We’ve done the “living wage” argument on the SDMB more than once.
It amounts either to a raise in the minimum wage, for everybody, in which case jobs will flow to China even faster, or different people getting paid differently based on their needs.
In which case, if I ran a Wal-mart, and I had a choice between the single guy living with his parents who only costs me $10 an hour, and the deserving single mom with two kids who will cost me $18, I’m hiring the single guy.
I have never seen how it benefits the poor to price them out of the job market. Nor the argument that “we are losing manufacturing jobs to the Third World, therefore let’s make it more expensive to keep them in the US”.
And FWIW, the answer to the question in the OP is “because they aren’t unionized”.
FWIW, I wasn’t trying to enter into the “living wage” argument. I missed previous SDMB debates and am not sure where I’d fall on.
What I was addressing was suezeekay’s contention that (damn near) everyone should go to college or take personal blame for the dire economic consequences due them because of their lack of education. I’m not seeing how that’s a realistic stance, at least not with our current capacity and funding structure for postsecondary education.
Probably not everybody has the ability to go to college, or work at a high-tech job. Half the population is below average, after all.
But then Wal-mart can be considere to be benefitting those folks as well - it provides low-cost goods, and low-skill employment.
I am sure some people use this as a stepping stone to higher things. Others don’t, for a variety of reasons. I imagine most of those reasons are not Wal-mart’s fault.
One beef I have with WalMart is that their guiding principle seems to be “to get cheap things as cheaply as possible”. For the most part they don’t offer higher end or midrange merchandise at all. As a consumer, I think I should have the choice to spend more on something of higher quality–or not. It should be up to me, not up to a merchant who caters only to the lowest common denominator.
[Disclaimer]I live nowhere near a WalMart, so this is purely academic for me.[/disclaimer]
This doesn’t really add to the discussion, per se, but if you go to www.jibjab.com and click on “Big Box Mart,” there’s a nice bit of satire there that is germane to this thread. You have to sit through a commercial first, but hey – money makes the world go 'round …
While they can afford to pay even higher wages, from what I understand (from a Time mag article), they actually pay more than min wage (this is my first hit off my google search, all other on-topic results are around that price point, which is ~$4 more than the min wage). How will Wall Street react to announcements that Wal-mart is unnecessarily raising wages? However, that’s not my point. My point also isn’t that the work of the avg Walmart worker is less harrowing and less demanding than your avg McDonald’s worker (I’ve worked at both), and Mickey D’s pays super-close to min wage (when I was working there [So where’s the gripe against McD’s?]) No, my point is that regardless of how many hours one is working, the worker will be paid the value for those services of the worker that the market commands. Isn’t that fair?
[My google search also showed an avg comparrison b/t Costo and Walmart: $10/hr vs. $9.64, wow, huge shift! [/sarcasm]] People in this country have to stop “Keeping up with the Jones” and actually have some humility. As posted before, if one actually qualifies for social welfare assistance, they should take it, even if they are working. There is no shame in that (perhaps it is an internal reminder that they’ve made poor choices in their life, but I digress…). Likewise, if one’s job can only command $X/hr, that should be a signal to change something and get another job, train for a better position. Obviously, this statement seems harshly critical of those people who have suffered misfortune, but you can’t blame the government for that. I am all in favor for subsidized social/temporary welfare for the poor and those in dire need.
Unions also raise prices, both for labor (which the corporation must buy) and consumers (where the corporation will transport its costs). Anyway, since you can’t provide illegal anti-union practices (and I can’t, and I don’t recall any from the Time article), I won’t argue this topic.
I’m starting to think that this is an urban legend, but let’s agree for this instance that it is true. So what. Isn’t the local business profiting from selling out its Shrek inventory? Won’t they just buy more from their supplier (unless you want to argue that Wal-Mart is restraining trade, in which case, that it is actually illegal)? Won’t that signal an increase to the suppliers of DVDs that more DVDs are needed, causing a ripple effect in the economy (more materials, more labor, etc.)? Even if such a ripple is temporary, it’s still boosting the economy. I suppose you can argue that taking away Shrek DVDs are causing people to do their additional shopping at Wal-Mart, but I argue that: (1) people are going to shop at Wal-Mart anyway, if nothing but the fact that they a huge selection; and (2) buying Shrek DVDs is economically equivalent to listing them as a loss leader, anyway – to prevent this technique is simply ridiculous, and stifles competition.
