The New York Times had a fascinating article today on the discrepancy between how much money Apple stores make and how little of that profit goes back to rewarding its retail employees. One of the most interesting questions posed was why Americans despise Walmart for paying low wages to its retail employees but don’t feel the same way towards Apple.
As MIT Professor Paul Osterman says in the article:
“It’s interesting to ask why we find it offensive that Wal-Mart pays a single mother $9 an hour, but we don’t find it offensive that Apple pays a young man $12 an hour.”
I’d guess that there are two reasons why we feel this way:
- Apple Employees Have More Choice
- Apple and Walmart Choose Different Types of People as Employees
1. Apple Employees Have More Choice
Inherent in our condemnation of Walmart’s low wages is that we don’t believe many of these employees have other employment options. Many (most?) of Walmart’s employees are low-income, single parents with only a high school education. They also often live in small towns where there aren’t many other opportunities for low-skilled labor. This is compounded by Walmart driving out many other local merchants, creating even less other jobs. Of course, in return the town gets “lower prices.” Demand is high for the Walmart jobs because there aren’t many other jobs left in those areas that these workers can turn to.
If Walmart comes in and takes over the town as the main retail outlet and a major employer, we think it owes something to the community. Like paying them decent living wages. But in fairness to walmart, how many retail outlets actually pay family-livable wages to low level employees?
In the case of Apple, most of its retail employees are young and college educated. Typically located in urban areas, they could work at many other places (which might still be low level positions that don’t use their full potential) but want to work at Apple because they love Apple. We don’t feel bad for them because we don’t think they’re trapped. If you want to work at a company that underpays you when you have other options then that’s your decision.
2. Apple and Walmart Choose Different Types of People as Employees
The other reason we don’t feel as bad for Apple retail employees is that Apple deviously hires young people without family financial responsibilities. If you don’t have kids you don’t need to make a lot to get by. In fact the ageism in Apple stores’ hiring process implied by the NY Times article seems borderline illegal.
Walmart doesn’t have the ability to do this as much. First, it’s not a sexy position. Second, it’s located in smaller towns. But I’m sure that if they could they would milk the hell out of this like option just other urban retail stores do (Gap, Radioshack, etc).
Which Company Is Unethical And Should We Care?
So is either company being unethical, and most importantly even if they are should we care?
The short answer is that both companies are acting unethically, but we should really only care about Walmart’s situation (in agreement with the gut reaction Osterman describes).
Let me explain more.
If ethical means paying employees a fair wage commensurate to what they bring in to the firm, then neither Apple nor Walmart–both hugely profitable companies–are being unethical.
The “should we care?” question depends on how strongly the laws of labor supply and demand affect the company. If labor supply and quality decreases when the company lowballs its employees, then the company is forced by the market to act in a more ethical fashion and we can let the market take care of things.
This seems to be the case in terms of Apple, who keeps suffering bad publicity after bad publicity about its business practices (see Foxconn) and also competes in a very competitive space. News has already spread about its low pay towards employees, and Apple has in response agreed to increase retail pay. Apple’s customers, who are by and large educated urbanites, would raise an outcry if it did not (similar to the minor backlash that occurred after the Foxconn scandal) and could easily shift to buy products from other companies. We shouldn’t care as much about trying to force Apple to act more ethically because it will have to improve pay to ensure high quality workers and retain customers.
In the case of Walmart, however, acting unethically doesn’t have the same effect on labor supply and loss of customers for the reasons mentioned earlier–less opportunity, uneducated employees in more dire economic straits. It also doesn’t have much competition in the small towns where it is based so customers have less opportunity to buy products from more “ethical” retailers. That’s why we should care about fixing Walmart’s practices but not Apple’s.
Do you agree? Am I totally wrong in thinking this?