart’s critics). Medicaid costs are a major priority on most governors’ agendas; already a quarter of states are spending more than 25 percent of their budgets on Medicaid, and observers across the political spectrum assert that the current system – with spiraling costs, a large population of uninsured, and an increasing number of medical bankruptcies – is unsustainable (although there is little consensus on what should take its place). In this environment, we can expect efforts like those in Maryland (which is trying to mandate that companies spend a certain percentage of revenue on healthcare) and New Hampshire (which requires health services to track where Medicaid enrollees are employed) to accelerate. Proposals such as these, if successful, will bring added costs to Wal-Mart. Moreover, these battles with critics and governments are contributing to the decline of Wal-Mart’s overall reputation.

As for being free-riders, nearly half of their employees’ dependents are either on Medicaid or just going bare.

We also have a significant number of Associates and their children who receive health insurance through public-assistance programs. Five percent of our Associates are on Medicaid compared to an average for national employers of 4 percent. Twenty-seven percent of Associates’ children are on such programs, compared to a nation al average of 22 percent (Exhibit 5). In total, 46 percent of Associates’ children are either on Medicaid or are uninsured.

In their recommendations, the realize the need to make sure their position is heard. This memo was written before the word got out that individual mandates are Kenyan Socialism but it’s interesting that at one time they supported the concept.

Become more engaged in the national healthcare debate, to position Wal-Mart as a leader in healthcare in general and on access (e.g.,individual mandates…
{snip}
Public reputation risk. Healthcare enrollment will fall several percentage points due primarily to a shift to more part-time Associates, which could draw additional attacks from Wal-Mart’s critics. Also,despite the proposed efforts, the Medicaid problem will not be “solved.” A significant number of Associates and their children will still qualify for Medicaid. Because many of these programs will offer more generous health insurance than Wal-Mart provides, many Associates will still choose to enroll in Medicaid, leaving the door open for continued attacks.

For those that decry the welfare state, it seems that they easiest way to shrink it is to make sure the private sector is not part of the problem. Increases in the minimum wage and mandatory benefits increase employment costs. Possibly a lot. Labor costs are a particularly high percentage of food service and retail. But these are jobs that cannot be easily outsourced or automated.

We have a tragedy of the commons problem in that what is good for WalMart (and their customers) is not necessarily good for the nation as a whole. It’s good to know that WalMart recognizes the problems they face. It’s less reassuring that in the nearly past decade they have done little to alter the perception of them.

120 Responses

  1. Walmart is not a “tragedy of the commons problem”. Medicaid is an individual subsidy, not a corporate one. Would you prefer that the employees simply not have jobs and still qualify for Medicaid?

    Also, this observation is false:
    “But these are jobs that cannot be easily outsourced or automated.”

    See the checkout kiosks that have sprung out in WaWa and the supermarkets. Increasing the cost of labor relative to capital will just accelerate this trend. The jobs are either worth the wage based on the economic value that they create or they are not. Trying to turn an entry level WalMart job into the equilivent of the old manufacturing jobs to generate wages sufficient to put the employee in the middle class by legislative fiat is doomed to failure. As was shown in DC, the result will be fewer jobs.

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    • See the checkout kiosks that have sprung out in WaWa and the supermarkets. Increasing the cost of labor relative to capital will just accelerate this trend.

      I avoid self-check-out when I can but they (WalMart and other big boxers like Home Depot as well) force you into them by understaffing registers. That is why I as an affluent person shop at Wegman’s or Lowe’s where the customer service is better.

      But there are jobs in a WalMart that are un-outsourceable. Merchandise has to be stocked and stores have to be cleaned. When they subcoontracted the latter out to firms that used illegal labor and violated wage rules, WalMart got a big black eye.

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  2. Also, Walmart could solve the reputation problem by simply refusing to hire anyone who would qualify for Medicaid. Presumably that addresses your free rider problem.

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  3. Walmart could solve the reputation problem by simply refusing to hire anyone who would qualify for Medicaid.

    Huh? Explain how that would work. They qualify for Medicaid because their wages are too low.

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  4. Make sure they have a spouse or are a kid with sufficient household income that they won’t qualify for Medicaid. Clearly the entire Walmart hourly staff isn’t on Medicaid. Just screen out those that would qualify.

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    • This whole discussion is like the twilight zone. It is premised on a completely backwards way of looking at the world.

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  5. Yello, I’m not a WalMart shopper but to answer your question they could hire only people who either have medical insurance as a dependent or spouse I suppose. I think it’s unfortunate that so many WalMart employees are almost destitute while working but from the piece above it seems they’re more concerned with their image than their employees. If they’re not breaking any laws then the only way to pressure them must come from either their employees or their customers. I don’t think you can legislate business ethics very satisfactorily.

    I imagine in this employers market most of their employees are simply grateful for the job, such as it is. I doubt there are many retail outfits who pay more than minimum wage and they probably all hire part time workers. It’s the new normal. Costco and Trader Joe’s would be better choices for people wanting to support themselves in a retail environment, if they can get the jobs.

    corked by jnc

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    • I’m not a WalMart shopper but to answer your question they could hire only people who either have medical insurance as a dependent or spouse I suppose.

      The number of labor laws that would violate is incredible. You can’t even ask people if they are married.

      I doubt there are many retail outfits who pay more than minimum wage and they probably all hire part time workers. It’s the new normal.

      You’re right most don’t. But retail wages have been falling, largely in part because of the pressure WalMart and other big boxers put on wages. It’s a downward spiral.

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  6. What bothers me is politicians and others who blast people living in poverty but working for needing food stamps and Medicaid. You can’t deny people a living wage and then blame them for needing assistance.

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  7. If they were paying a living wage Scott then their employees wouldn’t need food stamps or Medicaid. It might be a living wage if you’re 18, living at home and being supported by your parents still. That’s not who they hire exclusively though. Whatever, it’s their choice to let their employees work for peanuts. I wouldn’t do it that way though. It’s not an episode of the Twilight Zone it’s an episode of American Greed.

