Wednesday, August 21, 2013

Walmart: The Greatest Basis Pointers

Excerpted from the Real Walmart: The very highest level of performance at Walmart will net you an annual raise of just $.60 per hour, capped for each job title. Last year, only 18 percent of hourly workers received any pay raise at all. If an employee is so industrious as to rise to the management level (of say, "check out supervisor") their pay will be $1.70 more than that of the lowest paid employee. But in a typical Walmart store, there may be 200 employees and only a handful of salaried managers. Getting one of those few positions is more like winning a lottery rather than any reliable path toward upward mobility.

Walmart's wages and benefits are so low that many of its workers have to rely on Medicaid and other social services to support their families, costing taxpayers between $900,000 and $1.75 million annually per store in the state of Wisconsin, where these costs were calculated. That's a taxpayer tab of at least $67.5 million each year -- just for the state of Wisconsin alone.

If Walmart wanted to improve workers' lives, it would allow more of them to work full time, and thus have access to health insurance and other benefits. Instead, the company keeps a tight lid on full-time work, thus denying benefits to about 70 percent of its store employees.

(*But globalists like Bill and Hillary Clinton love Walmart...and let's not forget their past.)

Walmart has been a major supporter of the Clintons since Bill's days as governor of Arkansas. In fact, Hillary was a member of Walmart's Board of Directors for the six years leading up to her husband's first presidential campaign in 1992. By 1993, tax returns showed the Clintons owned more than $100,000 worth of Walmart stock. In 2008, the company made substantial contributions to Hillary's presidential campaign, while Bill has maintained a close personal relationship with Walmart CEO H. Lee Scott.

If Hillary runs in 2016, it will be in the post-Citizens United era of the SuperPac. These are made by billionaire contributors, and there are few billionaires as wealthy as the scions of Walmart -- the six Walton heirs together own as much wealth as 40 percent of the U.S. population. The candidate who has them has the atom bomb in the SuperPac wars.

Walmart claims, "We work directly with manufacturers, eliminating costly markups." If by "work with," the ad means "dictate to," then this claim is accurate. But again, as Charles Fishman, the business reporter who wrote The Walmart Effect asks, what is "the high cost of these low prices?" Walmart's market power is such that many of its suppliers face a stark choice: take dictation from Walmart, or lose half or more of their business.

"To survive in the face of [Walmart's] pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas."

Just ask Steve Dobbins, CEO of 75-year old Carolina Mills, a company that supplies thread and yarn to textile manufacturers -- half of whom supply Walmart. His company grew steadily until 2000. Then his customers, with Walmart's gun to their heads -- began a hemorrhage of offshoring in order to find the dirt cheap labor necessary to meet Walmart's low price demands. Carolina Mills shrank from 17 factories to 7 within three years. The way Walmart "works with" its suppliers has been disastrous for American workers.

From Rick Sloan, Union of Unemployed - From the corner offices with the billion dollar views to the cubicles with multiple computer screens, the pressure to produce profits is intense. So frenzied is their appetite for profits that piranhas are sedate by comparison. And yet, decisions driven by a basis point -- 1/100 of one percent -- can determine our fates.

It is no longer Wall Street versus Main Street. That's too trite. The Basis Pointers have gone global. No continent is immune. No community can escape. No one’s job is safe.

The irony of ironies is that Basis Pointers revel in Creative Destruction, a concept borrowed from Karl Marx and popularized by Joseph Schumpeter after WWII. In Capitalism, Socialism and Democracy, Schumpeter wrote that "the same process of industrial mutation... that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism."

The cycle of destruction is endless. Walmart buys so much product that they dictate pricing to suppliers, driving down the suppliers' profits, and putting other suppliers out of business. All along their supply chain, workers end up out on the street... over a few basis points difference in unit costs.

Goldman Sachs buys and stores aluminum ingots, then moves tons of them from one warehouse to another. By doing so, they drive up the price of soft drinks and beer cans by a few basis points... adding up to more than a billion dollars in profits a year.

Schumpeter's Creative Destruction is speculative. For a few basis points here or there, capital will flow... except to all those who seek to build a better life for themselves and their families. Builders - those who make things and make things happen - find that Creative Destruction is aimed at their jobs, their plants, offices and stores and their communities. They fear the Basis Pointers. They know that, with a click of a mouse, the Basis Pointers can wreak havoc on a global economy.

And yet, the Basis Pointers are not gods. They, too, put their pants or pant suits on one leg at a time. They, too, error. They loathe the algorithms that dictate their lives. And what they fear most are the Builders, who easily outnumber them.

In our Democracy, numbers count. In the municipal, special and gubernatorial elections this year, few Basis Pointers will bother to vote. But the Builders will. And their votes will be decisive. Who represents the Builders? Who shills for the Basis Pointers? (*Besides crony capitalists like Obama, Bill and Hillary Clinton...and Republicans like Mitt Romney and George W. Bush. Both political parties have abandoned the American worker.)

From Boston to Detroit, from Richmond to Rahway, from Staten Island to Harlem, the test is the same. Ask which candidate is collecting mega-bucks from the banks, brokerages and hedge funds. The answer won't come as much of a surprise. (*Globalists like Bill and Hillary Clinton and most of the multi-billionaires on the Forbes 400 list.)

* It's been well-noted that the capital gains tax (first initiated in 1921) was one of the greatest driving forces behind income inequality. Everybody made a big deal about "the Bush tax cuts" --- but it was Bill Clinton who lowered this tax from 28% to 20%...which gave the signal to all the big campaign donors (the top 1%) that it was OK for George W. Bush to lower this tax again, from 20% to 15%. Under Obama, as of 2013 it only went back up to 20% --- so Warren Buffett's secretary is STILL paying a higher tax rate than her billionaire boss.

The Wall Street Journal: "Political allies of Vice President Joe Biden have concluded that he can win the 2016 Democratic presidential nomination—even if Hillary Clinton enters the contest—and are considering steps he could take to prepare for a potential candidacy. The last sitting vice president to fail to win the nomination was Alben Barkley, who served under Harry Truman and lost out in 1952."


  1. Today Walmart is the largest private sector employer in the U.S. with more than 1.3 million employees. A Reuters survey of 52 stores run by the largest U.S. private employers showed that 27 of them were only hiring temporary workers --- including America's largest employer, Walmart, who calls temps "flexible associates". And America's second largest private sector employer is a temp agency called Kelly Services with 538,000 workers.

  2. One very simple thing would put an end to this. Break these companies apart into 50 companies (one per state), or better yet, break them apart by counties. They would lose their monopoly power overnight.

  3. UPDATE: DEC. 15, 2015

    Wal-Mart claims the "OUR Walmart" campaign violated an NLRB protective order by giving documents to Bloomberg Businessweek detailing how the retailer prepared for Black Friday strikes and rallies in 2012.

    Wal-Mart hired a division of the defense contractor Lockheed Martin to monitor activist activity online and was in contact with the FBI about the protests, the report showed.

    OUR Walmart, which is now unaffiliated with the United Food and Commercial Workers union, accessed the documents during an unfair labor practices proceeding at the NLRB. In its motion, Wal-Mart blames the leak on both OUR Walmart and UFCW and asks the NLRB to bar the groups from using the documents in future board proceedings.

    Wal-Mart says its surveillance activities were aboveboard; OUR Walmart and UFCW say the retailer's latest arguments are meritless.

    More from Businessweek's Josh Eidelson here:

    Read Wal-Mart's NLRB filing here: