I’d call Walmart a symptom, and not the problem. Other businesses would have developed the same model if they hadn’t done so. They didn’t really invent it, they were just very successful in deploying it.
“Is,” please, not “was”; it ain’t over quite yet and will outlast the Tea Party.
That’s the funniest thing I’ve read all month!
The Occupy movement still exists as a cohesive thing NOW? Really? Where is it?
I’m not going to claim to be an expert on Wal-Mart benefits practices but I do know a few people that have worked at a few different stores. Policy is such so that it is very difficult to advance. Basically to get a promotion there are a series of official and unofficial obstacles put in your way and if you manage to navigate them then you are eligible to be promoted. Workers are made to work through breaks because managers to not arrange for coverage. Apparently if you are out sick, they do not pay you for the first day you are out out of your sick time. They do not pay a living wage. With 3 years with the company, you get paid roughly what I was paid doing the same job 20 years ago when I was in college.
So why even work at WalMart? The people I know work there because it is the only major employer in the town or they have no motivation to go out and find a higer paying/more stable job. IMO, WalMart would be perfect for high-school or college kids but not for anyone looking for a career.
You are mistaken - it needs data. We don’t “all know” anything of the sort until we get some kind of hard evidence.
Regards,
Shodan
First of all, there are ultimately only 2 fundamental business strategies- be lowest cost, or differentiate yourself from your competition. Everything else is basically some variant of one of those two.
So Wal-Mart’s strategy is hardly novel. What is novel is that they both pursue that lowest cost strategy so single-mindedly, AND more importantly, realized that their supply chain and wholesale buying power are the keys to being the lowest cost, and relentlessly pare down costs by improvements to both of those. The way they treat their workers is another cost-cutting move, but like you’ve said, it’s not unique to them. Furthermore, it never has been - it’s just more obvious with them because they’re ubiquitous in the nation’s communities. Let me repeat- Wal-Mart’s low cost strategy doesn’t necessarily hinge on low pay; that’s everywhere already. Is Home Depot, McDonalds, Kroger, Target, or any of the other nationwide chains significantly better in this regard, or are all of them crappy, low-wage, part-time hellish retail employers? I sure know Sports Authority was when I worked there in grad school.
Assuming that they are indeed the lowest cost retailer, it does make sense that their customers would tend to be from poorer segments of society, so the fact that the customers have less money seems to me to be due to self-selection, not because Wal-Mart has single-handedly fucked the US economy. If people have less money, then of course Wal-Mart would suffer somewhat. It doesn’t follow that the people having less money is because of Wal-Mart however.
I have a suspicion that what we are seeing with Wal-Mart’s profitability fluctuation is probably a combination of a less than stellar economic rebound, the fact that their competitors are now starting to pursue low-cost a lot more vigorously than before, and because Wal-Mart may be hitting something of a floor in how cheap they can get their products.
It could be that people are realizing that there is a cost higher than what’s printed on the price tag.
What that higher cost is, could be attributed to a number of different thoughts:
[ol]
[li]Cheap junk wears out faster. People are tired of cheap press-board furniture that breaks after a year or so, and are more concerned with quality.[/li][li]People are not as knickknack oriented as they used to be. People are beginning to realize that less is more, and that “stuff” is not as liberating as the capitalists of the country would have you believe.[/li][li]Then there is the cost associated with more of what we buy being produced overseas; therefore fewer jobs in our own country and more environmental costs associated with the transport of freight.[/li][li]Shopping at Walmart is not worth the pain in the ass. Seriously. Fifty registers, and only one or two open. People park like idiots in their parking lots (well, they park like idiots in any parking lot). Shopping cart corrals everywhere, and I still have to move one out of the way to park at least 40 to 50 percent of the time. Then there was this one time I went in, and someone had actually taken a shit right in the middle of the floor; I kid you not.[/li][/ol]
Efficiency helps the economy it does not hurt the economy. The earth has no more resources than it did 100 years ago,yet the average standard of living is ten times as high as it was 100 years ago. The reason for this is we have learned to produce more with less input. That is how living standards go up, instead of a hundred workers with scythes we have one worker riding a combine. The 99 then go to work producing other things and the economy grows.