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    • lms:

      If they were paying a living wage Scott then their employees wouldn’t need food stamps or Medicaid.

      You’re not paying them anything at all, much less a living wage. Are you denying them a living wage?

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  8. “yellojkt, on August 6, 2013 at 8:41 am said:

    I’m not a WalMart shopper but to answer your question they could hire only people who either have medical insurance as a dependent or spouse I suppose.

    The number of labor laws that would violate is incredible. You can’t even ask people if they are married.”

    Well, if you want to stop the “free rider” problem, then you should support changing those laws so that Walmart can’t benefit from Medicaid.

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  9. “lmsinca, on August 6, 2013 at 8:35 am said:

    I don’t think you can legislate business ethics very satisfactorily. ”

    It’s not business ethics, that they are trying to legislate, but rather economics. You can’t make a Walmart job worth the equilivent of a skilled manufacturing job by legislative fiat.

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  10. “lmsinca, on August 6, 2013 at 8:50 am said

    If they were paying a living wage Scott then their employees wouldn’t need food stamps or Medicaid. “

    Typically, a living wage is defined as upwards of $25 per hour. The employees simply don’t provide work of sufficient economic value to justify that wage. All you will do by mandating this is further the elimination of retail jobs.

    Every time the government tries to force more benefits to low skill staff, it backfires. See Obamacare leading to reduced hours and converting more people from full time to part time work.

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    • Every time the government tries to force more benefits to low skill staff, it backfires. See Obamacare leading to reduced hours and converting more people from full time to part time work.

      The logical sins of ACA are legion and limiting coverage to full time workers is one of the bigger loopholes everybody saw coming. Contributions to health care should be hourly pro-rated up to a maximum (say the current 30 hours). That way full time employees are actually less costly than part-time ones. That system also starts looking a lot like privatized OSADI.

      The problems and counter-incentives are fixable but nobody seems willing to try.

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  11. jnc, there’s a huge gap between $8.00 and $25.00 per hour.

    Are there no ethics in economics? From the outside looking in that’s the way it appears and no one seems to really care all that much, even when they break laws they get away with a slap on the wrist. That’s what’s undermining the confidence of regular Americans. Whether it’s WalMart or BofA, it doesn’t seem to make much of a difference.

    I came up in a very different business environment that’s largely disappeared. I’ve talked about it before but I don’t think anyone here really gets what I’m saying. My fault probably.

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  12. You make labor more expensive, companies substitute technology for labor.

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  13. “Are there no ethics in economics? ”

    No.

    Here’s the ugly truth. In capitalism, companies exist to provide returns to their shareholders, not to provide employment. Employees are a necessary evil in order to produce profit.

    The harder and more costly that the government makes labor, the less of it that there will be.

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  14. I’m not understanding your comment Scott. I’m not paying them anything but we’re all contributing to their employee’s welfare. Are you saying that because I don’t shop there? The reason is the only store we have locally is filthy. I don’t eat at restaurants that are filthy either so I’m not going to buy groceries at one. Anything else I need I can get a lot closer to home, even if I might pay a little more for it.

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    • lms:

      I’m not paying them anything…

      Exactly. You don’t offer them any employment at all, at any wage. You pay them zero. Does this mean that you are “denying” them a living wage”? If not, then your characterization of Walmart “denying” them a living wage makes no sense, since Walmart is actually doing more for them than you are. Walmart is at least willing to pay them something for their work, while you are not willing to pay them anything at all.

      You and Walmart are actually doing exactly the same thing. You are each paying these people exactly what their labor is worth. To you, their labor is worth nothing, so you pay them nothing. To Walmart, their labor is worth minimum wage, so they pay them minimum wage. If their labor is worth a “living wage” to someone else, then they will get a “living wage”. No one is “denying” them anything.

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  15. “lmsinca, on August 6, 2013 at 9:04 am said:

    jnc, there’s a huge gap between $8.00 and $25.00 per hour. ”

    Correct, but when people start talking about a living wage as defined by what it would take for a single person to earn upwards of $40,000 annually, that’s where things end up. And it’s what most progressive arguments that revolve around a living wage call for.

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  16. “And it’s what most progressive arguments that revolve around a living wage call for.”

    I always find it amusing that progressives are all for increasing the price of things like cigarettes or gasoline in order to discourage consumption, but somehow they think the laws of supply and demand are suspended in the labor market….

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    • Brent:

      but somehow they think the laws of supply and demand are suspended in the labor market

      They think the same thing about health care, too.

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  17. “yellojkt, on August 6, 2013 at 9:02 am said:

    Every time the government tries to force more benefits to low skill staff, it backfires. See Obamacare leading to reduced hours and converting more people from full time to part time work.

    The logical sins of ACA are legion and limiting coverage to full time workers is one of the bigger loopholes everybody saw coming. Contributions to health care should be hourly pro-rated up to a maximum (say the current 30 hours). That way full time employees are actually less costly than part-time ones. That system also starts looking a lot like privatized OSADI.

    The problems and counter-incentives are fixable but nobody seems willing to try.”

    No, health insurance shouldn’t be linked to employment at all in the first place.

    And progressives have been trying to fix these “problems” for most of the twentieth century, but all of the previous solutions have created a new set of problems.

    As a reminder on health care policy:

    “The point of this recital is not to show how Congress and past administrations have played “Abbott and Costello Go to the Doctor” for the past 30 years, or even to purge myself by confessing my own long list of sins and miscalculations in health care policy tinkering. The point is to alert the Clintons, who embody the first real chance since Lyndon Johnson to make health care available to more Americans, and Congress, which has the best shot in a generation to do something sensible in this area, that the principle of “caveat emptor” applies to reinventions of the health care system finely tuned by the best and brightest policy wonks.

    The writer was special assistant for domestic affairs to President Lyndon B. Johnson and secretary of health, education and welfare under President Carter. He is now president of the Center on Addiction and Substance Abuse at Columbia University.”

    http://www.scribd.com/doc/85096617/Article-on-birth-of-Medicaid-by-Joseph-Califano

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  18. “limiting coverage to full time workers is one of the bigger loopholes everybody saw coming”

    iron law. foreseeable consequences are not unintended. they did that by design to keep costs down so the CBO score would be more politically acceptable.

