Wal-Mart & Our New Gilded Age


(Signe Wilkinson via GoComics.com — click link for full-sized image)

Harold Meyerson, at the Washington Post, on “Wal-Mart’s strategy of deniability“:

… Over the weekend, a horrific fire swept through a Bangladesh clothing factory, killing more than 100 workers, many of whose bodies were burnt so badly that they could not be identified. In its gruesome particulars — locked doors, no emergency exits, workers leaping to their deaths — the blaze seems a ghastly centennial reenactment of the Triangle Shirtwaist fire of 1911, when 146 workers similarly jumped to their deaths or were incinerated after they found the exit doors were locked.

The signal difference between the two fires is location. The Triangle building was located directly off New York’s Washington Square. Thousands watched the appalling spectacle of young workers leaping to the sidewalks 10 stories down; reporters and photographers were quickly on the scene. It’s not likely, however, that the Bangladesh disaster was witnessed by anyone from either the United States or Europe — the two markets for which the clothes made inside that factory were destined. For that, at least, Wal-Mart should consider itself fortunate….

If this were an isolated incident of Wal-Mart denying responsibility for the conditions under which the people who make and move its products labor, then the Bangladeshi disaster wouldn’t reflect quite so badly on the company. But the very essence of the Wal-Mart system is to employ thousands upon thousands of workers through contractors and subcontractors and sub-subcontractors, who are compelled by Wal-Mart’s market power and its demand for low prices to cut corners and skimp on safety. And because Wal-Mart isn’t the employer of record for these workers, the company can disavow responsibility for their conditions of work…

This system isn’t reserved just for workers in faraway lands: Tens of thousands of American workers labor under similar arrangements….

Other discount retailers — notably Costco and Trader Joe’s — pay their workers far more, train them more extensively, have much lower rates of turnover and much higher rates of sales per employee, according to a Harvard Business Review article by Zeynep Ton of the MIT Sloan School of Management. Costco is a very profitable business, but Wal-Mart maintains an even higher profit margin, which it achieves by underpaying its employees. The conservative economic blogger Megan McArdle estimates that if Wal-Mart held its profit margin down to Costco’s level, its average worker would make about $2,850 more each year — a considerable increase in a sector where workers’ earnings average less than $25,000 a year….

Naturally, McArgleBargle (after saying that “arguably, the higher wages that FDR’s policies pushed for helped prolong the Great Depression”, because that’s another lie the Robber Barons are trying to mainstream) insists that “$2850 a year… is substantial but far from life-changing.” Why, that’s not even two Thermomixes, not that Wal-Mart shoppers should even aspire to own Thermomixes! And after all, “Further wage improvements would have to come out of the pockets of Walmart’s extremely price conscious shoppers”, because reducing the Walton heirs’ multi-billion-dollar profits is literally unthinkable to Megan McArdle!

Somebody’s going to re-write Diderot’s notorious aphorism to reference the last vulture capitalist and the last Kochsucker apologist.

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57 replies
  1. 1
    Linnaeus says:

    I love the smell of neofeudalism in the morning.

  2. 2
    Nicole says:

    Thanks for the link to that privileged moron’s piece, Anne Laurie. I just read it and now I’m stewing mad. Which is good, as I am up late doing work and needed something to give me an energy jump. Now, if I can just see my work through the red film over my eyes…

  3. 3
    👽 Martin says:

    “Further wage improvements would have to come out of the pockets of Walmart’s extremely price conscious shoppers”, because reducing the Walton heirs’ multi-billion-dollar profits is literally unthinkable to Megan McArdle!

    Yeah. She’s fixated on WalMarts 3.5% profit margin, but that’s on half a trillion dollars in sales. That leaves a hell of a lot of raw profit – $25B last year. If they converted 20% of their net profit into wages, that’d be a $5,000 a year raise for every employee.

    The overall problem we have is that wages/GDP is at a historic low. Only 44% of our GDP is returned as wages. Prior to Reagan, it was pretty reliably 50% or higher. Corporate profits are at record highs of 11% of GDP, and historically they were 7% or lower.

