Frazzled wrote:

 Jihadin wrote:

Among those arrested Thursday was Barbara Gertz, an overnight stocker at the Walmart store in Aurora, Colorado. She told Al Jazeera that many workers were illegally penalized for striking in June outside Walmart's headquarters in Bentonville, Ark.

Say again?

Aljazeera has opened up a smear of regional branches in the US, and a news channel. Its actually some of the most informative news out there. The absence of reporters sitting around a table babbling to each other is refreshing. They are a lot like the BBC in that aspect.


Automatically Appended Next Post:

 Easy E wrote:
Yeah, they are a US network now. They bought Current TV from Al Gore.


Also:

Strikes, strikes everywhere! Panic! It's almost like we still need Unions to balance out corporate power! Call in the Freikorps! Call in the Pinkertons!

I bet the preppers didn't see this one coming...

 loki old fart wrote:


You know some people work to live, not live to work. Doing too many hours? get your outgoings down.

 NuggzTheNinja wrote:

 loki old fart wrote:


You know some people work to live, not live to work. Doing too many hours? get your outgoings down.

That's a cute expression, but it doesn't really offer anything academic to the current argument.

pities2004 wrote:
The real problem is people wanting to be entitled to more money without having to work for it.

 Redbeard wrote:

pities2004 wrote:
The real problem is people wanting to be entitled to more money without having to work for it.

I think you're dead wrong about this. No one who is striking is looking for money without work. What they want is reasonable compensation, a living wage for a doing a day's work.

Sure, they want more than classical economics says they should have, because economics has no soul and teaches people that they should all be self-serving bastards and put their own interest first.

However, Walmart could double the wages of every employee working there and Alice Walton and the other heirs would still be in the Forbes list. Just because Walmart can get away with paying people minimum wage and growing their private pile of gold doesn't mean that's fair or right. To be honest, I'd happily bet that any Walmart employee actually works harder in a day than Alice Walton does in a month.

It's not about wanting money without working. It's about wanting a system that doesn't favour a very small handful of people being able to accumulate all the wealth at the expense of the vast majority.

And yes, it's about the system. Walmart couldn't get away with paying their rock-bottom wages if the government didn't pick up the slack and make sure their employees could actually afford to eat with food stamps. Explain to me why my taxes should be subsidizing the pockets of the richest family in the country? Who is really feeling entitled to more money without working, the guy who works 38 hours/week because god-forbid he be considered full-time and get benefits, or Alice Walton?

 pities2004 wrote:
Why should a walmart worker be making more or the same as a teacher?

 pretre wrote:

 pities2004 wrote:
Why should a walmart worker be making more or the same as a teacher?

Why should a teacher be making so little in the first place?

 pretre wrote:

 pities2004 wrote:
Why should a walmart worker be making more or the same as a teacher?

Why should a teacher be making so little in the first place?

PhantomViper wrote:

 pretre wrote:

 pities2004 wrote:
Why should a walmart worker be making more or the same as a teacher?

Why should a teacher be making so little in the first place?

Its not "so little", it is what the market as a whole as deemed his salary should be.

 Alfndrate wrote:

No, teachers make jack gak. If I were a teacher right now I'd be making about 7 thousand dollars less than I do now. I'm currently living with my parents, paying some in rent, and not having to buy food... I still barely make ends meet.

 Redbeard wrote:

I think you're dead wrong about this. No one who is striking is looking for money without work. What they want is reasonable compensation, a living wage for a doing a day's work.

Sure, they want more than classical economics says they should have, because economics has no soul and teaches people that they should all be self-serving bastards and put their own interest first.

However, Walmart could double the wages of every employee working there and Alice Walton and the other heirs would still be in the Forbes list. Just because Walmart can get away with paying people minimum wage and growing their private pile of gold doesn't mean that's fair or right. To be honest, I'd happily bet that any Walmart employee actually works harder in a day than Alice Walton does in a month.

It's not about wanting money without working. It's about wanting a system that doesn't favour a very small handful of people being able to accumulate all the wealth at the expense of the vast majority.

And yes, it's about the system. Walmart couldn't get away with paying their rock-bottom wages if the government didn't pick up the slack and make sure their employees could actually afford to eat with food stamps. Explain to me why my taxes should be subsidizing the pockets of the richest family in the country? Who is really feeling entitled to more money without working, the guy who works 38 hours/week because god-forbid he be considered full-time and get benefits, or Alice Walton?