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  19. I understand all of that you guys, but I don’t have to like it. I’m not advocating any policy changes necessarily, not even a rise in minimum wage, just making observations.

    I remember long discussions with my Dad when things were different and he was a big wig at a large manufacturing outfit. He worked in his later years with both the retail and manufacturing end of the business on customer and employee satisfaction. His company didn’t believe profits and employee benefits were mutually exclusive.

    It’s a different world now and I realize that very well.

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  20. “It’s a different world now and I realize that very well.”

    I think that started in the 80s when big pension funds like CALPERs demanded that company management be paid largely in stock in order to align their incentives with shareholders.

    Once it became “their” money, management became far more parsimonious with compensation for the rank and file…

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  21. Brent, I thought that was driven by the concurrent attempts to cap executive compensation in cash, i.e. the million dollar rule from 1994.

    http://economics.mit.edu/files/4326

    http://www.nber.org/chapters/c10845.pdf

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  22. It started in the 80s, when Armand Hammer of Occidental Petroleum used a hundred million of shareholder funds to fund a museum…. That was the straw that broke the came’s back.

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  23. Scott, do we really need to get that deep in the weeds on one comment? If a living wage is $25/hr and WalMart is paying it’s CA employees only $8/hr then they are denying them a living wage. Their reasoning may be justified but they’re still not paying them enough to support themselves or a family on. I have nothing to do with it other than making an observation about it. As I said I’m not even making a suggestion about what should be done about it, even though I do have ideas about that. Hahaha, I know better than to show my true tendencies here.

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    • lms:

      Scott, do we really need to get that deep in the weeds on one comment?

      Do you really need to frame the issue in terms of “denial”?

      If a living wage is $25/hr and WalMart is paying it’s CA employees only $8/hr then they are denying them a living wage. Their reasoning may be justified but they’re still not paying them enough to support themselves or a family on.

      If a living wage is $25/hr and lms refuses to hire any employees at any wage, then she is denying them a living wage. Her reasoning for refusing to hire them may be justified, but she is still not paying them enough to support themselves or a family on.

      The whole point of using the “denial” language is to casually frame the employees as victims, with WalMart an active perpetrator of injustice. This is a twilight zone view of the world, a complete inversion of a reality in which WalMart is actually offering these people a chance at something that even you are not willing to offer them.

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  24. Krugman’s a little more sophisticated or deceitful, depending on how you look at it.

    He advocates for raising the minimum wage based on the premise that outside forces will swamp any impact it has on labor and the idea that labor is “sticky” and thus there are unlikely to be significant layoffs due to raising the minimum wage. However, he draws the line at a living wage and dismisses it glibly as a straw man argument that no one is making. This is a bit disingenuous.

    http://www.nytimes.com/2013/02/18/opinion/krugman-raise-that-wage.html?_r=0

    I think he’s correct that say a minimum wage hike to $9 which is what the Democrats are advocating for won’t produce mass layoffs, but where this will come back is if a company has to do layoffs for other reasons, this raises the bar on when they will rehire and they will instead try to wring more productivity out of their existing staff when business comes back rather than hire additional staff. The same also applies to things like mandated benefits like maternity leave, etc.

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  25. “lmsinca, on August 6, 2013 at 9:36 am said:

    Scott, do we really need to get that deep in the weeds on one comment? If a living wage is $25/hr and WalMart is paying it’s CA employees only $8/hr then they are denying them a living wage. Their reasoning may be justified but they’re still not paying them enough to support themselves or a family on.”

    Why should anyone believe that a WalMart job is sufficient to support themselves or a family on?

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  26. Brent and Scott

    but somehow they think the laws of supply and demand are suspended in the labor market

    They think the same thing about health care, too.

    If you think labor in this country today is only suffering from the laws of supply and demand then I think you’re the ones who are defying common sense. And the health care market is not, and has never been, a true market of supply and demand. I wish it had been. As soon as it was linked to employment all consumer incentives were taken away from the consumer and health care was perverted by a completely different set of rules for the employed with benefits and the rest of us without benefits through employment.

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  27. “If you think labor in this country today is only suffering from the laws of supply and demand then I think you’re the ones who are defying common sense. “

    Your real fight is with free trade and globalization. Unless you enact protective tariffs, trying to achieve a general boost to labor is doomed to failure.

    “And the health care market is not, and has never been, a true market of supply and demand.”

    Thank you.

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  28. jnc

    Why should anyone believe that a WalMart job is sufficient to support themselves or a family on?

    It doesn’t matter if they believe it should be or not, it’s not. The problem with the employment opportunities in this country for unskilled and mostly uneducated people are legion. As I said it’s a new world and I only hope there’s something in the future that will change the dynamic. We have entirely too many people living below an adequate standard of living and trying to support their families on pennies.

    I don’t have any answers unfortunately. Unless it lies in education somewhere. That would be an investment in the future though the same way universal health care would be.

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  29. “I don’t have any answers unfortunately.”

    I do. 🙂

    or, more accurately, the Institute for Justice does.

    property rights, school choice, and fighting for economic justice, which IJ defines as “Arbitrary licensing and permitting laws foreclose many occupations that are ideally suited to people of modest means.”

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  30. Scott

    with WalMart an active perpetrator of injustice

    Did you read the words from WalMart in yello’s post? They were the ones worrying about how they might be perceived. I just recognized they had reason to worry.

    Refusing to give something to someone is denying them. I wasn’t actually thinking of something more nefarious in selecting that word. As I said, they may believe they’re justified. I think you using me as an example of denying wages to imaginary employees is a stretch in making your point.

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    • lms:

      Refusing to give something to someone is denying them.

      If you truly believe that, then you should have no problem admitting that you, too, are denying these people a chance to earn a “living wage”. Indeed, far worse than WalMart, you are denying these people a chance to earn any wage at all.

