WalMart Makes Empty Gesture to End Minimum Wage Pay While Cutting Pay Levels

WalMart just announced that it will at some unspecified point down the road end minimum wage-level pay for its workers. As we’ll demonstrate, there is way less here than meets the eye. In fact, all in pay levels, including benefits, are falling for WalMart workers, not rising.

Even a “just the facts’, ma’am” account from Reuters makes clear how few WalMart employees will benefit from the story that the retailer is pushing today:

Wal-Mart Stores Inc plans to improve opportunities for its employees so that in the future there will no longer be a few thousand workers on its payroll making minimum wage, the chief executive of the world’s top retailer said on Wednesday.

The act of upgrading minimum wage positions would be largely a symbolic move for Wal-Mart. Currently only about 6,000 workers make the minimum out of its U.S. workforce of 1.3 million. Wal-Mart says its average full-time hourly wage is $12.92, compared with the federal minimum wage of $7.25.

This move is purely cynical. First, the vague planned measure was announced the day before fallies by OUR Walmart, a labor group pushing for better pay, were scheduled to take place. The announcement is an obvious ploy to take the winds out of the sails of those protests. And how much above minimum wage levels will these pay increases be, exactly? Given WalMart’s famed tight-fistedness, don’t expect more than token increases.

The policy change follows closely on the heels of WalMart announcing that it will eliminate health care benefits to over 30,000 part time workers, coinciding with the Bentonville giant stating that it would start selling health insurance in its stores. Nothing like having captive customers. But the media focus on the elimination of part-time coverage, a change Obamacare opponents predicted, missed the even bigger story as far as WalMart’s compensation practices are concerned: that it put through what amounted to a pay cut for its full time workers by shifting more health care costs on to them. As David Cay Johnston explained in an AlJazeera op ed earlier in the week:

To understand the pay problems Walmart illustrates, let’s start with a company announcement from last week.

The retailing giant never said it was cutting compensation, which would be a PR disaster, given the campaigns to raise the minimum wage. Instead, company publicists told reporters that come 2015, it would raise health insurance premiums for its full-time workers by 20 percent and eliminate access to company health insurance for 30,000 workers who have insurance now but who clock less than 30 hours a week. And reporters, as they too often do, parroted the company’s statements without contextualizing them.

Walmart said it must take these actions because it expects health care costs to rise by $330 million above the $170 million increase it budgeted for in 2015. To put those numbers in perspective, $330 million is about a third of the company’s domestic revenue for a single day. Over a year it comes to less than 7 cents out of each $100 Walmart’s underpaid cashiers ring up.

While that $330 million expense will disappear from the company’s books, it must be recorded somewhere on the universal ledger of America.

That $330 million will be borne primarily by Walmart’s workers, many of whom will finance the higher health insurance premiums by cutting back somewhere else, perhaps by skipping meals. Those who cannot squeeze another dollar from their budgets will drop their insurance, adding a new liability for taxpayers, if they become seriously ill or injured. Economists call the uninsured free riders. Some Walmart associates who lose or drop their health insurance will not seek treatment, their conditions going from curable to disabling or even fatal.

Walmart’s top five executives, of course, have no such worries. Their employment contracts describe them with the same word applied to stock clerks and cashiers: “associate.” But Walmart foots the bill for their annual physicals. Their titles may be equal, but management and board concern for the well-being of associates is not.

The story also stresses that WalMart has become a poster child of pay for executive underperformance:

Walmart claims its executive pay policies align the interests of shareholders and executives. CEO Michael T. Duke retired this year with at least $140 million of company stock, after averaging about $20 million in each of his last three years at the helm. He owes his fortune not so much to the rising stock price that benefits all investors as to meeting a narrow target that can be manipulated with accounting tricks: operating income (profits before interest, depreciation and taxes). This measure includes wages, however, giving Walmart executives an incentive to hold down rank-and-file compensation.

Over the last 10 years, Walmart’s stock price has grown only about two-thirds as much as the broad market, its debt-to-equity ratio worsened, and the return it earned on assets drifted downward. Profits grew only three-quarters as much as revenue. These are hardly exemplary marks for executive performance or a good sign of future profits.

Most troubling of all: Dividends grew 60 percent more than profits as founder Sam Walton’s heirs, who control half of all shares, stuffed their pockets.

The lesson here is that paying big bucks for inferior executive performance is like cutting rank-and-file compensation by raising health insurance premiums: It’s inefficient, unfair and counterproductive to the long-term interests of shareholders.