What set Walmart apart from its competition was its supply chain management. It used computing power to match inventories so it did not have to waste money on items sitting around a warehouse. Walmart probably benefited more from computers than almost any other company.
Walmart’s employment practices are to hire alot of low skill people and not pay them much. This is similar to all retailers, there wages are average for the sector. This keeps prices low and since Walmart has more customers than employees it is good overall for the economy. It is estimated that Walmart’s low prices on food save its customers 25% or at least 18 billion dollars a year. The average Walmart customer makes 35k per year. Thus Walmart is raising the standard of living for the poor and lower middle class by millions of dollars per year with its efficiencies. Here is the paper showing the 25% food savings
Walmart is a boon for the poor people of this country, it provides millions of low skill jobs at competitive wages and a higher standard of living through reduced prices.
Henry Ford realized that the only way that his firm could grow, was if his workers were paid enough to buy a car. So he (very sensibly) decided to pay his workers a wage ($5 /day) that would allow them to buy a house and a car-he was wise to do this, because the market for cars then was very small. Walmart takes the opposite position-and it is finally reaping what it sows-the quality of what they sell declines, as wages stagnate.
We need more Henry Fords! Tyrant though he was (in many ways), he at least understood economics.
I agree that efficiency is generally good for the economy, but that’s certainly more true when things are less efficient. Couldn’t there be point where efficiency hurts? For example, let’s say I invent a general purpose robot that could do the work of 1,000 people in labor-intensive position. I sell this to the various captains of industry, and now, rather than having coal miners, oil rig workers, fast food cooks, Walmart greeters, and so on, a small army of robots take their positions. Yes, there will be additional profits, but those go to the holders of capital, not the holders of labor. (I don’t know how to phrase this so it doesn’t sound like pure Marxism. I’m not a socialist, really!)
It’s not like those former coal miners are going to start their own factories and control capital.
I’ve read about all the wondrous improvements in productivity and automation, and how (in the sixties) this would lead to 3 or 4 day workweeks. That’s not what happened, though. Instead, 20% or 40% of the workforce was laid off (that is, the labor saved that could have led to 3 or 4 day workweeks) and they had to find different jobs. That’s good – they were now more productive elsewhere. However, at some point, other jobs get harder and harder to find.
The benefits of all this productivity have gone to the owners and management, not to labor – wages have been stagnant for decades (I think).
Other than some sort of sci-fi idea of paying people not to work or some dystopia where you apply for some government artist job or something, I don’t know how to solve this problem.
Specifically for Walmart, if they come to a town and cause the closing of various higher-paying mom-and-pop shops, then it’s a devil’s bargain for the poor and lower middle class – yes, they saved money, but their higher paying job in the now-non-existent downtown is gone.
Unfortunately, I don’t have cites for this. Maybe there’s an econ doctoral student here to separate the fact from fiction.
I’m not reading your cites anymore. You need to provide a quote that supports your claim that: “Over half of their workforce makes $10 an hour or less.”.
I work for a competitor of Wal-Mart, and I think the OP is not far off the mark. All the discount retailers have issued lower forcasted revenue for the current quarter. The downward pressure on wages is surely one reason why spending has dropped among low- to middle-income consumers. Our company like WM pays its retail employees the lowest wages we can, with enough hours to keep them benefit ineligible. It’s poor public policy that makes this a good business model. It’s one reason I support increasing minum wages - although it would cost us hundreds of millions of dollars a year, forcing us to raise prices, it will have an equalizing effect on our competitors as well and will put more money in the pockets of our core customers.
From the last cite:
“Half of Walmart’s one million hourly associates in the United States make less than $10 an hour, a spokesman told HuffPost in October. Many of those who make more than $10 an hour likely belong in another category offered by Walmart as an example of employee satisfaction: 300,000 employees have worked for the company for more than 10 years.”
