Wednesday, January 09, 2008

Wal-Mart More Selective Than Harvard? Doesn't That Mean That Wal-Mart Wages Are Too HIGH?

According to the NY Times:

Stanford University received a record 23,956 undergraduate applications for the fall 2007 term, accepting 2,456 students, meaning the school took 10.3% of applicants.

Harvard University received applications from 22,955 students, another record, and accepted 2,058 of them, for an acceptance rate of 8.97%.

Applications to Columbia numbered 18,081, and the college accepted 1,618 of them, for what was certainly one of the lowest acceptance rates this spring at an American university: 8.9%.

According to the
Atlanta Journal-Constitution:

They came in droves — high school students, retirees, young moms, the unemployed — all for a shot at a job at a new Wal-Mart on Memorial Drive in central DeKalb County.

In just two days, and with virtually no advertising or even any signs, a staggering 7,500 people filled out applications for one of the 350 to 400 available jobs.

Bottom Line: Wal-Mart accepts only about 5% of its applicants, compared to the most selective universities, which accept 9-10% of their applicants. Alternatively, Wal-Mart has about 20 applicants per available job, compared to Standford, Harvard and Columbia, which have only 10-11 applicants per available opening.

Further, the standard assumption is that Wal-Mart's wages are unreasonably low. A Google search of "Wal-Mart" and "low wages" results
in 122,000 hits. But with Wal-Mart receiving 20 applications per position, you could make a stronger case that Wal-Mart's wages are actually TOO HIGH. That is, Wal-Mart could lower its wages considerably and still have too many applications.


At 1/09/2008 12:02 PM, Blogger Caveat B said...

I graduated from Cornell's School of Engineering, but never even bothered applying to MIT, what with my awful 780 SAT math score and not even being close to valedictorian of my class ...

Somehow, I am not so intimidated by a job application to WalMart.

My point is, beer and pretzel opportunities are more accessible and less selective. Sure, WalMart is selective, but it is also more accessible than Harvard.

At 1/09/2008 12:54 PM, Anonymous Anonymous said...

But on the other hand over 50% of the new hires at Wal-Mart will not be working there a year later

At 1/09/2008 1:47 PM, Blogger Tim Worstall said...

And none of the applicants to those universities will be "working" a year later.

Or have things changed since my undergraduate days?

At 1/09/2008 2:13 PM, Anonymous Anonymous said...

"In just two days, and with virtually no advertising or even any signs, a staggering 7,500 people filled out applications for one of the 350 to 400 available jobs."

sounds like americans are a little more desperate for jobs (any job!) than the unemployment stats would indicate.

At 1/09/2008 2:44 PM, Anonymous Anonymous said...

I'm really sorry to see this argument come up again. If anyone is interested in a contrary position than this post, click here:

At 1/09/2008 3:28 PM, Anonymous Anonymous said...


I read your link which includes WakeupWallmart as one of its sources. The piece also indicates that someone with a PhD would be considered a "trouble maker". Most companies would consider a person with a PhD applying for a sales job as overqualified and likely to be a poor fit with the position. Do you honestly believe that a person with a Doctorate would be challenged by the task of scanning barcodes or stocking shelves?

When I shop at Wallmart, the cashiers seem to me to be perfectly competent and are no slimmer than any of the customers. Some even wear pins denoting awards for performance which contradicts the assertion that Wallmart prefers substandard workers.

Please supply a source (preferably an independent, non-activist source). A high turnover rate is very expensive to a business. If Wallmart is so cost conscious, why would it not better manage this business metric. Having read that many of managers have been risen through the ranks, I have to ask you to show me the beef on this one.

Take a pill, folks. Obviously, Wallmart is not more exclusive than Harvard. You & I may not want to work there but some people do. It is a well-run company that had a highly successful business model.

I have never worked for Wallmart, own no stocks in their company, am not related to an employee and generally try to support smaller retailers.

At 1/09/2008 3:31 PM, Anonymous Anonymous said...

Nah, you aren't sorry at all. It gives you and your co-bloggers another reason to display your anti-corporatism, anti-capitalism bias.

At 1/09/2008 5:35 PM, Anonymous Anonymous said...

This is one of the few instances that I completely agree with Prof. Perry. If Wal-Mart was to double the wages of every employee, there would be people complaining that they did not get a 3X wage increase.