And of course, we have the elephant in the room: that WalMart’s policies of crushing worker wages, along with supplier margins, is a major factor in the lousy state of worker wages. One of the reason the stock market crumbled on Wednesday before Fed Chairman Janet Yellen talked it into reversing some of its losses is that retail sales and the New York manufacturing index, particularly the component that measures orders, were unexpectedly weak. In a consumption-driven economy, WalMart’s revenues comes from shoppers who look an awful lot like its workers. Squeezing workers on the scale it has managed to do has been a failing strategy for over a decade. But the company is such a cost-driven one-trick pony that it is unlikely to know how to get out of its own way, even if it were to have a miraculous change of heart. So even though, as economist Herb Stein said, that which is unsustainable won’t continue, it’s not clear what the crushing of labor end-game looks like.

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  1. cnchal

    . . . it’s not clear what the crushing of labor end-game looks like

    When Western labor was getting crushed due to the rapid transfer of manufacturing jobs to China, there was cheering by the Fed that slave labor was keeping inflation down. The story was that even though there were fewer jobs and less money for most, they could stretch their dollars further by buying crapified junk from Walmart and come out ahead. It was a lie, in a line of many lies.

    It was one thing to drag Japan into the present after WW2, and even Taiwan and Korea, but China with it’s massive population is a whole other story.

    Perhaps the final crushing of labor will look like those dirt smeared faces of Chinese workers caught in a trap set by their leaders. The trap of a grossly polluted nation that will take hundreds of years to clean up and heal itself. All so the Waltons can live in obscene luxury.

    1. hunkerdown

      It’s a different sort of “genetic fallacy”, the vain conceit that anything about oneself (including one’s position on some leader board) must outlive one. If we started worrying more about the future (a public good) and less about posterity (a private good)…

      Do they even teach kids how to share in preschool anymore?

    2. ambrit

      It could well look like a post modern version of “The Grapes of Wrath.” (With a bit of “Matewan” thrown in for ‘balance.’)

    3. jgordon

      Good news! Manufacturing jobs are returning to America in droves. Bad news: only robots are being employed. Heck, even Chinese companies are replacing their manufacturing workers with robots left and right these days.

      Personally, I think that this whole industrial economy thing has been a colossal failure overall. Not that it couldn’t have worked in theory, but humans are just too damned arrogant, negligent, and sociopathic (as a species) to handle industrialism responsibly. Not that we have to go back to a hand-to-mouth existence, but someone somewhere ought to be putting some thought into how we and our descendants are going to get by relatively comfortably without large scale political and corporate systems micromanaging every aspect of our lives. Because otherwise things are going to be a real pain going forward.

  2. proximity1

    “Report: More Americans Saving Money For Child’s Unemployment” (The Onion, “America’s Finest News Source”)

  3. Peppsi

    Could a large scale boycott hurt them? Are their margins big enough to lose 10% of their customers? Could coordinated strikes and boycotts mess up their supply chain enough to seriously damage them, or do they have enough cash to weather an action like that?

    1. Vatch

      A boycott could hurt them in those markets where they have competition. Unfortunately, in many locations, there is no competition. All or most of the previously existing small businesses are often bankrupted when a Walmart moves in. In some places, a Target or a Meijer competes with the local Walmart. Do those companies treat their workers any better than Walmart does?

  4. Carolinian

    While I’m a great fan of NC I must opine, as I’ve done before, that the ongoing Walmart critique is shallow to the max. Nothing is sillier than this mainstream liberal delusion that by paying Walmart workers like auto workers we will somehow save the American economy. Retail jobs, whether at Walmart or anywhere else, have always been crap jobs where you stand on your feet all day and do boring things like stock shelves and take inventory. I would contend that the people that work at Walmart fully understand this and their dream is not to be better paid at Walmart but to go work somewhere else. The failure of the American economy is the failure to provide “somewhere else.”

    Walmart exists because it provides a large swath of the American public with what it wants. However it does have competitors in the low price retail segment and here’s betting that once it raised wages–and prices–and gives full medical benefits to its “associates” that they would turn around and shop at those lower price competitors. Which is to say treating Walmart workers like auto workers would mean no more Walmart. This will gladden the hearts of many but likely just result in Family Dollar superstores instead.

    The liberal obsession with Walmart is really a token of their own failure to help low wage workers with higher minimum wage, universal health care etc. Much easier to just pretend it’s all the fault of business people doing what business people have always done. If you want to see what real labor exploitation looks like then check out the old men you still see in my region trundling around, yes, Walmart with an oxygen bottle for their COPD. The cotton mills and brown lung are now mostly gone. In fact some of those low wage southern mill workers undoubtedly now work at Walmart. They probably consider themselves better off.

    1. Carla

      “The liberal obsession with Walmart is really a token of their own failure to help low wage workers with higher minimum wage, universal health care etc.” This is a good point.

