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Do Large Modern Retailers Pay Premium Wages?

Author

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  • Brianna Cardiff-Hicks
  • Francine Lafontaine
  • Kathryn Shaw

    (Brianna Cardiff-Hicks is an Associate at Cornerstone Research. Francine Lafontaine is the William Davidson Professor of Business Economics and Public Policy in the Ross School of Business, University of Michigan. Kathryn Shaw is the Ernest C. Arbuckle Professor of Economics in the Graduate School of Business, Stanford University.)

Abstract

With malls, franchise strips, and big-box retailers increasingly dotting the landscape, many are concerned that U.S. middle-class jobs in manufacturing are being replaced by minimum-wage jobs in retail. Retail jobs have spread, whereas manufacturing jobs have shrunk in number. The authors show that wage rates in the retail sector rise markedly with firm size and with establishment size. These increases are halved when they control for worker fixed effects, suggesting that better workers are sorted into larger firms. Also, higher-ability workers are promoted to the position of manager, which is associated with higher pay. The authors conclude that the growth in modern retail, characterized by larger chains of larger establishments with more levels of hierarchy, is raising wage rates relative to traditional mom-and-pop retail stores.

Suggested Citation

  • Brianna Cardiff-Hicks & Francine Lafontaine & Kathryn Shaw, 2015. "Do Large Modern Retailers Pay Premium Wages?," ILR Review, Cornell University, ILR School, vol. 68(3), pages 633-665, May.
    • Handle: RePEc:sae:ilrrev:v:68:y:2015:i:3:p:633-665
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    References listed on IDEAS

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    8. Kevin Rinz, 2018. "Labor Market Concentration, Earnings Inequality, and Earnings Mobility," CARRA Working Papers 2018-10, Center for Economic Studies, U.S. Census Bureau.
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    10. Justin C. Wiltshire, 2023. "Walmart Supercenters and Monopsony Power: How A Large, Low-Wage Employer Impacts Local Labor Markets," Department Discussion Papers 2304, Department of Economics, University of Victoria.

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    Keywords

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    JEL classification:

    • J00 - Labor and Demographic Economics - - General - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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