As We (Too Many of Us) Get Poorer

As we get poorer, the best we seem able to do is take a spiritual
attitude toward the increasing numbers of Americans living at or near
the poverty level. Religion has always espoused the argument that the
disadvantaged should be meek, that their reward lies in the hereafter.
That’s an argument of the privileged, of course and you don’t see the
poor in the front pew at any church I ever attended.

As we get poorer, the best we seem able to do is take a spiritual
attitude toward the increasing numbers of Americans living at or near
the poverty level. Religion has always espoused the argument that the
disadvantaged should be meek, that their reward lies in the hereafter.
That’s an argument of the privileged, of course and you don’t see the
poor in the front pew at any church I ever attended.
Walmartassociate
There are new ways in these new economic times to get at that same argument and our 21st century gift to the working poor is Wal-Mart. Lordy, here I am, beating on Wal-Mart again.
Over six and a half billion people, the approximate population of the earth,
shop every year at Wal-Mart. According to the company, these customers,
worship at the alter of consumerism and demand the lowest possible
prices.
And they get them, in part (perhaps too large a part) because W-M
pays the lowest wages in the country for its ‘associates’ and caps
their wages—no matter how many years they serve the company—at a rate
within shotgun range of the poverty level.
Lesliedach
Leslie Dach, a long time Democratic political operative, is W-M’s executive vice-president for corporate affairs and government relations (essentially the company’s spin-meister). Dach was asked by Jeff Goldberg in a not totally flattering piece in the April 2nd New Yorker,

“if
it was moral for a self-styled Democrat to work for a company that,
among other things, maintains a mobile squad of union-busters who can
be dispatched by corporate jet to any store that gives off the faintest
rumblings of union activity.”

The answer
illustrates why Dach is held in such high regard at W-M. It’s also a
pretty clever response to Goldberg’s loaded question, the equal to ‘have you stopped beating your wife.’

“I
think, first of all, that morality is not the right language. I think
the more than one hundred and thirty million people who shop at
Wal-Mart each week, who are saving money so that they can lead a better
life, who save money there, would be insulted by that frame. Some of
these issues are complex, and the debates are complex.”

Like
Don Rumsfeld, if Dach doesn’t like the language, he merely rephrases it
to suit himself. First he refuses the premise and then twice uses the saving of money as an alternate answer.
The issue is not complex. W-M’s customers can hardly be insulted by Dach’s morals. Nor is Dach’s moral conduct a complex
debate. Three strikes–you’re out, Les. Changing the subject to saving
money is hardly an answer to a question Dach didn’t want to answer.
Thus are we spun, and spun in the hands of a pro.
When questions go unanswered, we all lose. When interviewees are
allowed to re-frame questions to suit themselves, the whole point of an
interview is lost. Journalists seem not to understand that.
When was the last time you heard a member of the mainstream press (or any journalist) dig in and say “excuse me, you didn’t answer the question.” That should rate as at least a four-credit course in any school of journalism.
Walmart
Further in the article, there’s a good deal of spin about W-M’s venture
into energy savings in its stores, transport fleet and even as an issue
pursued with its suppliers. 65,000 suppliers–no small deal.
A recently opened prototype super-center will save $100,000 annually
on electric alone. Across its 6,400 stores worldwide, that kind of
saving might not lower prices or raise wages, but would pass through
$640 million to Wal-Mart’s bottom line.
The spin, according to Dach, “What we’re trying to do is make sustainability sustainable.”
Nice turn of phrase and absolutely as it should be. Coming decades
won’t see any substantive environmental progress unless business makes
a profit from it and I wish them well—go for it.
Costco
But it’s impossible to consider Wal-Mart without discussing their
impact on driving down wages. By its own admission, the average wage
for full-time employees is $10.51 compared to Costco’s $17.46 and Costco is their competition.
If you accept the federal poverty level for a family of four to be
$18,850, then W-M wages clear that hurdle by a mere $2,170. Costco sets
the bar at a substantial $16,070 surplus, taking their workers securely
into the lower middle-class.
Monawilliams
Confronted with that wage issue, Mona Williams, W-M’s chief spokeswoman claimed the company profit-per-employee
stands at $6,400 and every dollar added to that hourly wages subtracts
$2,000 from that number. Fair enough–that certainly checks out with
the company levels of profit.
But it disavows raising prices. Addressing this, Williams claims

“You could raise prices, but what about the woman shopping for Easter shoes for her kids? We can’t raise prices on her.”