Wal-Mart is exploiting economic cycles, which every business does. If the town is in such a condition where Wal-Mart is the only alternative, for good or for bad, it is that way before Wal-Mart even got there. If Wal-Mart is crushing local competition, it is because those business cannot compete or adapt and deserve to be out of business.
Every company does this. McDonald’s does this with local producers, Starbucks does this with their global coffee suppliers, K-Mart did this (and look how they turned out), Sears, even in the hi-tech (non-retail areas): Motorola (suffered greatly, but they had other contributing factors), IBM, EDS. This is called competition. If the market doesn’t want a fat, gluttonous corporation, it will crush it.
While I am staunch pro-choice, half of the country might actually agree. If you want to stop this, you have to severely limit PACs. For good or for bad, lobbying is one of the most effective ways to get a voice to be heard. Unfortunately, even Congress cannot think through a viable solution. The best method (to satisfy all parties/players) is to take little steps and use a wait-and-see approach.
Someone else already pointed out the subtlety of this argument. Anyay, I am a big believer of efficient markets and a global economy. If China can produce it easier (as demonstrated by the market), then so be it.
mazinger_z, your examples contradict figures given elsewhere and attempt tro trivialize others. Regarding Wal-Mart vs. Costco wages, see this result from Forbes, that bastion of marxism:
You can find similar stories elsewhere.
Walmart’s strong-arming has become legendary. I don’t know if they forced Vlasic out of business or not, but the implication from the Frontline program is that they certainly did Rubbermaid in. Other chains do certainly try to get the best price; I’ve never heard that any of them effectively forced suppliers out of business. That’s not “business as usual”.
As for Wal-mart’s buying up popular DVDs – we’re not talking hundreds of DVDs here, in most cases. On-hand stock isn’t huge, and it takes time for replacements to come in. If your business depends on satisfying instant gratification having things on-hand is priceless. You can’t blithely argue that peopl were going to Wal-Mart anyway". The only rational reason for Wal-Mart to do this in the first place is to bring them in to the store because otherwise they wouldn’t have gone to Wal-Mart, but to their usual store instead. Certainly ther can legally do so, but it indicates that they’re gunning for the other businesses.
What training should they give them?
What exactly are you buying at Walmart that requires assistance from ‘trained staff’?
Walmart’s stuff is pretty basic.
This is based on the assumption that all these DVDs (and CDs) & their packaging are produced in America, and that increased consumption will feed directly into America’s economy. I’m at work, but does anyone have a DVD & case onhand to check where it was made?
I also think that smacks of an urban legend. But, assuming it’s true, it’s really easy for the target store to prevent this by limiting purchases to reasonable quantities. Many stores already do that. Of course the ones that will gladly sell every copy of Shrek they have, knowing it will hurt them in the long run, are just the kind of mismanaged businesses that are vulnerable to getting put out of business by better managed competitors.
Thanks for the link, it shows exactly the results I had predicted (though, not in this thread, just in discussions I have with friends IRL). The most important part is that it shows a real-world example of value: Costco is paying its managers more.
Perhaps I should have better illustrated my point, however. The difference in salaries between Costco and Wal-Mart is competition. What Forbes is reporting is the essence of competition in mid-stream. It looks like Costco is losing for now – As cited in the article, Costco trailing the leader, but the comparrisons aren’t exactly similar: net income (Costco -3%) vs. operating revenue (Wal-Mart +12%). Costco may eventually outpace Wal-Mart if all things stayed equal, because Wal-Mart will not have the adequate talent and manpower to operate additional stores efficiently (Wall Street hates stagnation). Wal-Mart will have to adjust and pay more. On the other hand, if Costco doesn’t move quickly enough, it will be saddled with higher labor costs because of union pricing (which may not be true if union lock-step pay raises end qucikly). Let’s see how long it will last. Personally, I do all my shopping at Costco, except for propane (cheapest by $4 anywhere I’ve seen, and I shop around!) and Kellog’s Raisin Bran (cheaper by $1 than most stores’ reg price).
Anyway, my googling’s first hit was some Wal-Mart employee talking about her pay rate vs. others, the fourth hit was comparing wages in the local economy. Hardly scientific, which is why for the second time, I’m not listing my results.