      However, Walmart exists because it cynically and systematically obliterated its competition…a process applauded by the American system. Now the chickens are coming home to roost as Family Dollar, Dollar General and others race Walmart to the bottom.

      Low prices often come at a very high cost, usually charged to those least able to pay.

      1. Carolinian

        Before Walmart came to dominate there were Kmart, Woolco and other more obscure discount chains. Like many successful businesses Walton and co. studied the early pioneers and figured out how to beat them at their own game. This included offering a slightly better grade of low price merchandise. It was only later that Walmart gained the size and market power to undercut Kmart’s prices and largely drive them out of business. But it wasn’t just about price. Kmarts were chaotic stores with long checkout lines and poor management. Walmart also started by putting stores in tiny rural communities that had never seen a chain store.

        These days the local Walmarts have a decidedly struggling air about them with their own long checkout lines and sometimes haphazard management. By contrast Aldi, a discount grocer that came from Germany and that undercuts even Walmart’s prices, is always packed and prosperous.

        People who don’t have a lot of money do care about price. By suggesting that Walmart should offer decent health benefits and inevitably raise prices to pay for that you are just indirectly taxing those low wage workers and shoppers for their health care, something that should be the responsibility of society as a whole. Perhaps one reason many liberals find this to be an appealing solution is that they would never be caught dead shopping there.

        One problem with the above post is that it doesn’t address the valid Walmart concern that health costs are out of control. Any business would have difficulty with this. Certainly there are many bad things that Walmart does and many valid criticisms, but to say they are at the bottom of our American capitalist malaise is silly.

        1. flora

          as you say: “Before Walmart came to dominate there were Kmart, Woolco and other ”
          and: ”
          so, really, this is about monopoly business practices.

        2. Ulysses

          “One problem with the above post is that it doesn’t address the valid Walmart concern that health costs are out of control.”

          I’m delighted to see that you have so much empathy for the billionaire Waltons and their total inability to provide health benefits for their low-paid workers. This must be why the Walton family have been pouring so much of their money, and energy, into pushing a single payer health care system.

          It’s amazing that any politician can get elected these days who isn’t a strong supporter of single-payer– what with all those Walton family millions sloshing around our political system crushing all of those who oppose this simple solution to an intractable problem that has those poor ol’ Waltons stymied!!

          In case you’re interested in leaving the parallel universe ,in which you obviously reside ,you might want to look at the example of Costco, a far more profitable (per-employee) discount chain with a much more highly paid, unionized workforce that enjoys good benefits.

          1. Paul Tioxon

            The health care issue is the burning one here. Health care costs are too high. They have been going out of control for decades. The freak out start when the costs were closing in on 10% of GNP and today they are 18% and rising. And Walmart is just a case in point here because we are discussion their feeble attempts to look like they care about employees, when clearly they do not. However, that does not disprove the problem the entire economy has with rising health care costs. The complete elimination of the health care for 30,000 part time workers and most likely more in the years to come is consistent with the disappearance with health care as a benefit from smaller independent businesses that simply can not afford salaries and health insurance as a benefit. It is not a measure of sympathy for Walmart.

            One thing I’ve noticed about these so called greatest places to work for, which Costco is among, is that they are only located in very well to do suburban locations that serve a very well heeled clientele. Whereas Walmart is everywhere man, like the Johnny Cash song. In the ghetto, in the burbs, in rural America. In PA, they are all over Philadelphia, and the largest employer in this state. But there is not one Costco to be found in the city. Where are they to be found around me? King of Prussia, the retail capital of the East Coast if you know anything about shopping. A new one open in Bucks County, miles above the Northeastern most part of the city, which is the most middle class/suburban part of the city. A third one is at least 10 deep into another prosperous suburb.

            Wegmans is another one of these great places to work that employees are supposed to love and stay at and pay well with good benefits. These stores are great. But, again, none in the city and very, very far from the madding crowd.

            Walmart treats its employees like crap because they can. They do not need to have one person in there with any retail management skills because everything is rung up at the register is then sent to the reorder precessing computer and a truck is loaded up with only what has sold. All that is required is the human labor to move the stuff around. Not a lot of sales pressure in these places, just understaffed stress and goof offs that can hide out in these large stores with next to no managers around to keep them hustling. So, I do not believe that Walmart is doing anything but what anyone who is watching corporate America expects to have happen and why there was an ACA at all that could pass political obstacles. The entire health care insurance system provided at work by employees in America is falling apart. That is not to say that hospitals are falling apart and doctors and nurses do not know what they are doing. It simply means that the anomalous system of finance for health care in this nation is played out and will be passed over to the government or some quasi public authority just like mass transit. Too expensive to run, no longer profitable for the employers to offer but still a necessary component of the social order, health care will fall off of the balance sheets of corporate America as something they just do not want to be bothered with anymore. It isn’t too bad for Walmart, they are just signalling along with everything else that health insurance as benefit is being phased out for the 99%.