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  31. “Did you read the words from WalMart in yello’s post? They were the ones worrying about how they might be perceived. I just recognized they had reason to worry.”

    In fairness, there is an active campaign funded by the Professional Left to tar them as an active perpetrator of injustice. Whether they deserve it or not.

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  32. I think that started in the 80s when big pension funds like CALPERs demanded that company management be paid largely in stock in order to align their incentives with shareholders.

    Now that must have been an unintended consequence. Yes?

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  33. Indeed, far worse than WalMart, you are denying these people a chance to earn any wage at all.

    Oh, please. Simply by not shopping at WalMart?

    That’s really going out on an extremely thin and bendy limb that should throw you off.

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  34. “Now that must have been an unintended consequence. Yes?”

    I don’t think CALPERs cares about that… For them, they wanted management’s incentives aligned with them, which they got. And good stock performance afterward.

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  35. There’s a comparison here to Amazon. I believe that Amazon pays higher wages on average than Walmart, but their business model is structured to drive their business with far fewer employees over all than Walmart as they do direct shipping and avoid having a retail footprint.

    Which model is better for the economy and country overall? Less employment with higher wages or broader employment with lower wages?

    Another good example of this was the shift to containerized shipping. Union dockworker jobs were dramatically cut, but those that are left are making over $100,000 per year.

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  36. Okay Scott, I admit I’m denying them any wages by not hiring them myself. When we did have employees they started at $12/hr full time with medical insurance which we covered 100%. I denied them a living wage but gave them benefits and full time employment , plus two weeks vacation and five sick days, six paid holidays as well as a yearly bonus based on sales, not theirs (they didn’t do sales), ours. They contributed to our operation so we figured they should benefit in some way………………….

    But yeah, I deny all sorts of people a living wage, just like WalMart. It’s a business decision…..

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    • lms:

      But yeah, I deny all sorts of people a living wage, just like WalMart. It’s a business decision…..

      Indeed. Happily, though, you have not yet become the object of a political propaganda and vilification effort. WalMart has not been so lucky, despite doing nothing more than making the same kinds of business decisions that you make.

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  37. It really comes down to whether or not you think somebody should be able to support himself and possible a family while not having any skills.

    living wage is just another way of funneling charity

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    • nova:

      living wage is just another way of funneling charity

      Exactly. It ironic to me – despite my apparently feeble sense of irony – that it is generally the big supporters of the welfare state that vilify WalMart. Afterall, the premise behind the welfare state is that “we” as a society, represented by government, have an obligation to support those who cannot support themselves. Yet the whole “living wage” movement is nothing more than an effort to push that presumed obligation away from “we” as a society, and onto a small and targeted segment of society, ie employers/owners. It just reinforces what I have long understood to be true, and that is that when the supporters of the welfare state talk about “our” obligations as a society, what they really mean is “someone else but not me”.

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  38. Nova

    It really comes down to whether or not you think somebody should be able to support himself and possible a family while not having any skills.

    See, just because people come into a job with no marketable skill set or even education doesn’t mean they can’t also be hard workers and able to learn. The jobs we offered didn’t really require much of a skill set, just common sense and an ability to learn how to do some pretty simple tasks. They were still important to us and while our employees didn’t make a ton of money, we tried to make up for it in other ways.

    Maybe WalMart does the same but from what I’ve heard from left wing propaganda it doesn’t appear they do. If it’s true is it still propaganda? I never know the answer to that. 🙂

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  39. ” just because people come into a job with no marketable skill set or even education doesn’t mean they can’t also be hard workers and able to learn.”

    wouldn’t providing them with a living wage remove the incentive?

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  40. wouldn’t providing them with a living wage remove the incentive?

    To do what? Go back to school (possibly)? Progress up the working ladder?

    There will always be a need for entry-level workers; why not pay them a wage that allows them to work without needing SNAP or Medicaid? I’ve yet to meet or hear about a real live person who stayed in an entry-level job because they wanted to, urban legends to the contrary.

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  41. “Go back to school (possibly)? Progress up the working ladder?”

    yes. why develop skills if you don’t need to?

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  42. Scott

    Happily, though, you have not yet become the object of a political propaganda and vilification effort.

    Well, none of our employees were on Medicaid or Food Stamps either so we actually didn’t make the same kind of decisions. If I don’t employ anyone now, does that mean I can’t comment on others’ employment practices? If it’s true that a certain percentage of WalMart’s employees receive both are we, as progressives, liberals, or past employers not allowed to comment? Where’s the honesty in that?

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    • lms:

      Well, none of our employees were on Medicaid or Food Stamps either so we actually didn’t make the same kind of decisions.

      Sure you do. Your decision not to hire any employees is an economic one. You have decided that your business is more viable/profitable without paying any employees, so you don’t hire anyone. WalMart has decided that its business is more viable/profitable without paying higher than minimum wage to certain employees, so it doesn’t hire those people for more than min wage. The decision is exactly the same kind of decision.

      If I don’t employ anyone now, does that mean I can’t comment on others’ employment practices?

      You can comment on anything you want. And I will presume the same privilege holds for me, including the ability to criticize/challenge your comments.

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  43. It is easy to be generous with someone else’s money…

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  44. I didn’t realize when this discussion started that a living wage was considered to be $25/hr. Isn’t there somewhere between $8 and $25, if it was full time work with benefits, that would be considered not harmful to so-called supply and demand, and still keep the WalMart family and shareholders satisfied with their profits? Just asking. Maybe then they wouldn’t take so much heat.

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  45. Scott

    Did it ever occur to you that some of us, both supporters of a safety net and employers/owners are simply mystified by the permanence of the welfare state for people who are permanently employed? The idea that people in this country, with jobs that are in demand apparently, are also drawing welfare in the form of food stamps and Medicaid indicates there’s something wrong with the free market, IMO. Pointing that out is different than advocating some sort of charitable $25 minimum wage, which is something I’m not actually advocating. As I said, IMO a responsible employer/owner also has a responsibility to it’s employees, not just shareholders. I guess that’s a past tense concept these days. Maybe just giving someone desperate for a job a broom and minimum wage isn’t really enough. I don’t know.