    Clearly we need to convert profits into wages. Getting wages up to 50% of GDP would be giving US workers an $800B raise – or about $6,000 per worker. A $3 rise in minimum wage would just about do it. Oh, hey, that’s what it should be if we increased it with inflation over the last 40 years.

  4. 4
    MoeLarryAndJesus says:

    Megan McArdle longs to bathe in the tears of Third World orphans.

    She’s heard they make one’s skin ever so supple in one’s middle years.

    How dare anyone judge her for such a thing?

  5. 5
    Linnaeus says:

    @👽 Martin:

    Hush, now. That’s socia1ism.

  6. 6
    Linnaeus says:

    @MoeLarryAndJesus:

    When you own a big chunk of the bloody Third World, the babies just come with the scenery.

  7. 7
    PeakVT says:

    Poking around on Wikipedia, I found out that there was an even larger garment factory fire in Pakistan earlier in the year. Once again, exit doors were locked.

  8. 8
    dollared says:

    @Linnaeus: Nice. Says the girl from Cleveland.

  9. 9
    PeakVT says:

    From the NYT link:

    Prime Minister Sheikh Hasina offered prayers and sympathy for the families of the dead as her cabinet declared that Tuesday would be a day of national mourning. At the same time, she voiced suspicions that the fires were arsons intended to undermine the country’s garment industry. Without presenting any evidence of a broader conspiracy, she called for vigilance against sabotage.

    I think that’s a pretty vile attempt at distraction by the Bangladeshi PM. Even if there was sabotage, that doesn’t excuse (if the allegations are true) the factory owner from not having emergency exits or locking exit doors.

    There are quite a few incidents of blocked exits resulting in fire disasters.

  10. 10
    Ruckus says:

    Pay workers out of profits? That’s just stupid. Those people wouldn’t know what to do with those profits. They wouldn’t invest it in offshore banks, they wouldn’t buy a $1500 mixer, they still wouldn’t be able to take a vacation in Barbados, and most important they still wouldn’t be able to throw a party that would be worthy of mcbargles attending. Why would you want to waste profits like that?

  11. 11
    Villago Delenda Est says:

    I might note that Costco is loathed on Wall Street because it treats its employees as human beings. As an integral part of the enterprise.

    This notion is absolute heresy to the Galtian garbage of the US financial industry, and such vile insects as the McArdle creature.

  12. 12
    Villago Delenda Est says:

    @👽 Martin:

    Clearly we need to convert profits into wages

    I think the most efficient way to do that would be to convert MBAs into Soylent Green.

  13. 13
    mai naem says:

    @Villago Delenda Est: There was an article in Business Week about MBAs getting the highest ever average starting salary which in the six figures. I’m surprised Ms. Himalayan Salt didn’t mention that the exits were locked so that other Bangladeshis who wanted those jobs so badly couldn’t get in.

  14. 14
    TheMightyTrowel says:

    This is wildly off topic, and for that I feel bad because this topic is extraordinarily important, but I promised muddy I’d post a gluten free cookie recipe and i’m off to bed soon so this thread will have to do. I’ll post it again in another open thread later your today/my tomorrow.

    Fior di Mandorla (almond blossoms)

    400g ground almonds
    200g sugar
    100g honey
    1 teaspoon cinnamon
    zest of 1 lemon
    2 egg whites
    powdered sugar (=icing sugar)

    preheat oven to 150C (ca 300F, gas mark 2)
    mix ground almonds, sugar, honey cinnamon and lemon zest together
    add only enough egg white to make a soft, firm paste (careful not to make it too wet!)
    start kneading the mixture while it’s still dry – like damp sand – the oil in the almond will help hold it together.
    shape into little cakes about 5cm in diameter and place on greased foil on a baking tray
    bake for ca 20 min and allow to cool
    dust with powdered sugar before serving.

  15. 15
    Keith G says:

    If we don’t like the way WalMart operates, we need to counter their actions with systemic solutions. That will take a while but such solutions will be more thorough.

    TAP is running a series of essays on long term strategies to construct a more powerful progressive movement. We can disparage WalMart to little real effect or we can drain the swamp in which this corporate snake dwells.