Ok, I’ll admit my original statement might have been a slight exaggeration. It’s only one-half of the workforce, not over half of their workforce. Also, it appears that claim is attributed to a certain subset of employees. That subset though is the largest part of their workforce. There may be other minor inconsistencies that I’m not aware of as well, as things change day-to-day.
You can point out the minor inconsistencies but the main point of it all still stands. Walmart takes in billions, CEO’s and other high-end employees receive lavish salaries, while the bulk of their workforce gets shit on.
You know what though, it’s ok. Walmart controls their own destiny and those people don’t have to work there if they don’t like it.
Whats not ok though is the unbelievable amount of resources and pollution that is perpetrated by Walmart. Their products (for the most part) are cheap, and made to be obsolete ASAP. They are grossly mis-using resources that people will depend on in the future. This is a well known fact, and a very complex issue. I hope that this point can be understood without providing sufficient citations.
Lastly, Walmart has a huge influence. Other companies have seen what Walmart does – exploit the cheapest labor possible (both domestically and overseas), manufacture products the cheapest way possible, raise prices as high as possible, block unions, lobby government, disregard the environment, etc, etc… – all in the name of profit. And they follow suit, both because they want to (to make more profit) and because they have to (to stay competitive).
What do you think of my post, 14?
There is famous story in economics where a person goes to China and sees a hundred people digging a ditch with shovels. He says to his Chinese tour guide in America we use one person and a piece of heavy equipment for that. The guide replies that if we did that what would the diggers do? That would put them out of work and we need alot of jobs in this country because we have so many people. The man replies then why not use spoons?
The percentage of national income going to labor is only 2% less than in 1970 and is higher than the average of the 1960s. Meanwhile total compensation has been going up steadily, the real per capita income of the bottom 90% of people went up 60% in the last 40 years. So it is not true that the returns have all gone to capital and not to labor.
Your example of the robot is a broken windows fallacy. 150 years ago 90% of people worked on farms. Now that number is less than 5%,yet massive unemployment has not resulted. Labor saving devices such your hypothetical robot have always been a boon to the economy though not necessarily individual workers. The reason we don’t work 5 hour weeks is because our appetites grow as quickly as our wealth. If you wanted to live in a tiny apartment, with an unreliable car, no cell phone, computer, or cable tv, eating canned food. You could do so with a part time job, but most people want the modern amenities that have improved our lives so much.
On the one hand people who work for a living shouldn’t be living in poverty.
On the other hand a lot of these people should have done more to make themselves more valuable in the marketplace.
Price controls are generally inefficient, but labor is not like other goods. A minimum wage of $9 ($18,000/year plus benefits) seems reasonable.
No, it’s not “one-half of the workforce”, it’s one-half of “the hourly associates”, and your source is some anonymous “spokesperson”. That’s not really a very good source.
Besides, the key part of this analysis isn’t so much what Walmart pays, but what comparable jobs pay.
This is unique to Walmart?
I think those things are the responsibility of governments, not private companies.
And if you think competition is dead, you’re wrong. Again, you are confusing the roles of business and government. The government doesn’t compete, but businesses sure do!
Your post is self contradicting, you say Walmart wastes resources and then say the try to manufacture things the cheapest way possible. The cheapest way is another way of saying using the most efficient way with the least waste.
The idea of profit did not originate with Walmart it has been around since the caveman. Henry Ford’s pursuit of profits are why we drive in cars instead of horse drawn carriages, Edison’s pursuit of profits are why we are not reading by whale oil lamps, Jobs’ pursuit of profits are why we have Iphones. Walmart’s pursuit of profits are why millions of poor people can live a better life through cheap consumer goods. Profit purges waste and drives efficiency and makes people want to do better and make more with less.
Why not 90$ plus benefits, why should people have to live in hardship?