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    • lms:

      The idea that people in this country, with jobs that are in demand apparently, are also drawing welfare in the form of food stamps and Medicaid indicates there’s something wrong with the free market,

      Wrong in what sense? If you mean in the sense that the free market is not working properly, I don’t know why you think that. There is nothing about a free market that implies a guaranteed minimum wage to anyone and everyone employed in the market. If you mean wrong in the sense of unjust, well, that is a much deeper discussion about what exactly is just and unjust. But I don’t think there is anything unjust about not paying someone more than the value of their labor.

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  46. why develop skills if you don’t need to?

    As I said, I have never, in real life, known or heard of anyone who stayed in an entry-level job their entire life. Even if you aren’t trying, you’re gaining experience and knowledge which is going to–at some point–move you out of that job.

    I don’t know where this conservative meme came from that people won’t work if they aren’t forced to, but it’s just about –>this<– close to being a dog whistle.

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  47. It is easy to be generous with someone else’s money…

    So what’s your solution?

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  48. “So what’s your solution?”

    Make it easier to do business here. Cheap energy has finally offset the low cost labor advantage that Asia has.You want more middle class manufacturing jobs? Well, there ya go.

    Equalize our corporate tax rate to that of our competitors so companies don’t have the perverse incentive to hire people overseas. It would probably raise revenue as our tax-code imposed subsidization of foreign governments comes to an end.

    Heck, why not re-introduce shop class in high school. How many people are paying money for Associates degrees to learn stuff we used to teach for free? An entry level air conditioning tech or welder ain’t making minimum wage…

    Like

  49. radically reduced barriers to entry by eliminating/curtailing occupational licensing/permitting.

    example — do you have a drivers license? did your car pass state inspection?
    congrats, you are now the principle owner of a taxi service

    or ..speaking of dog-whistles.
    http://ij.org/hosey-v-ohio-state-board-of-cosmetology

    FWIW, I believe these ordinances are passed and enforced to keep people poor and dependent on the political establishment. FDR was right when he said :”Necessitous men are not free men.” He probably didn’t think we’d turn that on its head and enact policies to keep them that way.

    Like

  50. Heck, why not re-introduce shop class in high school. How many people are paying money for Associates degrees to learn stuff we used to teach for free? An entry level air conditioning tech or welder ain’t making minimum wage…

    One hundred percent behind this one! Your other points make sense as well. But you’re never going to persuade politicians or the general public to try the vast restructuring that would be required, so let’s start with shop class.

    Like

  51. FWIW, I believe these ordinances are passed and enforced to keep people poor and dependent on the political establishment.

    I disagree completely. I suspect they’re the stupid result of one person’s bad judgement. Just like on ladders where they have about 10 stickers saying “don’t stand above this step”–because some doofus did, fell, and sued.

    Because businesses are not altruistic (just ask jnc) they’re always going to need regulation. But I will agree that some regulations are completely off-the-wall.

    Like

    • Because businesses are not altruistic (just ask jnc) they’re always going to need regulation.

      The dual fallacy here is that 1) the regulators are “altruistic” and that 2) altruism can be legislated/regulated into existence.

      Like

  52. “FWIW, I believe these ordinances are passed and enforced to keep people poor and dependent on the political establishment.”

    Rent-seeking. NYC taxi medallions cost over $1 million.

    Like

  53. Scott

    Your decision not to hire any employees is an economic one.

    No it wasn’t. We made other economic decisions that the lack of employees are an unwelcome repercussion of.

    including the ability to criticize/challenge your comments.

    Obviously. One thing I don’t do though is assume your comments are part of some propaganda machine. I get tired of that assumption about us liberals. I’m merely making observations, not employing some sort of liberal/progressive assigned framework to base my comments on. I actually think I might have something to add as a business owner but perhaps not.

    I’m only saying that I don’t think it’s a particularly good business practice to treat your employees the way WalMart does, especially knowing in advance how it will be perceived. That seems intuitive to me but as I said, I must be showing my age as I grew up in a different kind of labor market.

    Like

    • I’m only saying that I don’t think it’s a particularly good business practice to treat your employees the way WalMart does

      I agree and think it is short sighted. But WalMart may actually see no value in a better trained, happier, harder working force.

      I could not have operated my law office on that model. My non-lawyer employees had to be productive, healthy, and able to engage the public. To do so required good pay, good benefits, lots of autonomy.

      But I have represented management teams that saw non-management as interchangeable pieces. At some level, that might work. But Costco and HEB treat their workers better than WalMart and they are highly competitive.

      Like

    • lms:

      One thing I don’t do though is assume your comments are part of some propaganda machine.

      I don’t assume yours are, either.

      I’m merely making observations, not employing some sort of liberal/progressive assigned framework to base my comments on.

      Actually, I think you fairly often speak from a liberal/progressive framework about the issues you speak about. Nothing wrong with that….you are a liberal. But since I am not a liberal/progressive, I am going to pretty routinely reject that framework and point out why I do.

      I’m only saying that I don’t think it’s a particularly good business practice to treat your employees the way WalMart does, especially knowing in advance how it will be perceived.

      Maybe not. Not being either a WalMart employee or a shareholder, I don’t really have any vested interest in how well it runs its business, so I really don’t care whether it is a good business practice. (I do assume that WalMart executives know more about what is good for its business than I do, just as I assume that you know more about what is best for your business than I do.) I originally responded only to object to the notion that WalMart employees are somehow entitled to a “living wage” and that WalMart is “denying” it to them.

      Like

  54. “Rent-seeking. NYC taxi medallions cost over $1 million.”

    the other side of the equation.

    Like

  55. FWIW, I believe these ordinances are passed and enforced to keep people poor and dependent on the political establishment. FDR was right when he said :”Necessitous men are not free men.” He probably didn’t think we’d turn that on its head and enact policies to keep them that way.

    Those laws were enacted to keep blacks out of those trades.

