Income disparity

By Jim Thompson
HCP columnist

Much attention has been made recently of the wages paid by McDonald’s and Wal-mart.

Added to this has been other data.

A friend of mine directed my attention to a factoid that said six Wal-mart heirs have more wealth than the bottom 42 percent of Americans. There is also an article out that says the gap between the richest 1 percent of Americans and the rest of the country is the widest now that it has been since the 1920s.

This article goes on to blame the current gap on the decline in unions, the rise in automation and so forth.

Now, notice I do not have to vet these articles too closely, as they fit the liberal mantra. I also do not have to examine too closely who has been in office for nearly 13 of the last 20 years – Bill Clinton and Barack Obama.

It is easy to blame big companies for low wages and high-profile people such as the Waltons for wealth disparity. However, that is far too easy and far too simplistic to explain today’s conditions.

If you own any kind of savings account, 401K or any other investment, you are part of the problem, too. How? You want a high rate of return on your investment.

Investment managers know this and only invest in companies that consistently produce high rates of return.

They know you will move your investments if you don’t like the return. Yes, you and millions of other investors steer the investment ship, because, as I have stated in this column before, on an individual basis, we all act like raving capitalists.

Stated another way, the Wal-mart family, all heirs of Sam Walton, the genius who started this empire, merely won the DNA lottery. They are benefiting from your greed to achieve high rates of return. It is as simple as that. All they have to do is sit still.

You can be jealous of them if you want, but you should be no more jealous of them than anyone else who wins a lottery.

Concerning wages, one notable exception on the retail front is Costco. Costco pays higher wages. Costco is beat up by investors regularly for paying high wages – it obviously lowers investment earnings.

The common thinking is McDonald’s and Wal-mart can afford to pay higher wages. And they certainly can, if they buck the desires of their owners (that would be the investors, which would be you).

However, this would be a zero-sum game.

Higher wages have to come from somewhere, and where would that be? You, the consumer, not you, the investor, would pay higher prices.

After all, you still want your rate of return, don't you?

None of this has anything to do with the wealth of the Waltons or any other wealthy people (unless you want to confiscate their wealth and redistribute it to the poor – an entirely different discussion).

But let's say the investors all came together and decided they would take a smaller return. That would then come out of your pocket, too.

Either way, higher wages cost you, as investor or consumer, real money. There is no place else for it to come from.

I am amused when people blame executives of large companies for low wages for employees while criticizing the high wages the executives receive.

First off, executives are hired in as competitive a market as professional athletes. Why don’t you complain about what athletes make?

You pay the athletes’ salaries every time you attend a game. You don’t criticize the bat boys’ salary, either, which is less than minimum wage in an extra-innings game.

As an investor, you want the best leader you can get to shepherd your investment, don’t you? They cost money.

They are doing exactly the job you hired them to do. It is nothing personal.

So, when it comes to Wal-mart and McDonald’s employees, I’ll offer a solution about as foolish as the others we have heard. Why not have tip jars at every cash register in any establishment like this? That way you have an opportunity to pay for good service.

It will also bring home to you exactly who is going to pay for any higher wages – and that would be you.

Hence, if you do not tip, you will be as guilty as anyone else on which you wish to cast dispersions regarding low wages. Let’s expose the shortfall, if there is any, at the source – you.

Jim Thompson is a columnist for The Highland County Press.