  16. 16
    Kane says:

    Donald Trump shirts that are sold at Macy’s are also made in Bangladesh. I wonder if this is the same factory.

  17. 17
    Schlemizel says:

    That $2850 ArgleBargle moos at is nearly a 12% raise for a Walmart employee. Now I understand that the cows calculator is broken so she couldn’t figure that out exactly but is the gastritis still acting up because I worked that out in my head just by looking at the two numbers. Someone should ask her if she couldn’t afford better silage with a 12% raise.

    Wally could do even better without asking the worlds richest family that does not own an oil country to shed a nickle. If they added a penny to the price of every product over a dollar they could pay for all the benefits and still give employees a nice raise. Which many would spend at Walmart thereby increasing revenue.

    70% of the US economy is consumer spending. If that fact does not turn a light on in McArgelBargles tiny brain about the advantages of higher incomes perhaps she should see a proctologist

  18. 18
    Schlemizel says:

    @Kane:

    In the last decade there have been something like 30 factory fires at third world garment plants. At the moment I forget how many hundreds have died in them.

    I don’t think it is just Wally or Donny. I’m guessing is Target and K-Mart, Sears and JCP, Macys and Nordstroms, LL Bean and Eddie Bauer. We as a nation (perhaps without our consent but more and more with our full knowledge) live on the backs of very young children in far away countries.

  19. 19
    greennotGreen says:

    @Villago Delenda Est: ” I think the most efficient way to do that would be to convert MBAs into Soylent Green.”

    Being plagued with insomnia last night, I stayed up way into the wee hours reading comic strips. Your comment was the first thing that made me laugh!

  20. 20
    Gindy51 says:

    @Villago Delenda Est: It’s also the only big box tore I will ever enter so Wall Street can go hang.

  21. 21
    Lurking Canadian says:

    @Schlemizel: But we needn’t worry about the people dying in the fires, because they were lucky to have those jobs instead of working in a rice paddy. /free trader

  22. 22
    sparrow says:

    @👽 Martin: This reminds me of a joke from the presidential campaign season:

    A worker, a union leader, and Mitt Romney are at an office party. There are 12 cupcakes. Romney eats 11, then says to the worker, “watch out for that union guy, he’s coming for your cupcake.”

  23. 23
    cmorenc says:

    The big problem with forcing reforms on Wal-Mart is that the store is wildly popular (because of its low prices) with the lower-half of the middle class population: people in the 20K to 50k range, a huge swath of whom are just a notch or two above the level of typical Wal-Mart employees. It will be difficult to successfully pressure Wal-Mart without finding a way to break the Wal-Mart ingrained shopping practices of this key segment attracted by the low prices facilitated by abusive low-wage practices.

  24. 24
    Elmo says:

    Not life changing?
    $2850 a year is almost $250 a month. Call it $175 a month after taxes.
    That’s a car payment.
    If you already have a car, that’s being able to afford to keep it running.
    That’s tires.
    That’s the electricity bill.
    Jesus Christ, how can she possibly not understand that the difference between having a car and taking the bus to work is, literally and completely, life changing?
    It’s being able to take your kid to the doctor.
    It’s being able to see a dentist.
    It’s having Christmas, for God’s sake.
    I just – I can’t even.

  25. 25
    Schlemizel says:

    @TheMightyTrowel:

    Those sound pretty good actually – I may whip up a batch for the heck of it.

    BTW I posted a pretty damn delectable gluten free cookie recipe on BJ last week – who is this muddy person?

  26. 26
    Lurking Canadian says:

    @Elmo: She means “it wouldn’t change MY life” and since she is the only person who matters (with the possible exception of Suderman), that’s enough.

  27. 27
    danielx says:

    There aren’t really all that many people that the word ‘twit’ accurately describes, but for McArdle it’s perfect.

    ‘Clueless fuckwit’ matches her pretty well. Also. Too.

  28. 28
    Schlemizel says:

    @cmorenc:

    Here is the deal though – if Wally added and average of 15 cents to the bottom line of every sale nobody would notice but it would pay for the benefits for its employees and give them a raise on top of it.