    Like

  56. “lmsinca, on August 6, 2013 at 10:55 am said: Edit Comment

    I didn’t realize when this discussion started that a living wage was considered to be $25/hr.”

    It varies based on locality, marital, and child bearing status.

    http://livingwage.mit.edu/

    A lot of the advocacy pieces I’ve seen on this are contrasting it to the “ideal” of the 1950’s with a single breadwinner, spouse, and two kids.

    Old Krugman piece on it, before he became radicalized:

    http://www.pkarchive.org/cranks/LivingWage.html

    Like

  57. “Michigoose, on August 6, 2013 at 11:07 am said:

    So what’s your solution?”

    I’m a big believer in the premise that it’s easier to find a (presumably better) job if you already have one.

    Therefore, policy should be designed to remove as many barriers to hiring as possible including various mandated leaves and other restrictions that discourage hiring.

    In the end, it’s ultimately up to an individual to be self motivated enough to improve themselves at their jobs and go elsewhere to advance if they can’t make enough money at their current job.

    Expecting a job as a Wal-Mart clerk to pay enough to be employed for life there is unrealistic.

    As an aside, here’s an interesting set of observations from an American job seeker in France, which has considerably more generous mandated benefits than the US.

    http://douthat.blogs.nytimes.com/2013/07/16/family-friendly-socialism-and-its-discontents/

    http://www.slate.com/articles/life/family/2012/11/socialist_child_care_in_europe_creche_ecole_maternelle_and_french_child.html

    http://www.slate.com/articles/double_x/doublex/2013/07/working_moms_in_france_the_government_benefits_are_great_job_prospects_not.html

    Lastly, here’s how to replace low level food service employees with technology:

    http://www.slate.com/articles/health_and_science/transportation/2013/08/drone_delivery_system_tacocopters_burrito_bombers_beer_and_sushi.html

    Like

  58. It varies based on locality, marital, and child bearing status.

    That is a fascinating website.

    in my locale, the site gives the living wage for a single person living alone to be $11.24. Similarly, the poverty wage for one adult with three children is $10.60. So a minimum wage of $12 is more than enough for an individual on his/her own and would also keep him/her and three kids out of poverty.

    If benefits were linked to poverty level, twelve bucks an hour sure seems like a good goal to reach. If the minimum wage were raised a buck a year for five years we would hit that pretty quickly.

    Like

    • It does seem apparent that over a long term an individual cannot afford to work for less than her daily sustenance.

      It does seem apparent to me that some people do not have the ability to command even their daily sustenance in wages.

      I think this is a result of a combination of factors including the HS dropout rate, the global economy, the entry of women into all jobs expanding the labor pool, automation, and probably a failure in many cases of the competitive model in the sense that a short sighted manager can get away with treating his workers as parts. I have seen young MBAs advise a client to lay off folks willy nilly as a cost cutting device without regard to long term consequences.

      So I favor community colleges and retraining programs, especially at the local level. I favor whatever makes the public education system actually work by replicating that which does work, especially when done by the locality. I favor strong anti-trust enforcement as a means of re-enforcing the competitive mechanism. I favor the concept of unions even though I don’t like so many of them [this last is so hard for me – I am really conflicted and think unions have no role wrt small business and should be very much restricted in public employment].

      But I am not a fan of raising the minimum wage to a “living” wage, although maybe those jobs SHOULD be automated. Creating really truly bad jobs doesn’t seem to me to be all that productive in the long run.

      Like

  59. Expecting a job as a Wal-Mart clerk to pay enough to be employed for life there is unrealistic.

    A person with a full time job should be able to live with a roommate or other employed person, pay for groceries and share of utilities, afford transportation and have enough left over to save for education/house downpayment/retirement. Any real job should let a teenager move out of their parent’s basement.

    Like

    • yello:

      A person with a full time job should be able to live with a roommate or other employed person, pay for groceries and share of utilities, afford transportation and have enough left over to save for education/house downpayment/retirement.

      Why?

      Like

      • Why?

        We’ve had this conversation before and based on your core principles there is no answer that would satisfy you.

        Like

        • yello:

          We’ve had this conversation before and based on your core principles there is no answer that would satisfy you.

          So it is a value judgment on your part? A matter of justice, as you perceive justice?

          Like

  60. The dual fallacy here is that 1) the regulators are “altruistic” and that 2) altruism can be legislated/regulated into existence.

    I didn’t make either claim.

    Like

  61. “yellojkt, on August 6, 2013 at 1:51 pm said:

    Expecting a job as a Wal-Mart clerk to pay enough to be employed for life there is unrealistic.

    A person with a full time job should be able to live with a roommate or other employed person, pay for groceries and share of utilities, afford transportation and have enough left over to save for education/house downpayment/retirement. Any real job should let a teenager move out of their parent’s basement.”

    Nope. Some jobs don’t generate enough economic value to justify that.

    Like

  62. As an aside, here’s an interesting set of observations from an American job seeker in France, which has considerably more generous mandated benefits than the US.

    Breaking news: The French are sexist.

    Like

  63. “yellojkt, on August 6, 2013 at 2:18 pm said:

    As an aside, here’s an interesting set of observations from an American job seeker in France, which has considerably more generous mandated benefits than the US.

    Breaking news: The French are sexist.”

    Breaking news: When you raise the cost of hiring someone, there’s less of it.

    Note that the person who was conducting the interview was a French woman.

    Edit: This isn’t sexism, but common sense and math.

    “But some of the government protections and incentives offered to mothers in France may in fact make their advancement in the workplace more difficult. Paid maternity leave increases with the number of children, from 16 weeks for one or two children to 26 weeks for three or more. (In contrast, paternity leave stays fixed at 11 days.) This much guaranteed leave can make employers nervous to hire and promote women. ”

    Why would you want to pay someone who isn’t actually working?

    Like

  64. “markinaustin, on August 6, 2013 at 2:11 pm said:

    I favor the concept of unions even though I don’t like so many of them [this last is so hard for me – I am really conflicted and think unions have no role wrt small business and should be very much restricted in public employment].”

    Triumph of hope over experience?