            1. HotFlash

              We have a couple of Costco’s here in Toronto, but they are, as you say, suburban. I believe it is the obsession with *parking*. I have been in a Walmart twice in my life, bought something the first time (1993, IIRC), the second time was only accompanying a friend. Our ballots don’t count for much, you see, but voting with our dollars? More important. People say it’s too hard. Maybe, but I say, this is where it matters most.

            2. Louis

              I agree that health-care is on the way out as an employee benefit. The question is what replaces it.

              Will workers be able to afford decent coverage on their own? Or Will workers be left in lurch, similar to how many people can’t afford to retire in the post pension-era?

              I guess we will find out in the not too distant future.

          2. Eric377

            This would be more impressive if you said Costco pays better and has lower profits. Lower pay and lower profits would seem to make for lower prices or else higher supply chain costs etc, which few believe about Walmart. The analyses of Costco (Target) versus Walmart are complex and the competing narratives are very disputed. Costco and Target have higher prices and part of that is a premium that their customers are willing pay so as not think of themselves as Walmart shoppers.

            1. cwaltz

              part of that is a premium that their customers are willing pay so as not think of themselves as Walmart shoppers.

              Heh and here I was thinking I shopped at Target because I didn’t want to wait in line for half an hour and I wanted to have access to some of the better product lines like Yummy Earth or Evol. Clearly I was just willing to pay a premium simply so I could “think” that I wasn’t a Walmart shopper. (hint: if you don’t SHOP at Walmart than you don’t just “think” you aren’t a Walmart shopper- you ACTUALLY aren’t a Walmart shopper) Walmart should look into WHY people don’t want to be thought of as loyal to their brand instead of pretending that it’s about some sort of snobbery and classism because pretending isn’t going to help their model.

          3. Carolinian

            Ah yes the irrelevant Costco comparison…what would you Huffpo readers do without that?

            Costco and Walmart are completely different businesses and have little to do with each other. Walmart sells cheap stuff to lower income people. Costco is a membership club where you must pay dues to shop and that caters to small business owners. Walmart has departments that must be staffed with salespeople, at least in theory, while Costco is a minimally staffed warehouse store where you pull your own merchandise off the shelf. So how are these two things alike? Labor costs are completely different. A more relevant comparison might be Target which offers much the same pay and benefits as Walmart.

            1. cwaltz

              Labor costs are completely different.

              Uh the actual cost of labor is determined by management and technically they don’t NEED to be different. Walmart(the second largest employer in the country) made that choice.

              Costco and Walmart are completely different businesses and have little to do with each other.

              They’re both retail businesses. The ONLY difference is one is a price club where you pay dues to access it and the other is not. That isn’t the definition of “completely different.”

              Walmart sells cheap stuff to lower income people.

              Remind me again whose idea it was to pursue this business model? Oh that’s right the crackpot management team running Walmart. They pretty much forced themselves into this corner by deciding that wouldn’t adequately staff or actually stock anything other than “cheap stuff.”

              Walmart has departments that must be staffed with salespeople, at least in theory, while Costco is a minimally staffed warehouse store where you pull your own merchandise off the shelf.

              I must of missed the personal shoppers that pull stuff off the shelf for you at Walmart. Psssst, the stuff that you pull off Costco’s shelf is STOCKED by Costco employees. There are no Costco leprechauns that placed those items there. So again, you are off the mark. And if you are only staffing people “in theory” then your model isn’t any different then the guy who doesn’t staff people(for the record, Costco has departments like Deli or a tire center. They just don’t have the problems Walmart has finding staffing for those departments because they have BETTER PAY and BENEFITS.

              You don’t seem to understand how markets work. Contrary to popular belief, labor is actually an essential component to a good business model and is part of the market(they can actually DEMAND better pay and benefits and lobby for them. Likewise, business owners ignore paying better and providing benefits at their own peril because they won’t attract a vibrant and competent base of labor to choose from and they won’t be able to keep good workers.)

              In reality, the only difference between the Walmart and Costco model are the choices that the management teams have made, not the actual business itself(which is selling products to consumers.)

              1. Carolinian

                Rather than the fancy footwork you might present a few facts like the staffing levels for Costco stores per dollar of sales versus Walmart. Walmart sells thousands more items than Costco which is less of a general interest store than a place where well heeled business owners go to buy, say, a hundred bottles of ketchup. Costco also charges dues which may not be a huge contributor to their bottom line but is surely not irrelevant. Common sense dictates that these two businesses are not alike other than the fact that they are, indeed, retail establishments.

                And as I say, while Walmart may not be a nice place to work their pay and benefits are not particularly different from Target or many other retail stores. I’m not aware that they are having a hard time filling those positions. Can you offer evidence to the contrary?

                Finally by “cheap stuff” I of course mean inexpensive stuff. It is to be sure very declasse for all those overweight proles with their ebt cards and love of soda to want to shop at such a low class establishment but there it is. The reason I bring all this up is not through any love of Walmart but because it illustrates why the left in this country, with their love of cultural signifiers and contempt for ordinary people, is going nowhere. How many articles have appeared on lefty sites about Walmart versus the far more relevant idea of raising the minimum wage? If you think business owners are just going to raise workers’ pay out of a spirit of goodness you are deeply naive. It will take a movement, and a change in attitudes about government, to make this happen. Posturing gets us nowhere.

                1. cwaltz

                  Fancy footwork?

                  Pot meet kettle. Now you’re arguing the difference between the two is scale, not business at all. Remind me again whose decision it is to recklessly open more stores to capture market share while complaining that you can’t afford to pay the workers you already have ? The reality is that Walmart could have chosen to open less superstores and put that money into labor. They didn’t. It’s a decision that’s going to hurt them when wages DO increase(and let me be clear they eventually will.)

        3. zapster

          Why is it that the only thing people can imagine is “they’ll have to raise prices to pay for it”? This is utter malarkey. In the past, shareholders and heirs were at the bottom of the heap for companies that were interested in the viability of their companies. The entire problem is the top layer skimming off too much capital. Cut *them* first.

          Once wages are back in line with productivity, people will be able to afford modest price increases, *if necessary*. But it’s not necessary now as all the profit reports indicate.

        4. Tom Skowronski

          Carolinian: Aldi pays their workers a lot better than Walmart. Also, the Costco stores here are packed, while a dog could sleep on the aisle of Sam’s Club without getting run over. Costco pays their workers good also.

        5. fds

          Most of Walmart’s sweatshop to shelves goods are not even vetted, by any degree, by the government. I once bought a pot set that melted on the stove top—supposedly stainless steel. What alloy or poor production technique was the contracting firm using?
          I have only shopped at Walmart because I do not have a home and my work/school makes me transient. If I needed a good to last more than one year or so, I would never shop there.

    2. Yves Smith Post author

      Sorry, you don’t know Walmart. I suggest you become more familiar with the full range of their business practices before making accusations.

      Walmart is predatory. period. Its practices go well beyond reasonable competitive behavior.

      My attorney would actively discourage her clients from taking orders from Walmart. Their strategy with small suppliers is to become so big with them that they have leverage over their business, and then keep squeezing them on costs. She had multiple clients whose businesses were ruined by becoming a Walmart supplier.

      1. Vatch

        “… businesses were ruined by becoming a Walmart supplier.”

        Excellent point. Walmart isn’t just monopolistic; it’s also monopsonistic, or at best, oligopsonistic.

      2. Carolinian

        Of course I do know all that, both because you’ve posted it before and because liberal websites are full of the latest Walmart outrages. One could say that the union that is trying to organize Walmart is also running a PR operation. However there’s less mention on those websites of the latest Apple, Starbucks, Whole Foods or other trendy store outrages. How well, for example, does Apple pay those employees selling those hugely marked up electronics at their stores? I’ve also seen the documentary The High Cost of Low Price and am quite familiar with Walmart’s business practices.

        My objection is to the notion that there’s something uniquely evil or even unusual about Walmart. This has a quality of “shocked gambling is going on here” to it. And I also think the perception of Walmart from people who live where there are no Walmarts can be rather hazy. Walmart does, for example, have price competitors, does not enjoy much brand loyalty, and does often offer genuine value to people without much money to spend. They also didn’t begin the process of outsourcing to Asia although they’ve embraced it fully. And that would be different from every other American retailer exactly how? In the roster of American business there are far worse companies. Monsanto and pharma would be at the top of my list along with the Wall Street banks, many others.

        1. Vatch

          I don’t know how reliable this information is, but here’s a one year old article about $8.86 per hour for Walmart employees (which differs from the average wage of their few fulltime employees:

          Here’s a two year old article about Apple retail pay, which jumped 25% from $11.91 per hour:

          The article makes it clear that Verizon retail employees earn a lot more.

        2. Yves Smith Post author

          This is flat out dishonest argumentation.

          Walmart is a rock-bottom employer. As Vatch demonstrates, their comp is below retail norms. And they are famous for their aggressive efforts to squeeze costs everywhere. To state that is not controversial, yet you engage in ad hominem in trying to depict an accurate description of Walmart as liberal hysteria.