    Wally just opened a new store here & is trying to run the local groceries out of business. They run these full page ads and tv spots showing savings of 15-20 bucks on a basket of groceries compared to the local stores. 15 cents would not even register.

  29. 29
    Schlemizel says:

    @Lurking Canadian:

    Angling for a job at the WSJ I see 8-{D

  30. 30
    cmorenc says:

    @Schlemizel:

    Here is the deal though – if Wally added and average of 15 cents to the bottom line of every sale nobody would notice but it would pay for the benefits for its employees and give them a raise on top of it.

    I’m entirely in agreement with your observation here. Nevertheless, it’s still difficult to force Wal-Mart (with its current corporate mindset) to make even this modest change, unless you can induce their customer base to make a sufficient show of supportive rebellion. Far too many habitual Wal-Mart customers are wilfully oblivious and indifferent to how Wal-Mart brings them the benefits of low-priced goods.

  31. 31
    Soylent Green is FReepers says:

    @Villago Delenda Est: Hey now, let’s not threaten the purity of the Soylent Green product by mixing MBA’s into it. You don’t know where some of those MBA’s have been.

  32. 32
    r€nato says:

    I actually dared to venture into McArgleBargleLand. I’m glad to see that she does respond to her commenters on occasion, but she sure as shit ignores the many commenters who point out her vulgar sense of entitlement and privilege.

    Anyone who thinks that an extra $2800 a year doesn’t matter to someone who makes $20,000 a year (bah! they’d just waste it on medical care or car repairs!) is certainly a candidate for being first against the wall.

  33. 33
    Original Lee says:

    @cmorenc: Back in the day, Wal-Mart was wildly popular with that demographic because the owners made a big deal about how everything they sold was Made in the U.S.A. as well as being reasonably priced. I have found a handful of things in our local stores that are made in this country in recent years, but I really had to look hard to find them. Wal-Mart is now all about the cheap.

  34. 34
    Svlad Jelly says:

    I make $18,000 a year — you bet your fucking ass $2,850 would change my fucking life. Buddha’s hairy balls, I hate that damn woman.

  35. 35
    Peregrinus says:

    @Svlad Jelly:

    Hell, I make $38,660 and you can bet $2,850 would change my life as well. That’s rent for two months and half for a third, student loan payments for four months, two extra courses in my master’s, a down payment on a car, enough to cover a major medical procedure for either myself or Peregrina should we need it . . . Shit, $2,850 would be more than our yearly raise, plus what I would get for completing a master’s. Even at this income level it would be huge.

    So, to sum up: Fuck Megan McArdle.

  36. 36
  37. 37
    gene108 says:

    @PeakVT:

    I found out that there was an even larger garment factory fire in Pakistan earlier in the year.

    I’m wondering, when people will defend Wal-Mart by blaming Muslims for being inherently unethical.

  38. 38
    muddy says:

    @TheMightyTrowel: Thank you so much!

  39. 39
    handsmile says:

    Much fully justified anger and disgust here with McArdle, whose dispatches from Versailles never fail to expose her malignity and moral corruption.

    But I’d like to thank Anne Laurie for linking to Harold Meyerson, a sadly underappreciated columnist whose byline is among the very few reasons to link to Kaplan Test Prep Daily (Dana Priest, Greg Sargent, Ezra Klein being the others). I believe Meyerson is the only columnist now writing for a major American newspaper whose subject is almost always labor issues or the economic plights of the middle and working classes. He deserves much wider recognition, broadcast media visibility, and praise.

  40. 40
    muddy says:

    @Schlemizel: This muddy person. I must have missed that recipe last week, please share again?

  41. 41
    Walmart's serf says:

    Long time lurker, I post very rarely.

    I find myself fascinated by these discussions because I work at Walmart and people have no idea what it is like. But the argument remains consistent, besides liberal progressive blogs like this one, everyone else I know still shops at Wal-mart, my store is having the best year ever. And the manipulation of the workers continues despite the flashes of fire. Raising the wage by $3.00 would indeed be life changing for me and my the vast majority of my colleagues. Let me tell you about them.

