Where will all the people work?!

During my first visit to India nearly three years ago, I was staying in the city of Trivandrum near the southern most tip of the country. One evening, I found myself at a local grocery store to buy some snacks. When I walked into the store, I was greeted by one of the staff and another person handed me a basket. Then as I wondered through the store, I noticed that there was a staff member in each isle there to help me find what I needed. At first I thought this was great, but then, when I was ready to check out, a different employee took my basket of groceries and set it by the checker who was going to ring me up. The checker then took each item out of my basket and searched for the price on the computer. After she totaled up my items, I paid for my items and she gave the receipt to another employee at the end of the checkout line who compared every item to the receipt before putting it in a bag. He then gave me my receipt and passed the bag to one last person who finally handed it to me as I walked out of the store.

My trip to the grocery store left me dumbfounded. In the course of buying half a dozen items, I encountered seven staff members. The next day, while on the bus to our worksite, I asked our host about the phenomenon I had experienced the night before. He explained to me that each person at the store got paid very little and there was no need for such a large staff, but if the owner of the grocery store didn’t give them a job, then they would not have anywhere to work. He said this business practice was common in India, at least in the southern region where we were, because it is better to have a job and get paid very little than have no job at all.

Does this make economic sense? Is there a benefit to having many people working for very low wages than having fewer people work for higher wages? In the United States, we would answer that fewer people being paid a higher wage promotes productivity and efficiency, therefore encouraging business and economic growth. But, with over a billion people in a country one-third the size of the United States, where will everybody work? How does unemployment affect the development of communities and quality of life for the people?

I could write an entire research paper on this topic, but please share your thoughts about whether these business practices are beneficial or detrimental to the social and economic well-being in India. Can we in the U.S. learn something from India as we prepare for substantial population growth?
-Emily Schaapveld

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2 Responses to Where will all the people work?!

  1. Erika Bylund says:

    Ultimately, the character of a nation evolves from the mindset of its constituents- the parts create the whole. I think people, universally, need a sense of purpose which is often obtained from a profession or job. Regardless of how mundane or trivial a job may be, it nonetheless provides something on which to focus; it creates the opportunity to achieve something measurable; and, in a practical sense, it affords one the ability to obtain income and pursue a higher standard of living. Work also provides one with a sense of direction and a feeling of control over one’s destiny. To paraphrase a story included in Fareed Zakaria’s book, The Post-American World, during India’s transition to independence, a British authority lamented to Ghandi, “There will be chaos if we just leave!” Ghandi replied, “Yes, but it will be our chaos.” This sense of control and direction over one’s destiny seems to be a prominent theme for India since achieving its relatively new independence.

    The staffing of the Indian store certainly seems excessive at first glance. While it certainly appears inefficient from an operations and payroll standpoint, it can be argued that the true benefit gained must take into consideration the effect on individual and community morale, as well as the effects on personal, community, and (on a greater collective level) the national identity. I think examples like that provided in Emily’s blog really illustrate how community-level initiatives will be the foundation for the creation of India’s modern (and global) identity. I also think such initiatives will provide the impetus for growth and new ideas as well as the economic momentum to allow India to leverage its huge population to achieve national prosperity and a higher standard of living for its people.

    I don’t believe that a similar initiative pursued in the U.S. would yield similar results. I think this would work in India because the net difference between no wages and some wages would yield an incrementally larger improvement in the standard of living there, than it would in the U.S. Also, as stated in Emily’s blog, labor is cheap in India, and so the cost to the store owner is relatively low, and sustainable, even for a large number of employees. The tax obligations and liability incurred by similar business owners in the U.S. would make such “inefficiencies” unsustainable in the U.S. However, we might be able to make some inferences on what effect the high unemployment rate in the U.S. might have on our nation’s morale and identity. As the standard of living and prosperity rise in developing countries like India, while the economic climate in the U.S. continues to deteriorate, what might we expect to happen to our American identity and national morale? Such a question will become increasingly relevant in the coming decade.

  2. Tim Lynds says:

    I believe that this practice makes economic sense in poverty stricken areas of India. Hiring an “excessive” number of employees gives each one of those people an income that they would not otherwise have. These people now have purchasing power, albeit very low purchasing power that they did not have before. They earn money and spend that money back into the economy. If these people did not have any income earning job, they would probably be able to contribute nothing or very little to the economy.

    If these jobs were eliminated to create fewer and higher paying jobs, there would be many more people stuck in extreme poverty. Having a huge poverty stricken population is not good for any economy. Pulling these people out of poverty by creating jobs for them will help expand the economy and set the country in the right direction. Even if this practice does not expand the economy, at least there will be fewer people who are suffering in extreme poverty.

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