          Walmart has also engaged in wage theft (forcing employees to not put in their full hours, not paying for overtime) and has also been sued for discrimination against women. They are clearly much worse than the average employ, but you falsely depict them as typical. Or do you think stealing from workers is a norm that should be encouraged?

      3. Eric377

        Walmart pushes pricing down at the expense of quality because they have up to now understood their customers’ priorities and they have impeded customer’s voting with their feet by savaging near-by brick-and-mortar competition. There are probably hundreds of small cities in the country where the question of where else are you going to go is tough to answer.

    3. Left in Wisconsin

      For the vast majority of workers, all jobs are sh1t jobs until workers organize to make them better. It’s not true that retail jobs have always been similar to Walmart jobs today. Granted you have to go back a ways now, but through the 60s and even into the 70s, there were plenty of retail jobs that were considered professional career jobs because strong unions had made them so. I’m old enough to remember a time when it was intimidating to go clothes shopping because the salesmen in the men’s dept were career professionals bound to take issue with my lack of style.

      And lest we forget, autoworker jobs were sh1t jobs, considered unorganizable and unimprovable because of the low skill levels and absence of solidarity of the polyglot immigrant workforce, until they were.

      1. MikeNY

        Also, small family-owned business often paid decent wages to employees.

        Retail is a necessary function in our economy. It should be paid like one. When retail workers have to go on government assistance to get by, we are talking about corporate welfare. Let’s be clear about that.

    4. MikeNY

      We live in a time where we believe corporations and the private sector are the answer to all problems. But Wal-Mart is the textbook example of how corporations will not voluntarily share the spoils of globalization with labor. Wal-Mart’s business model is parasitic on labor, and ‘the Market’ has failed to correct this.

      As Wal-Mart is one of the largest private employers in the US, it’s worthwhile pointing this out. I think criticism of them is justified, though I agree the problem is bigger than Wal-Mart. The problem is that only capital in the US has benefited from globalization.

    5. cwaltz

      Retail jobs, whether at Walmart or anywhere else, have always been crap jobs where you stand on your feet all day and do boring things like stock shelves and take inventory. I would contend that the people that work at Walmart fully understand this and their dream is not to be better paid at Walmart but to go work somewhere else.

      Really? How many Walmart employees did you speak with to come to this conclusion? I worked there for 3 years. You can contend until the cows come home but the reality is that most workers that worked there wanted to be paid decently for their labor NOW, not at some imaginary down the line job they may or may not get in the future. As a large matter, most minimum wage workers aren’t thinking about the imaginary future, they’re too busy trying to deal with present day to day issues like affording THIS month’s rent or THIS month’s electric(which leads to ridiculous middle class people contending that their problem is poor planning rather than a lack of PRESENT resources.)

      Furthermore, this elitist idea that somehow retail workers deserve a pittance while the CEOs of these companies collect millions because the job is boring or repetitive is a load of crap. Capitalism has been sold as a fair system that supposedly rewards workers for their productivity. Since when does productivity preclude the boring and repetitive jobs? It doesn’t. It’s just an excuse for bunches of people to get on with their superiority complexes and CHEAT low wage workers out of their share of profitability.

      The business people deserve every single bit of scorn they get. They’re a bunch of greedy bastards that continually think they can move the goal posts when it comes to what labor deserves(hey you totally get it better off than the plantation days so be grateful!) and that no one will notice that their system is no fairer than the “socialist” or “communist” systems they love to scorn. They figure that Americans are financially illiterate enough that they can put out memes like wage increases lead to price increases and no one will question that wages are a line item just like any other expense(when was the last time you heard the argument that building owners can’t increase rent because it leads to price increases or cattle workers can’t increase the cost of beef because it will lead to thousand dollar burgers? Never, that’s when) and realize that PROFIT, not price is directly related to wage increases. They figure they can prey on that superiority complex that most of the “educated work force” has to keep wages low by keeping the floor low. Sadly, most of you appear to prove them right.

      If you work a 40 hour work week you shouldn’t have to beg to pay the bills. It shouldn’t matter if the job is retail, or food service, manufacturing or any other sector. The criteria should be if you work a full work week then you should be able to pay for rent, food and other basics with a little left over to save for an emergency, schooling, or even your own place someday. Conversely to your mill worker story, there are hundreds of Walmart workers who don’t consider themselves better off. They’re tired of having to get second jobs because some putz has decided that the labor they perform isn’t worth anything(even though the market requires their job to exist.)

      1. Carolinian

        Actually my cousin worked at Walmart for awhile and rather liked it but he’s a bit odd. Before that he was a foreman at a textile mill that closed. He went to work at Walmart because he had to make money somehow. So in that sense he did, very much, want to be ” somewhere else.”