Rubbermaid is a bunch of bastards, I know from personal experience dealing with them at the corporate level. They deserve what they got. (I haven’t dealt much with their latest entity, but they seem ok so far). If the supplier cannot meet Wal-Mart’s demands, it has no business doing business with Wal-Mart. If Wal-Mart can’t find anyone to do business the way they want business to be done, then it will have to change. Wal-Mart doesn’t want its suppliers to go out of business, it needs more and more suppliers to capture more and more market. When companies accede to Wal-Mart demands – and fails – it is either through bad leadership and/or poor knowledge of its products and services. If a company knows that they cannot perform at those conditions, then it either has to change or don’t do business with Wal-Mart (or at all).
How is this any different than running loss leaders? Why should we as a society stifle competition? Hasn’t the local store made its profit already by having their inventory bought out? I’m sorry, I’m not buying your argument, give me a real world example, even if a thought experiment, that shows that this is nothing different from running a loss leader, and that such a solution isn’t mandating how a company runs its business.
By constantly denuding its competitors of key product, Wal-Mart not only earns a sale of that product, but gradually “teaches” shoppers that no store other than Wal-Mart can be counted on to stock new releases, eventually driving them under. Wal-Mart can do this with impunity because they know the studios will simply buy back the unsold stock:
You can defend Wal-Mart’s practice as legal, but since its only benefit is to eliminate competition (and therefore consumer choice), I feel to see how I as a consumer should be thankful.
Interesting mazinger_z. I give a cite that contradicts your bizarre assertion that Walmart’s wages aren’t significantly lower than Costco’s, and you try to spin it by saying it confirms predictions you made someplace else besides here. That’s a stretch.
Rubbermaid may or may nor be a bunch of bastards – that’s beside the point. The Frontline documentary cited above seems to suggest that Wal-Mart is being a bunch of bastards by demanding pretty extreme changes in Rubbermaid’s pricing after they were accommodated into a relationship. It may be legal and it may be pure capitalism, but clearly they weren’t expecting a cuthroat move like that from a big customer. People know better now about WalMart, but Rubbermaid clearly had no warning that Walmart would play ball that hard.
And your use of “loss leader” is clearly different from everyone else’s. Selling products at a loss to lure in business is different altogether from denuding a competitor’s shelves, as Nonsuch points out.
Well, I can easily think of an example: fish. The only place to buy fish within a 50 mile radius or so is Wal-Mart. The pet department is staffed by people who know nothing about fish. Chances are, if you own fish, you know more about them than the people in the pet department do. We also have a terrible time keeping fish from Wal-Mart alive. They often die within a few weeks and we end up having to buy more. But, as I said, it’s the only place to buy them in this area. The other pet shop we did have, which had decent fish and people who knew about them, closed a few years ago.
I personally do not shop at Wal-Mart, but can’t prevent my husband from doing so. Though I think he would stop if he had somewhere else to buy our fish. That’s about all he goes there for.
In post after post, I take apart 10K’s, explaining to you this “THEY COULD BE PAYING VASTLY HIGHER WAGES IF THEY WEREN’T GREEDY PROFITEERS” fallacy… looks as if I have to do it again.
In FY2004 WMT had sales of $285 billion ($191b WM, $37b Sams Club, $56b International). COGS+Overhead was $271 billion, leaving operating income of $17 billion. WMT had $1 billion in debt and capital lease obligations, $5.5 billion in income taxes for Net Income of $10 billion.
Of that profit of $10 billion, WMT had retained earnings of $8 billion and paid out $2 billion in dividends.
Oh, and they have 1,700,000 employees worldwide.
Assuming that you want to take 1/2 of their NI and pay the employees higher wages, we’re talking about a salary increase of less than $3,000/year. If you confiscate it all, you can now give everybody $5,800 a year! Of course, you would demolish the value of the stock (why own stock in a company that will never make any money) and destroy any hope of WMT being able to compete effectively (no retained earnings = no savings = no investment = no growth).
So they’ll have $6,000 raises… for a few years at least. But as the competitors are allowed to plow their obscene profits, the WMT employees are doomed. At least as WMT employess, anyway.
And reports of Costco’s wage superiority are vastly over-reported, but I just redid the WMT research. Last thing I care to do is try to substantiate or refute your claim about the other company.
Given how unions have done so well for the US industrial worker, perhaps WMT is doing their workers a favor.