At 1/09/2008 6:17 PM, Anonymous Anonymous said...


As a gardener, I call it the "success factor". If a plant is successful, it is scorned in favor of some mothy, weak, spindly rarity despite the fact that the successful plant is better able to cope with the extremes of climate.

Everyone enjoys hating Wallmart, McDonalds, Microsoft, China, United States. We are taught to distrust corporations and businessmen by our teachers.

It seems a whole lot scarier when we read about what children are learning in other countries:

At 1/10/2008 12:46 PM, Anonymous Anonymous said...

I will say it again - if you don't own stock in Walmart, or work in Management at Walmart, what they pay their workers is (or should be) none of your business. If you think they make too little, I suppose you could give them some of your money. Don't give them some of my money.

We should be focused on what people are paid that work for the government, since that IS our money. I think soldiers so make twice as much as they make (I used to be one, really lousy pay). I think most other government employees should be unemployed.

At 1/10/2008 4:22 PM, Blogger Cobb said...

Marko's right - Wal-Mart employees make what they make and it's none of our business.

But, I think Prof. Perry's point may be that a more efficient outcome would result if Wal-Mart was not forced to pay their employees the minimum wage. In that sense, we should care what they make, because the more efficiently the economy functions, the better we all do.

At 1/10/2008 5:19 PM, Anonymous Anonymous said...

In Oct, 2005 & again last year, Lee Scott, Wallmart's CEO, was advocating raising the minimum wage to help working families.

At present, Wallmart pays more than the minimum wage so raising the minimum wage would not affect Wallmart. Raising the minimum wage would affect small businesses that currently pay minimum wage discouraging them from creating new jobs.

The idea of raising the minimum wage to "get" Wallmart is counterproductive since low skilled workers who cannot find jobs and small businesses that can no longer afford to employ them are affected.

Another strategy is "anti-Wallmart" legislation which has been passed by different states which is designed to target employers with more than 5,000 employees requiring extended benefits, pay, etc. Wallmart has contested such legislation and won on the basis that it is designed to target only Wallmart.

Most people have the following problems with Wallmart:
1. they outcompete local mom & pop operations & corner grocery stores
2. Wallmart is non-unionized
3. Overseas suppliers are squeezed by Wallmart to narrower and narrower margins (this probably doesn't bother American critics but these still represent folks who don't like the Wallmart experience)

What people do not realize is that Wallmart is not a monolithic steamroller that destroys all competitors. Just like the Daleks in Dr. Who, Wallmart doesn't always win.

In the UK, Wallmart never even got a look in the door, they were outcompeted by Tesco's. Wallmart has also stumbled in other countries as it rolled out its one-size fits all model overseas in countries like Japan. Wallmart ended up withdrawing from the Korean market and selling 85 stores in Germany. Domestically, Wallmart's attempt to attract higher end customers also failed.

Wallmart had a very good model and it was the first retailer to use barcodes to collect information about customer preferences giving them an early lead. Mining barcode information has come a long way since then.

In short, many successful businesses do the same thing that made them successful in the past, become so large that they are next to impossible to manage or are unable to adapt to changes in the marketplace. Wallmart needs the right decisions today to keep the company relevant in ten years time.

So far, Lee Scott does not seem to be in the same league as the founder.

At 1/10/2008 6:00 PM, Blogger juandos said...

Eliminate the inane minimum wage laws and if Lee Scott wants people to be paid more, well then let Lee Scott do the paying out of HIS wallet...

At 1/11/2008 2:12 AM, Anonymous Anonymous said...

A coworker was decrying Walmart and its wages. I pointed out that if he wanted wages to rise, then encourage less people to apply. What's funny is his type are driving people to those jobs by discouraging everything but white collar jobs in our state. College grads have a 1% unemployment rate, while non-grads have something like a 9% rate.

At 1/11/2008 12:36 PM, Anonymous Anonymous said...

I assume Walmart wants to raise the minimum wage to use the power of the government to put its small competitors out of business since it pays more than minimum wage. That is what happens when you have government regulating wages.

As I mentioned above, since it is not our business (literally) what Walmart or any other business pays its employees, we should get rid of federal Minimum Wage laws. It exceeds the commerce clause, in my opinion, anyway.


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