Walmart’s Workers Don’t Deserve a Share of Walmart’s Profits

From Robert Nozick’s Anarchy, State, and Utopia:

Often people who do not wish to bear risks feel entitlement to rewards from those who do win; yet these same people do not feel obligated to help out by sharing the losses of those who bear risks and lose. [p. 257]

This made me think of the people who argue that Walmart has an obligation to pay its workers more rather than allow the profits to go to the owners. As Nozick points out, if they were consistent, these critics would advocate that employees also share in any of Walmart’s losses. “We had a down quarter: please send us twenty percent of your last three month’s pay.”

As Yaron Brook and I argued in our book Free Market Revolution, one of the reasons many people prefer to work for a company rather than start their own is because they do not want to share the risks involved with being an owner or entrepreneur. They would rather forego the potential upside of taking on the risks of running a business so as to avoid the potential downside.

What a worker deserves is whatever income he and his employer contractually agree to. From the employer’s perspective, employee compensation is an expense it has to bear before he reaps any profits. Whatever revenue is left over after all such expenses are accounted for properly belong the employer.