PhantomViper wrote:

 Alfndrate wrote:

No, teachers make jack gak. If I were a teacher right now I'd be making about 7 thousand dollars less than I do now. I'm currently living with my parents, paying some in rent, and not having to buy food... I still barely make ends meet.

You don't have to pay rent or food or things like electricity, water, cable, internet, what kind of "ends meet" are you talking about?

PhantomViper wrote:

 Alfndrate wrote:

No, teachers make jack gak. If I were a teacher right now I'd be making about 7 thousand dollars less than I do now. I'm currently living with my parents, paying some in rent, and not having to buy food... I still barely make ends meet.

You don't have to pay rent or food or things like electricity, water, cable, internet, what kind of "ends meet" are you talking about?

 pities2004 wrote:

 Alfndrate wrote:
Student loans on student loans on student loans.

Student loans? I haz that

 pities2004 wrote:
Why should a walmart worker be making more or the same as a teacher?

 Kilkrazy wrote:
All the arguing about what they should or should not get is meaningless. If the strike succeeds, they will get a pay rise.

 daedalus wrote:
It's an interesting culture we've been sold: "Meritocracy for the poor"

 Alfndrate wrote:


Note: I went to college to be a teacher, I know exactly how little they make...

 pretre wrote:
+1 to Redbeard

 daedalus wrote:
It's an interesting culture we've been sold: "Meritocracy for the poor"

What are you trying to say here?

 Alfndrate wrote:

 pretre wrote:
+1 to Redbeard

 daedalus wrote:
It's an interesting culture we've been sold: "Meritocracy for the poor"

What are you trying to say here?

I believe he is trying to say that we've sold this idea that if you work hard, your hard work will be rewarded...

 daedalus wrote:

 NuggzTheNinja wrote:

 loki old fart wrote:


You know some people work to live, not live to work. Doing too many hours? get your outgoings down.

That's a cute expression, but it doesn't really offer anything academic to the current argument.

Actually, he has a very good point. If you reduce your expenses, you CAN afford to work less, or for less. I used to barely break even, and by cutting back on expenditures and paying off debt as soon as possible, I'm now in the black.

Hell, at this point, I could work 20 hours a week at my current pay (or 40 at half pay) and still make ends meet.

Doesn't mean I WANT to, but I could.

nkelsch wrote:

 Alfndrate wrote:


Note: I went to college to be a teacher, I know exactly how little they make...

Teachers in my area make more annually in 10 months than their 12 month 4-year degree professional office job alternatives. They start here at 41k where entry level business people barley make 35k. Also, Teachers get their masters for Freeeeeee and after their masters +60 can max out well over 100k a year (for 10 months of work). And after 30 years, they get health benefits and 60% of their annual income in retirement. Something working stiffs get none of.

Leaving teaching to chase down the 'money' of the tech world because all I could see was dollar signs, You fail to realize how much teachers really do make and how much better off they are than the rest of the population.

And if you wanted to be a teacher, you should have gone to community college, worked through school and kept your debt low because once employed and you get your masters, your college degree basically is 'overwritten' with the school you get your masters from for all purposes. Who ever thought they should be entitled to dicking around for 4-6 years and then get an education and then cry about money? I worked all through college and graduated with zero debt.

 whembly wrote:
@Redbeard et, el...

What are you arguing for... specifically?

nkelsch wrote:

 Alfndrate wrote:


Note: I went to college to be a teacher, I know exactly how little they make...

Teachers in my area make more annually in 10 months than their 12 month 4-year degree professional office job alternatives. They start here at 41k where entry level business people barley make 35k. Also, Teachers get their masters for Freeeeeee and after their masters +60 can max out well over 100k a year (for 10 months of work). And after 30 years, they get health benefits and 60% of their annual income in retirement. Something working stiffs get none of.

Leaving teaching to chase down the 'money' of the tech world because all I could see was dollar signs, You fail to realize how much teachers really do make and how much better off they are than the rest of the population.

And if you wanted to be a teacher, you should have gone to community college, worked through school and kept your debt low because once employed and you get your masters, your college degree basically is 'overwritten' with the school you get your masters from for all purposes. Who ever thought they should be entitled to dicking around for 4-6 years and then get an education and then cry about money? I worked all through college and graduated with zero debt.

