Walmart's wage hike proves we don't need the government to raise the minimum wage

But conservatives also have to stop claiming "the market" will take care of everything

Walmart
(Image credit: (AP Photo/Jae C. Hong, File))

Today, Walmart announced a striking decision: The retail giant is going to give 500,000 of its workers a pay raise. Just like that. Walmart's minimum wage, from April onward, will be $9 an hour, $1.75 more than the federal minimum wage. By next February, that $9 will rise to $10.

There are lessons here for both left and right.

First, this should show progressives that the government doesn't actually have to mandate a minimum wage hike for wages to go up. There are other, market-based ways to get wages to increase, like tightening labor markets.

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For companies, raising wages is not an exercise in philanthropy. It's a business decision. They'll almost certainly make it up in higher retention and productivity. Like Starbucks' innovative decision to offer online college courses as a benefit, raising wages improves a company's image and allow it to hire better workers. Most employee incentive schemes are probably a waste. The money would be better spent in across-the-board pay raises.

Now, you might argue that the government must step in, because Walmart could just as well have decided not to raise its wages. Nobody would have been surprised if it hadn't. After all, this is the sort of decision that only pays off in the long-term and which is increasingly hard to make in our short-term-driven economy. This is where the lesson for the right comes in.

Whenever a problem arises that progressives want to fix with some heavy-handed government intervention, conservatives respond that the market will take care of it — and they're very often right. But here's the thing: "The market" is not a demigod who lives on the planet Neptune. The market is simply decisions made by individual human beings, and human beings can decide to do some things and not others.

The progressive demand for government intervention often arises from cultural failures, and cultural remedies do not spring up magically into existence. They have to be created. Sometimes conservatives risk adopting their own version of the left's materialistic Vulgar Marxism when they think of "the market" as an autonomous force that drives history and doesn't leave room for individuals to choose to drive it in one direction or another. As the economic historian Deirdre McCloskey and the philosopher Michael Novak have shown, a thriving free enterprise system rests on the exercise of virtues and not just the laws of supply and demand.

If we conservatives think the federally mandated minimum wage is a terrible policy (and it is), we shouldn't just explain why it is a terrible policy, and we shouldn't even just support alternatives like wage subsidies. We conservatives should also actively make the case to companies like Walmart that they should pay their employees more. Same thing with rethinking work-life balance and careers for women. It's striking that we almost never hear the expression "civic duty" anymore; the reason why the demand for regulation arises is because people are no longer expected to exercise private virtue.

When the Hobby Lobby case was in the headlines, conservatives liked to score rhetorical points by pointing out that the company's owners' Christian values led them not only to refuse to pay for abortion (a traditionally right-wing concern) but also to pay their workers above-market wages (a traditionally left-wing concern). That's fair enough, but the striking question is: Why is Hobby Lobby the exception and not the rule?

Like everything else, the market is a cultural institution and should be treated as such.

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Pascal-Emmanuel Gobry

Pascal-Emmanuel Gobry is a writer and fellow at the Ethics and Public Policy Center. His writing has appeared at Forbes, The Atlantic, First Things, Commentary Magazine, The Daily Beast, The Federalist, Quartz, and other places. He lives in Paris with his beloved wife and daughter.