    Like

    • JNC, I worked the union side before I worked the management side and from either end I saw good locals and bad ones. Bad ones are really bad.
      Good ones understand themselves to be in a partnership, of sorts, where if their members are productive everyone wins. The difference is between wanting a bigger slice or a bigger pie to slice.

      The problem I see with public employee unions is that they cannot help produce a bigger pie so they are always fighting for slices and are thus always antagonists, never potential partners.

      Like

  65. So it is a value judgment on your part? A matter of justice, as you perceive justice?

    Human dignity. But don’t ask me to define it.

    Like

  66. Scott

    I don’t assume yours are, either.

    I think you do, but I can’t prove it. 😉

    I think you fairly often speak from a liberal/progressive framework about the issues you speak about

    Key word you missed in my comment was “assigned”. I think that changes things and I put it in my comment on purpose. I think it’s possible to reach liberal/progressive solutions by thinking for myself. I’m not someone who believes everything she reads or hears. I’m also capable of disagreeing with liberals/progressives when I think they’re wrong. Not everyone is just a propaganda sponge.

    And I don’t believe I ever said WalMart employees were entitled to a “living wage”, I said they were being denied, as in “not being given” one. I doubt, if we’re using $25/hr as a living wage, WalMart would survive. I do believe they probably have employees that work above and beyond the minimum wage they receive. Of course, it’s WalMart’s decision to follow whatever business model they want but I think assuming we’re not affected by it is a mistake.

    Like

  67. “re-introduce shop class in high school”

    agreed … but that shatters the idea that everyone should go to college

    Like

  68. What are malingerers entitled to?

    Like

  69. shatters the idea that everyone should go to college

    I don’t know a single person who believes that.

    Like

  70. yello:

    Human dignity.

    So it is an affront to a person’s dignity to offer them a paying job that will not allow them to “live with a roommate or other employed person, pay for groceries and share of utilities, afford transportation and have enough left over to save for education/house downpayment/retirement”?

    Is it less of an affront to a person’s dignity to offer them no job whatsoever?

    Like

  71. So. . . . today is the 12th anniversary of “OK, you’ve covered your ass now.”

    Like

  72. High horse alert. Why in the hell is this considered funny?

    http://thehillaryproject.com/games/

    Like

  73. Wow. Absolutely nothing misogynist about that whatsoever.

    Like

    • yello:

      Absolutely nothing misogynist about that whatsoever.

      Do you view Hillary as representative of all women?

      Like

  74. Do you view Hillary as representative of all women?

    Jesus, Scott. Slapping any women is beyond the pale. Is this sort of dialog some sort of game to you? What point are you trying to make? That someone can hate one woman without hating all women? This is sick shit.

    Like

    • yello:

      This is sick shit.

      I think it is actually pretty standard shit for high profile politicians. Mocking and degrading/dehumanizing politicians is a time honored tradition in this country. And it runs the gamut from mild (like using the term “congresscritters”) to harsh. But is has nothing to do with gender. When Bush was president I remember seeing toilet paper with his face on it for sale. He was routinely portrayed as a chimpanzee in political cartoons. Hell, calls for his assassination were a regular feature at left-wing protests, and I don’t think many of those were even intended in jest.

      Hillary was targeted because she is a politician, not because she is a woman. At least that is sensible assumption absent any real indication otherwise. It is easy to imagine the exact same website featuring Obama, or Bush, or Romney, or Clinton, or literally dozens of other male politicians. Would such a thing have produced similar outrage from you about “sick shit” and accusations about hating men? I am highly skeptical. I think it is both interesting and notable that those who are quickest to attribute sexist motives to others often seem to have the hardest time actually viewing and treating women without taking their gender into consideration. A similar phenomenon occurs with race.

      Like

      • Mocking and degrading/dehumanizing politicians is a time honored tradition in this country.

        I remember a similar Flash game where you could throw a shoe at Bush. Funny and a mildly clever take on current events at the time. The other two games on that anti-Hillary site are juvenile and silly. But simulating slapping a woman for talking and then showing her face bruised and battered is crossing a line.

        I understand that nuance is lost on you and you are oversensitive to what you see are debate stifling accusations of sexism/racism/homophobia but you really need some perspective on what goes too far. It’s impossible to have a civil discussion with someone who finds portraying abuse of women (or a woman who happens to be a prominent politician) tolerable.

        Like

        • yello:

          …you really need some perspective on what goes too far.

          I think you really need some perspective on what doesn’t go too far.

          It’s impossible to have a civil discussion with someone who finds portraying abuse of women (or a woman who happens to be a prominent politician) tolerable.

          This highlights the difference between us quite well. I view Hillary as a prominent politician who happens to be a woman. You view her as a woman who happens to be a prominent politician. To me, her gender is incidental and unimportant. I view her as no different from any male politician, and so I don’t expect her to be treated differently. If that website featured Bush or Clinton or Obama, I would not find it notably objectionable, so I don’t find it notably objectionable when it features her. To you, her gender is defining and primary. You view her as decidedly different from male politicians, and hence you feel she needs to be treated differently. You object to the website to a degree, when it features her, that you would not if it featured a male politician.

          BTW, suggesting that the website portrayed “abuse of women” is just wrong. It portrayed abuse of a particular politician. Sometimes a cigar is just cigar.

          Like

        • He was routinely portrayed as a chimpanzee in political cartoons.

          If you don’t get it, you just don’t get it.

          You object to the website to a degree, when it features her, that you would not if it featured a male politician.

          Because your hypothetical counterexample doesn’t exist. Sure you can play any of these games but nobody would bother with a game where you slap Bush (or Obama for that matter) while he’s giving a speech because without the underlying assumption that mouthy women deserve a beating, there is no ‘humor.’

          Like

        • yello:

          but nobody would bother with a game where you slap Bush (or Obama for that matter) while he’s giving a speech because without the underlying assumption that mouthy women deserve a beating, there is no ‘humor.’

          Slap Bush.