Your friends job is stupid. Buying out inventory stocks as a means to put people out of business? How, exactly, does that work? “DAD! I just sold 40 copies of Shreck at $22.99 each to the Wal Mart guy, giving us two weeks of cash flow, income, and profit in one fell swoop!” “Damn them! They’re going to put us out of business if they keep on buying out our stuff!!!” :dubious:
Of course, the faulty assumption is that a towns “economic base” always resides in the retailers. Trust me, it does not. Just go to a college town like Athens GA or State College PA, or a industry town like Hershey PA or Corning NY (to name two obvious examples - there’s hundreds of others) and tell me that the retailers are driving the city. :rolleyes:
You have a bizarre view of money, one that has WMT placing stores in places that are increasingly poverished because they keep shipping “the towns” declining stores of dollars “away”, with no means of getting new dollars. But in believing that every town in America has no employment or “American Dream” opportunities other than retail, I guess this idea is easier to swallow.
Wal Mart, regardless of it’s vast size, does not have the sort of control of the market that you seem to think. While it is true that they have exacted effeciencies from their suppliers, the idea that vast numbers of manufacturers are running at a loss or at break-even just for Wal Mart is to laugh. Not to say it doesn’t happen - poorly run manufacturers are just as common as, say, poorly run local retailers.
As far as the CD thing is concerned, so what? K-Tel has been offering and selling sanitized versions of songs for decades and nobody batted an eye. Those compilation disks - “Wow 18” and the like - are heavily edited as well regardless of whether you buy them.
Again, so what? If you want the version of “Hollaback Girl” that has Stefani singing “shit” 34 times, download it. Or buy it off the internet. Or go to the library and buy it off the internet. Or get your friend with a credit card to go to the library to buy it off the internet.
This is a political complaint, obviously not debatable with facts, just opinion and tastes. But don’t think that Left leaning capitalists don’t take on governments - check out how George Soros almost brought down the British banking system back in the 1990s by making such a large play for a downward spiral on the pound that he was the triggering event on, yes, a downward spiral on the pounds value.
And all these complaints and problems are being handled at the appropriate levels, nor are they limited to Wal Mart. One would be hard pressed to find any corporation of over 200,000 people that doesn’t have ongoing sexual harassment and labor disputes. Not dismissing them, but the fact of their existence isn’t anything surprising nor does it prove that WMT is “worse” than others.
Some quick calculations, comparing figures from 10k’s and making assumptions:
Wal Mart
of employees: 1,700,000
Avg Hourly wage (estimate derived from data in Forbes article) all employees: $16
workhours year, per person (assuming full-time employment for all employees): 2000
Total yearly cost: $54,400,000,000
Costco:
of employees: 113,000 (10-k)
Avg hourly wage per employee (again, derived from data in Forbes article): $25
work hours a year, per person: 2,000
Total yearly cost: $5,650,000,000
I would like to note that the article is comparing apples to oranges by the way. They are comparing a membership warehouse (Costco) to a discount department store (Wal Mart), akin to comparing Coca Cola to Mayfield Dairies. Over 80% of WMT’s revenue comes from discount stores (both American and International), so the comparison made isn’t valid. But we’ll assume that it is, knowing that it isn’t.
For Wal Mart to start paying its employees wages comparable to Costco, they would have to increase their labor cost by… guess.
Too low.
Wrong again.
Close enough. $35,000,000,000 dollars. That’s 3.5x the amount they made in “profit”, meaning that the assertion made about WMT being able to afford Costco wages w/o having to raise prices is, not shockingly, incorrect.
But… there is a means out there for WMT to raise their avg hourly rate to Costco levels.
Just fire 600,000 people.
And don’t bother countering with “executive salaries must be cut!” blather. Even if WMT execs were soaking the company for 100,000,000/year (which they aren't, but anyway) the average wage for the other employees would increase .039/hour, or $78 year.
So, what have we learned?
Costco and Wal Mart are in two different businesses, each with their own business model and cost structure. Had the article bothered breaking out the Sams component to WMT, it would’ve made more sense, but it didn’t and therefore is essentially useless.
Wal Mart, disregarding the differences in business models, would have to pay over $35 billion more in wages for current employees to be paid Costco wages (given my, admittedly quick 'n dirty, assumptions). That is 3.5 times more than their current after-tax profits.
Or Wal Mart could lay off 600,000 people in order to achieve a Costco-esque wage structure.
So, you don’t have to do the work on the Costco thing. You’re welcome.
Now you’ve got a decision to make: Raise prices and destroy your business model, leaving no other reason than social inertia for people to come to your suddenly overpriced discount store, or fire 600,000 people?