One Way to Deal With Income Inequality

So, I was sitting around one day thinking about Wal Mart. Well, first I was thinking about my good friend and co-blogger Tom, who made me think of low quality merchandise at even lower prices for some reason, then I started thinking about Wal Mart. I don't really dislike WalMart unlike a lot of other folks, it provides millions of jobs, allows working people to get more for their money and according to John Kenneth Galbraith's ideas about countervailing power, is a valuable counterweight to oligoplolistic and monopolistic manufacturers by leveraging its huge by power and forcing down prices, but it irks me a good deal how much the pay structure of Wal Mart (and other service sector businesses) contributes to income inequality.

The Walton family owns Wal Mart and thanks to its booming retail chain, is extremely wealthy. This year, the Waltons were 8.5 billion dollars richer than last year, which means they made more money than the Federal Government spends on pre-school education through head start. Workers at Wal Mart do get more than the minimum wage, but not much more. By the standards of their industry, they are greatly underpaid. The average pay for retail workers is $12 an hour, Wal Mart employees get paid $8 an hour, a third less than their peers. If anyone is curious about the rise in income inequality in the United States, just look at employers like Wal Mart.

So, what is to be done? Well, there are a number of options, unionization of service workers (which has proven very difficult to do), raising the minimum wage (not a bad thing, but then again it could add unemployment, especially in a fairly soft economy) or more government programs and taxes aimed at redistributing wealth (nothing wrong there, its just that well...c'mon, it isn't in the cards). Another option is to attack the difference in pay head on by encouraging business owners to share the wealth and by encourage, I mean, like all of us liberty hating statists, coerce business owners into sharing the wealth (or should I say, "share our wealth"). There ought to be penalties in the tax code (for the individual as well as the firm) that strike at companies that pay the executives significantly more than they pay the bulk of their employees. Any company where management pay exceeds rank-and-file pay by a certain ratio would get hit with a special charge from the IRS, as well as the individual beneficiaries from that disparity on their personal income taxes.

This proposal isn’t just a vindictive, sour grapes attack on the wealthy driven by own envy and frustration with my pathetic prospects in life. No, I believe it will do a lot (or at least a little) to improve the lot of men and women stocking the shelves and working the registers. See, business people, just like everyone else, really like money and will want to get more of it each year. With these proposed changes in the tax laws in place, they will be encourage to increase the pay of their underlings, so they can increase the amount of money they receive without having to give a substantial amount to Uncle Sam. It isn’t like they’d especially mind sharing the wealth in such a manner either, because it isn’t their money they are lavishing upon themselves and their subordinates. Today’s managerial elite don’t really own the companies they work for, so it is the money of investors (and customers) that is getting burnt up and the investors are probably rich, so screwing them only makes the system more egalitarian.

In short, this plan would make a dent in the disturbing trend of rising inequality in the United States. It would improve the lot of the workingman and make the wealthy suffer, all without any serious harm, as far as I can tell.

Sorry folks, this is should be my last “big think” post for a while. Now’s we’ll return to glib, smart ass commentary, vulgarity and of course HATE HATE HATE HATE.