          Like

  75. The problem with this kind of stuff (slapping Hillary) is you’re always going to offend someone. When 22% of women in this country have been or will be victims of domestic violence, not to mention rape and other crimes targeting women, the creators will be held responsible. I think that’s fair.

    In particular I believe, if Hillary runs, she will be subjected to a lot of direct and not so direct attacks. Some because she’s a woman, some because she’s a liberal and others because she’s a Clinton. I’m pretty sure she can take the heat though.

    I wouldn’t interpret every attack as misogynist the same way I don’t interpret every attack on Obama as racist although some (witch doctors, watermelons on the WH lawn and lynchings) clearly were.

    It’s gonna be a long and bumpy road if she runs. I can tell you up front that some women in this country already feel their autonomy slipping away thanks to Republican state houses and their attacks on abortion laws and so they’re going to be watching for any sign of particularly nasty attacks they can attribute to the fact that some men don’t like it when women try to assume responsibility for running the government or some small part of it.

    Whether these attacks rise to the level of misogyny will be the subject of many debates I’m sure.

    The best I can do is believe that most men have the same attitude as Scott, gender has nothing to do with his attitude toward others, unfortunately, that’s not always going to be the case.

    Like

    • Lulu, I thought the a lot of the stuff I saw aimed at GWB was/remains disgusting. I thought a lot of the stuff I saw aimed at BHO was/is disgusting. I thought the slapping and bruising HRC thing was/is disgusting. I guess I am with Scott in that I don’t need to parse why it was disgusting and with you in that it is easy to parse some stuff, like lynching and watermelons and nose bones. It is also easy to ID a battered woman as evoking a different emotional response than a battered man – but neither tickles my sense of humor, that is for sure.

      Like

  76. “shatters the idea that everyone should go to college”

    “http://www.realclearpolitics.com/articles/2013/05/08/should_everyone_go_to_college_118314.html”

    really? I didn’t think that would be controversial at all. I thought the entire secondary entire system (nominally) based on that goal.

    Like

    • NoVA, you raise an interesting point. Let us start from the understanding that there is no such thing as a public secondary education system outside a school board’s conception of it limited by state standards and now by federal mandated “testing”.

      Good local districts offer a variety of paths other than “college prep”. They may differ in each school in the district.

      But with all of those caveats, the pressure is on suburban schools to tailor their curricula to college entrance.

      I think this is entirely parent driven. Thus the HS that serves my high tech area of Austin is a nationally well regarded or rated HS but it offers the following “tracks”:

      Architectural Design
      Business/ Accounting
      Computer Science/ Engineering
      Drama/ Communications Media
      Film/ Media Technology
      Fine & Applied Art
      Performing Arts; Music Concentration
      Science & Mathematics

      Not what the HS I attended in an industrial small city of NE NJ offered at all:
      College prep, secretarial prep, general ed, or industrial arts.

      Not what some other neighborhood HSs offer in Austin, either; e.g. Crockett HS offers hospitality and health care education/training with internships as well as elementary and day care teaching internships.

      If my granddaughters wanted to become auto mechanics that could be done through the coop agreement between the AISD and Austin Community College. If I had wanted that track it was in my HS 53 years ago.

      So I don’t know how this is done in NoVA, but I do know it is in response to parents in Austin, done in coop with the community college, and varies pretty widely from school to school.

      I could envision a suburban SD, unintegrated with other resources like community college or businesses willing to take interns, opting for all college prep when only half the kids were college material. Is that something like what you see?

      Like

    • JNC, what options are offered where you live? Do you see the limitation of options as parent driven? Does your HS have a working agreement with your CC? With local employers?

      I now think Austin has done a better job than I previously thought when I hear this kind of generalized bitching and moaning.

      To each of you: what is going on where you are?

      Like

  77. Mark

    I think there are people in this world who treat political opponents as enemies, no matter what. I object to that regularly wherever I am. I also think if you’re black you might be more sensitive to racial slurs, female to potential misogyny, old to ageism, etc. etc. Some people mean it and others think they’re being funny. It’s difficult to weed out the bad and not take out some of the good with the trash sometimes.

    I don’t find much of it funny either and I have a pretty good sense of humor and love political cartoons.

    Like

  78. The high school here is very career oriented both via the college path and other technology based paths. We have agricultural technology, which includes everything from food to landscape design to veterinary medicine, industrial technology, which includes computer and electronics training, drafting and wood technology.

    There is a direct link to the local Community College and lots of 1 and 2 year training programs and certificates there. College seniors are encouraged to take classes at the CC their last year of high school.

    We also have very high quality math and science teachers with both an IB program and AP classes.

    Like

    • Lulu, it sounds like your School district is also trying to meet the community needs.

      Maybe the complaint that all “they do is is college prep” is an east coast thing.

      Many times I understand what is going on here and in NM, AZ, and SoCal to be similar and what goes on in Boston to DC to be very different.

      One particular area where this is true is higher education. The southwest relies heavily on CCs and I think they are denigrated in the northeast.

      Like

  79. “all “they do is is college prep” is an east coast thing.”

    that was my experience. but i’ve been out of school a long time.

    Like

    • “all “they do is is college prep” is an east coast thing.”

      It really varies by area. I live in Howard County, Maryland which is a subdistrict of Lake Wobegon because all the kids are above average. My son’s school which is considered in the bottom third of the county schools, but still good enough to knock on the door of the WaPo SuperSchool List (or whatever they call it) at one time had a Biotech Magnet program. The curriculum was based on the needs of either kids that were college prep or going to go to some other medical technician program after high school. Because of the technical coursework, it wasn’t perfect for someone aiming at Ivy League schools but was great prep for state schools. The county does have one genuinely vo-tech school which is often used as a resource center for kids with specialized interests not available in their local school.

      Like

  80. Here’s the ugly truth. In capitalism, companies exist to provide returns to their shareholders, not to provide employment. Employees are a necessary evil in order to produce profit.

    Actually, that is not a universal rule (and is limited to corporations, which is not a necessary feature of capitalism). Labor is an integral part of the successful German model. Though, you provide a useful perspective for the shareholder class.

    BB

    Like

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