One simply cannot have a discussion about Walmart's wages without someone bringing up Costco. It seems to be de rigeur, like tipping your waiter, calling your mother on her birthday, and never starting your thank you notes with the words "Thank you". So lets get it out of the way before the supper gong goes.

Obviously, there's a pretty pleasing narrative for labor activists:

A Sam's Club employee starts at $10 and makes $12.50 after four and a half years. A new Costco employee, at $11 an hour, doesn't start out much better, but after four and a half years she makes $19.50 an hour. In addition to this, she receives something called an "extra check"—a bonus of more than $2,000 every six months. A cashier at Costco, after five years, makes about $40,000 a year. Health benefits are among the best in the industry, with workers paying only about 12 percent of their premiums out-of-pocket while Wal-Mart workers pay more than 40 percent.

In response to this post, Matt Yglesias says that Costco's margins are lower than Walmart's, so pretty clearly, there's room for them to lower the margins and give the money to the workers. Quite possibly so, but I'm not actually sure how well this argument really works. It would be a good argument in the case of, say, steel plants or automakers, where the business models are all about the same. But Walmart is not just a poor man's Costco. They're very different businesses, with very different labor models, demographics, and revenue streams. And those things work together: the fact that Costco is doing great with a given labor model or profit margin does not therefore mean that Walmart could easily follow the same course. With depressing regularity, you see pundits and activists asking "Why can't Walmart be more like Costco", which is a little like asking why Malcolm Gladwell can't be more like Michael Jordan. I mean . . . um . . . where do I even start?


How about with some basic figures about Costco and Walmart? I, er, just happen to have a handy little table right here. Just something I threw together, you know. No trouble at all.

What do you notice? Costco has a more highly paid labor force--but that labor force also brings in a lot more money. Costco's labor force, paid $19 an hour, brings in three times as much revenue as a Walmart workforce paid somewhere between 50-60% of that. (There's a bit of messiness to all these calculations, because of course both firms have employees who don't work in stores--but that's the majority of their workforce, so I'm going to assume that the differences come out in the wash.)

This is not because Costco treats its workers better, and therefore gets fantastic productivity out of them, though this is what you would think if you listened to very sincere union activists on NPR. Rather, it's because their business model is inherently higher-productivity. A typical Costco store has around 4,000 SKUs, most of which are stacked on pallets so that you can be your own stockboy. A Walmart has 140,000 SKUs, which have to be tediously sorted, replaced on shelves, reordered, delivered, and so forth. People tend to radically underestimate the costs imposed by complexity, because the management problems do not simply add up; they multiply.

One way to think about this is Thanksgiving dinner: how come you, who are capable of getting a meal on the table 364 nights of the year, suddenly find yourself burning things, forgetting the creamed onions in the microwave, and bringing the mashed potatoes to the table a half an hour late? Because when you're cooking sixteen things instead of four, it is not the same as cooking four four-item meals. There are all sorts of complex interactions involving things like heating times and oven space, and adding more people to the problem, while probably necessary, itself multiplies the complexities.

Walmart has tried to reduce ("rationalize") the number of SKUs, but they were forced to backtrack and restore over 8,000 items to their stores. That's because most Costco shoppers are opportunity shoppers--they buy whatever is on sale at the moment, and supplement with frequent trips to the grocery store. Many Walmart shoppers, on the other hand, rely on the store for the majority of their needs--it has to be everything to everyone. That's really expensive, and it requires a lot of labor to keep track of all of those SKUs, figure out where to shelve them, etc. Walmart uses a lot more labor per sale than Costco does because it sells more than one kind of gum, and not always by the 24-pack.

You know how your husband hates going to Costco because you have to stand in line for twenty minutes? That's another part of Costco's low labor costs. Except for its very busiest days, like Black Friday, Walmart keeps more registers open, which speeds your passage through line, but also wastes expensive worker time standing at the checkout and waiting for people to come by. Again, this is not just some idiosyncratic decision that the stores have made because, well, people are different: customers will wait in line at Costco because they don't go there very often. At Walmart, which is many peoples' grocer, clothier, and auto supply shop, long lines would cost them a lot of business.

