I think you misunderstood what I was saying. To state the same thing differently: They pay the market rate which is less than or equal to the employee's margina

I think you misunderstood what I was saying. To state the same thing differently: They pay the market rate which is less than or equal to the employee's marginal productivity, or, an employer is not going to pay someone more than their marginal productivity. > unless you think North Dakota Walmart employees are twice as productive as Walmart employees elsewhere. No, not at all. Walmart was merely paying the market rate. It's important to recognize that at some point with fewer workers the per-employee marginal productivity increases--a kind of inverse way of talking about diminishing returns. You can be sure that the Walmart in North Dakota paying $17+/hour was not hiring nearly as many workers as a Walmart paying people $8/hour. EDIT: I want to add one more thing. Not only would the $17/hour Walmart not be hiring as many people as the $8/hour Walmart, but they're also going to have a lower over-all productivity rate unless the $17/hour workers had their labor complemented by additional technology. The cost of purchasing the additional technology is price prohibitive until labor costs rise.