        I’m not making a case for greedy business owners, just making a case against simplistic thinking. Walmart pays the market price for the labor they employ. Why do you think they would act any differently? The problem therefore is that market price. If you think low wage workers should make more –and I do–then only the government can bring this about by raising the minimum wage. Greater competition for employees would also help but our giant Wall Street induced recession/depression makes that unlikely anytime soon.

        1. Yves Smith Post author

          Did you not read the post? Did you not see that this strategy is failing EVEN FOR THEM as a business? In crushing their workers, they are also crushing their customer base. High turnover (which means hidden costs like more managerial time to hire new people, efficiency losses due to training, pilferage, and the need to have managers ride employees like hell because the pay and work are lousy (another big hidden cost) mean these cheap workers are not as cheap as they appear.

          Costco has long paid premium wages and has low turnover, more on the ball workers, and extremely low shrinkage.

          You labor under the false premise that paying rock bottom wages is a good strategy. It’s bad for Walmart and bad for the country. But neoliberals like you applaud it.

          And the big problem is not minimum wage law as much as Fed policy, which since Volcker has been to focus on crushing worker bargaining power to contain inflation. The Fed’s piece in that has been to see higher unemployment rates than would have been deemed acceptable in the 1950s and 1960s as acceptable, even virtuous. They use a large reserve army of unemployed workers to make sure they aren’t in a position to demand wage increases. Look at the Fed talking before the market downdraft of this week about raising interest rates sooner because they EXPECTED wages to get better next year. That shows how aggressively anti-worker the Fed has been and continues to be.

          I pay the people who work on this site more than I have to and I get tons of loyalty and super performance as a result. Do you not understand that you get what you pay for, and in paying and treating workers badly, you get unmotivated staff who do the bare minimum?

          1. Carolinian

            Did you read my post?

            The failure of the American economy is the failure to provide “somewhere else.”

            Of course Walmart and other businesses have workers over a barrel because of the high unemployment rate. But as that situation is unlikely to change anytime soon the best thing people of the left could do is support a higher minimum wage which puts a floor under all wages. Unions know this which is why they in the past have always advocated the minimum wage even though none of them made so little. Btw I’m not sure when advocating for universal health care and a higher minimum wage became part of the “neoliberal” program.

            As to the notion that Walmart could turn their business around by paying higher wages, they employ a lot of people but those people probably don’t constitute a very significant percentage of their shoppers. If you want to give the Walmart class of shoppers more money then a more general wage increase will be needed.

            My point is simply that Walmart is the symptom, not the disease, and if you think they are the disease then you need to include all the other businesses that act in a largely similar way. It’s not just about one company.

            1. cwaltz

              You contradict yourself. If Walmart caters to lower income workers than minimum wage earners are indeed the base on which Walmart relies. It’s the same thing with the Mickey D employees.

              It’s actually kind of funny to me to watch the low wage businesses scratch their heads and wonder why their sales numbers are in the toilet. If I’m a McDonalds employee and I make minimum wage, guess what? I’m not going to have money to buy that big screen TV from Wally World. I can barely pay my rent with my wages. If I’m a Walmart worker, guess what? I don’t have the money to buy “premium” sandwiches. I’m eating off the dollar menu. The cheap employers are essentially causing their own sales to wan.

              The oh so brilliant CEOs aren’t even smart enough to realize that yes a wage increase is going to hurt them to some extent(in particular if you are really stupid and greedy company that expanded on the backs of the profit labor gave you without sharing) but it also is going to help them because sales are driven by consumer demand and demand doesn’t return until your customers have money to drive it. The McDonalds employees who get a wage increase from McDonalds may have the money to buy their kids clothes from Walmart instead of the thrift store. The Walmart employee who gets a raise may have the money to take the family out to breakfast at Mickey Ds. However, as long as all the employees try to get off as cheap as possible their customer base isn’t going to be spending on extras. So in essence thety are creating their own predicament with their greed.

              It never ceases to amaze me that these rocket scientists running these companies haven’t even mastered Econ 101. They aren’t job creators. Consumers are. Until some of these tight fisted morons start sharing profits with workers they can continue to expect their sales to be in the tank. And heck if they wait too long they may even find out that their customer base has learned to live without their goods and services since they’ve been doing so this long.

              No skin off my teeth if either of these models fail spectacularly. As a matter of fact I can’t think of business models more deserving of failure.

            2. cwaltz

              When you are the largest private employer in the country, you drive the market, the market doesn’t drive you.

              The reason this isn’t about Target or other employers is because Walmart, as the largest employer(barring the federal government), is actually setting standards. Target and other stores are competing with their sales, not the other way around.

              So in essence Walmart IS the disease.

        2. jrs

          unions could bring about higher wages. But it’s a long slow seemingly impossible slog to unionize retail? Yes and by the time the government raises the minimum wage (if they even do), it won’t even make up for inflation.

          1. jrs

            and unions could keep wages high, not just a wage increase, a yearly COLA. In theory this could be government policy but have you heard anyone proposing the minimum wage should have an automatic COLA? I’m not aware of that.

  5. Debt serf

    Walmarts demise will eventually come as the younger generation refuses to shop there. Most walmarts I’ve been to are full of seniors and immigrants.

    1. Louis

      This assumes the younger generation will, for the most part, eventually have the disposable income to avoid shopping there. If the economy improves sufficiently then it’s a possibility; however, if job growth continues to be in low-wage jobs, as more and more jobs are automated or outsourced, many people in the current younger generation may have no choice.

      I actively avoid Wal-Mart for reasons that other posters here do; however, I don’t begrudge those who shop there—some people don’t have a lot of other good options.

      1. cwaltz

        I think that there is still enough competition out there that the Walmart model could fail largely because Walmart appears to have an identity crisis and it’s shareholders and leadership are greedy. They still refuse to understand that you can’t be Bloomies and the dollar store at the same time. It’s one or the other. Either you are a low cost bargain basement place to shop or you are a boutique(and if you are going this route then you better hire workers to reflect that fact and stock products to reflect that fact because boutique shoppers aren’t going to tolerate waiting in line for a half hour for a $4 shirt.)

        1. Louis

          It is certainly true that there is a limit to cost-cutting: i.e. you can only cut so much before quality suffers and you ultimately cannibalize yourself. Wal-Mart has experienced the former (lack of quality) for a long time.

          At the macro level the latter is coming—if Wal-Mart is the only one paying low-wages and relentlessly cutting cost they have a considerable advantage—but once everyone else catches up the economy takes a hit. There may eventually be a forced restricting of the economy—the consumer spending model is unsustainable without a critical mass of people who have disposable income—as well as more people relying on government assistance.

          If you don’t have disposable income, you’re probably going to go to Wal-Mart and put up with waits, because every dollar matters. Unless disposable income greatly improves across the board, Wal-Mart is here to stay.

          As far as stock prices go, they tend to jump with cost-cutting including reducing the size of your workforce or reducing wages and benefits–there is not real incentive, from the strict financial point of view, to improve wages or hire more people.

  6. Louis

    We’re still—to some degree or another—in an economic trap: businesses aren’t going to hire more employees unless demand requires them to do so, whereas consumers aren’t going to spend money (stimulating demand) if they’re unemployed or otherwise uncertain about their financial situation.

  7. TedWa

    The biggest travesty is that Walmart and similar corporations would not exist at the level and size that they do without government assistance for it’s workers in the form of food stamps – which goes to the CEO’s bottom lines. Who’s really to blame here? If they can’t pay a living wage and successfully exist and thrive, then what is our government doing in supporting these detriments to society and the common good? Sure, Walmarts are okay for shopping bargains now and then for some (I go to WinCo where the company shares profits with stocks and better wages and working conditions), but do we really need them every 10 miles??!! Costco does better by paying their employees a living wage and good benefits. In a sink or swim economy, Walmart would have sunk a long time ago. It’s inevitable anyway. Government needs to get out of the business of supporting corporations that would not exist without their largess and stop funding serfdom for the 99% while bending over backwards to insure CEO short term profits.

    1. Louis

      Although you can argue that the safety is a de facto subsidy for Wal-Mart, it was not intended as such—the subsidy aspect was an unintended consequence. Eliminating the safety net would also have unintended consequences: e.g. more people homeless or living in cars–despite having a job—as well as civil unrest and people resorting to crime. Furthermore, I might add, there is no guarantee Wal-Mart would suddenly start paying living wages if the safety net was eliminated.

      Either way, there’s no free-lunch here.

      1. Vatch

        The safety nets of SNAP (Supplemental Nutrition Assistance Program or food stamps) and Medicaid should not be removed or reduced. Instead, we should borrow an idea from the way that government unemployment insurance is handled. If an employer has ex-employees receiving unemployment compensation, my understanding is that their state unemployment tax rate is higher.

        Similarly, if an employer has employees who receive SNAP assistance or Medicaid assistance, that employer should pay an extra tax based upon how many employees (or ex-employees who are still eligible for unemployment compensation) are receiving the government assistance. Society at large should not subsidize Walmart (or Target or whatever) with special assistance.

      2. fds

        There was a bill in one state to force companies like Walmart, which use federal assistance to supplement employee’s meager income, to pay a special tax. Walmart lobbied, and it failed to pass…

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