McDonald's and Walmart, the two biggest private-sector employers in the U.S., don't pay their workers much. This more or less eternal truth is making one of its increasingly frequent appearances in the news this week. McDonald's is catching flak for a "sample monthly budget" for employees that sets aside $20 a month for health insurance and no money at all for heat. (Hey, it's July.) Walmart, meanwhile, is threatening to cut back on plans to open stores in Washington, D.C., after the D.C. council voted to impose a "super minimum wage" of $12.50 an hour on big retailers. For decades, most discussions of pay levels and income disparity in the U.S. have been accompanied by a pronounced economic fatalism. Pay is set by the market and the labor market has gone global, the reasoning goes — and when a Chinese or Mexican worker can do what an American can for less, wages have to go down. In explaining what's happened to autoworkers, say, that story makes some sense (although it doesn't explain why German autoworkers have for the most part kept their high pay and their jobs while Americans haven't). But McDonald's burger-flippers and Walmart checkout clerks can't be replaced by overseas workers. Instead, both companies were able to build low pay into their business models from the beginning — McDonald's because so much of its workforce was made up of living-at-home teenagers who did not in fact have to pay for heat, Walmart because of its roots in small Southern towns where wages were low and "living wage" laws unheard of. Now McDonald's is increasingly staffed by grownups (teens have gone from from 45% of its workforce in the 1990s to 33% recently), while Walmart is trying to conquer the big cities of the North. Both companies have been understandably loath to depart from their low-pay traditions, so conflict and criticism are pretty much inevitable. Which is an extremely healthy development.