Costco's higher revenues are also a function of their demographic. Costco shoppers have an average income of $85,000--not surprising, because Costco tends to locate itself in affluent suburbs. Walmart shoppers are what the firm calls "value driven shoppers" which is to say, there's not a lot of spare money lying around the house, just waiting for an opportunity to buy a 6-lb wheel of Camembert. Value driven are very price conscious, and willing to forgoe things like service or artful displays in order to shave an extra 50 cents off the weekly shaving cream budget. If you've been wondering why Walmart seems serenely unworried that last Friday's labor action will touch of a boycott, this is why. If you took all the people in my twitter feed expressing excitement about a new era of labor organizing last Friday, I'd be very surprised to learn that they had spent as much as a thousand dollars between all of them at a Walmart last year.

Meanwhile, to speak more directly to Matt's point, Costco's margins are lower than Walmart's because they're basically a grocer with a sideline in televisions and kitchen gadgets. Margins are very slim in the grocery business: it's a big part of peoples' budgets, it's not particularly fun shopping, and people have a good sense of what the prices would be because they shop very frequently. Plus the losses to shrinkage and spoilage are very high. On the flip side, no matter how bad a recession gets, people still buy groceries, so those margins are pretty safe; if that weren't the case, we'd have lost all our grocers, along with our national dignity, in 2009.

Costco is doing very well for a grocer, but very poorly for a department store, the category to which Walmart technically belongs. Target, the store that is most like Walmart (albeit with a younger, more upscale demographic), has a profit margin of 4.1%.

One final thing that's worth pointing out is that Costco doesn't even make money selling the groceries and the six person hot-tubs. Their annual membership fee revenue exceeds their net profit--which is to say that the actual business of selling stuff is operating at a loss. They're charging you an annual fee to buy stuff at or near cost. That's a model that works really well with their basically affluent customer base, and not incidentally, a model that allows you to worry a bit less about your cost of sales. Sam's Club tries to do the same thing, but caters to a lower-income clientele and makes a lot less money despite having more stores.

The point of all of this is to say that while it might be true that Walmart could make more money by adopting Costco's labor model, there's no particular reason to think that this would be so. The differences in their labor models are not just some sort of personal preference, or ideological choice*; they're responses to the way that labor needs to be deployed to do the quite different things that these stores do. We say that "they're competitors" because they do compete with eachother in some markets, for a handful of SKUs. But very few people could replace their trips to Costco with visits to Walmart, or vice versa. Despite the superficial similarities (cheap stuff in large store) they're really very different, and you can no more graft one's labor model onto the other than you can buy a single pack of gum in the Costco checkout.

This is, of course, a separate question from whether a union should force Walmart to change its labor model; I'm merely addressing Matt's claim that there's obviously plenty of room for Walmart to lower margins, and more importantly, the rather fatuous argument that they should obviously do it voluntarily because it's better for everyone--the evergreen platitudes that I have wearily begun thinking of as the "Costco Shows it's Possible" story. Matt thankfully does not make that argument, but by God, everyone else does, so I'm afraid I've got a bit of pent up steam on the subject. Costco shows it's possible to be Costco and pay the wages that Costco pays. They have not demonstrated that it is possible to be Dollar General while doing the same.

I don't necessarily have much of a takeaway here--other than "Megan has accumulated a lot of factoids about Walmart and Costco that she would like to inflict upon her audience"--though I supposed I'd argue that before you decide whether this will be on net a good thing, you'd want to know whether changing the labor model would mean changing the business model--whether emulating Costco's admirably high pay would also mean emulating its extremely lean staffing models. That's something you need to know before you decide whether unionizing would, on net, make Walmart's 1.3 million US associates better off.


* So actually, Costco's labor model is partly an ideological choice; its founder and longtime CEO, James Sinegal, was a fairly committed progressive who paid himself a very modest salary. (He did, of course, own a good bit of stock). There is some question about whether this is going to continue long term; Sinegal overrode his executives on a bunch of stuff related to compensation. One signal to pay attention to: the incoming CEO makes more than twice what Sinegal did, though his mid-high six-figure salary still pales in comparison to the CEO of Walmart.

But whether or not Sinegal's ideology mattered, he would have had a hard time paying those kinds of salaries in a Walmart style operation, which is much more labor intensive, so that each extra dollar of wages cuts more deeply into the bottom line.