Doing
the math on Wal-Mart gross sales–$315 billion and profits–$11 billion
(3.5%), it’s pretty clear that each 1% increase in prices drops an
additional $3.15 billion in the coffers. Work backward from that,
taking into account W-M’s 1.8 million ‘associates’ and bingo–each 1%
price increase provides 88 cents an hour in additional wages. No affect on profits. No unpleasant after-taste.
Wal-Mart could boost its average hourly wage to $19.30 by raising
prices 10%, blowing by Costco (by almost two bucks) and becoming an
employer of choice instead of last resort.
But we gotta get back to Mona Williams’ Easter shoes. W-M sells women’s Gracie Peep-Toe Espadrilles (whatever the hell they are) at $15.88. The real question is whether W-M customers would turn their backs at $17.47 Peep-Toes.
Phrasing it as if women will be unable to buy Easter shoes for their kids is deceptive and does nothing to address the issue.

Samwaltonbook
It is the business of business to make profit. Nothing wrong with that.
Pointing out that Sam Walton’s wife and kids are worth more than Bill
Gates and Warren Buffet combined isn’t relevant either (although it’s fun).

But wages ought to be structured in a way that encourages an expansion of product and services.
Henry Ford had this figured out when he introduced the $5 day to his line-workers and he did it at a time when that was double the prevailing daily wage.
Cars were pouring off Ford’s innovative production lines and he didn’t need cheaper workers so much as he desperately needed buyers.
With his five bucks, he turned auto-workers into auto-buyers and one
could say that the consumer-society (for better or worse) was born of
Ford’s decision. Remember, you could buy a Model-T for 70 days worth of
wages, if you could find a way to feed the kids.
Consumersociety
Wal-Mart needs buyers as well. The cheapest way to increase profits in retailing is to raise per-store sales. It’s the retailing Fountain of Youth. And you do that when you increase the income of your buyer-base.
Once again, we’re standing at the threshold of dwindling ability on
the part of working America to partake of its fruits. Pretending to
lower consumer costs for the most marginal earners of society by
wreaking havoc with their take home pay is not a way forward. It’s a
sure-fire way to destroy what is left of the American worker trying
with less and less success to support the American family.
If Leslie Dach wants something to spin, let him contemplate how much
of that additional $8.80 would end up in Wal-Mart cash registers.
There’s more than one way to grow a company that’s closing in on market
saturation.

And there’s surely more than one way to earn a profit.
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Media comment;

1 thought on “As We (Too Many of Us) Get Poorer

  1. finally start making a profit after January 01, 2008.
    China will demand being paid in (coins)penny's and nickels after that date because of the big fall in the US (paper) dollar.
    Having decrease down to an all time low of $0.14 cents has put all the overseas Countries playing defense. The penny and nickel have increase all most double in price because of their metal content.
    Hence……the return of the containers that have been stacking up 10 stories high on the East and West Coast will be used in the transfer of the currency.
    It's gonna be a big surge of profits for the Chinese government to swallow but with the 11% growth a little more can't hurt that much.
    With the new law in America…the American people can't melt the coins down for the content but China can….so! they melt the coins and exchange for euro's, dinar's, ruble's, peso's, colon's, yen's are even franc's but not one paper US dollar cause they only worth $0.14 "red" cents.
    Oh!
    1 penny is worth $0.014 cents
    1 nickel is worth $0.057 cents
    Plus China gets a bonus in the fact of killing two birds in one "BUSH"……keep some of the copper and nickel and cut back on imports!
    Dang!
    that little 4ft lady has got a head full of cents…oooops!
    sense and gonna make the US look like they have none….!!!
    oh well….guess thats what all the nincompoops in D. C. get for dealing with greedy a!!holes in Corporate America and the Wall Street private bank they call Federal Reserve

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