    We have a full time front end supervisor with Wal-mart insurance. Her husband became ill with a life threatening disease. She couldn’t afford her medication or her husband’s. It was four days until pay day. How much did she need? $10.00. I organized a front-end fund-raiser, and people were giving me their last five dollars, and when I turned it down, because it always seems to be the poor supporting the poor, they would insist, saying I have gas, I have food, I have everything I need. No salaried manager-who on average nets about $2500 every two weeks, contributed.

    I live in a Northern climate, and one of our hardware associates needs new shoes his has holes in them. The problem is that his son needs therapy too. I talked to my family, and we decided instead of Thanksgiving this year, we would put that money on a Visa gift card and anyomously donate it to this worker.

    One of our grocery associates was so poor that the store gave him a thanksgiving box. Yes, a big production was made over how awesome our store is, we donate food to our workers at the holidays. I wanted to scream at the meeting when they announced this program and were bragging about how kind and benevolent Wal-mart is, “Why is no one asking why isn’t this worker getting paid a living wage to buy his own damn food?”

    I am forgoing medication that isn’t necessary at the moment, until my next pay period. it’s just to help with my sucidal mood swings during my perimenopausal periods, so it’s not like I am going to die without it. But what if I were like Doris and needed this medication to save my life?

    And, here’s the thing, our customers and the vast majority of people in our area don’t care. I read worked National Serf Day(Black Thursday-Friday) and I was thanked no less than five times for not protesting and walking out of the store by customers. See, they don’t want to feel uncomfortable. My store is having it’s best year ever saleswise. The prevailing attitude is if you don’t like it here, get a job somewhere else. I dont’ know how to conteract that argument very well.

    As for what an extra $2580 would do for me a year? I could replace my three year old glasses. I could use it to fund some sort of training program so I could find a slightly higher paying job. I could replace the tires on my car.

    We are getting a bonus on December 7th, and extra $500 as part of “profit-sharing” plan. Let me tell you what Wal-mart has planned for our $500. We will on our next payday, be given a 20% discount off an entire transaction. When I said, so basically, Wal-mart has tapped into our behavior patterns, and has conveniently scheduled the bonus to be delivered at the same time as their bonus 20% off for employees discount? How awesome that we worked so hard to give them a huge profit and then they turn around and make more off of us. I am going to do my level best not to spend my 20% bonus at Wal-mart this year.

  42. 42
    Steeplejack says:

    @Elmo:

    This. This. This.

  43. 43
    Walmart's serf says:

    sorry for the misspellings. I don’t proofread as well as I should.

  44. 44
    MobiusKlein says:

    1991, Hamlet chicken plant fire, USA. http://en.wikipedia.org/wiki/H.....plant_fire
    “Twenty-five were killed and 55 injured in the fire, trapped behind locked fire doors.”

    Time for a new golden age?

  45. 45
    Lojasmo says:

    @Schlemizel:

    500+ garment worker deaths in those 30 fires.

  46. 46
    Violet says:

    Realize I’m way late to this thread, but speaking of the Gilded Age, apparently the people who brought us Downton Abbey are creating a show about the Gilded Age, set in New York. Appropriate timing.

  47. 47
    celticdragonchick says:

    @Elmo:

    Yes. A thousand times yes.

  48. 48
    Maude says:

    Disney and Sears also had clothes made at that factory.

  49. 49
    ruemara says:

    @Walmart’s serf: May I steal this and repost? Typos and all, it’s the damned truth.

  50. 50
    Walmart's serf says:

    @ruemara:

    Absolutely.

    And I meant it, I don’t know how to counteract the whole “walmart customer apathy”. suggestions are welcome.

  51. 51
    pseudonymous in nc says:

    @Walmart’s serf:

    Thank you for posting this. It puts flesh to the bones of what I’ve always suspected about Walmart.

  52. 52
    Walmart's serf says:

    @pseudonymous in nc:

    Oh, yes, I think I should be more vocal about what it is like to work for Wal-mart.

    Thank you for the comment.

  53. 53
    TooManyJens says:

    Naturally, McArgleBargle insists that “$2850 a year… is substantial but far from life-changing.”

    Poor people aren’t real to them.

  54. 54
    Laertes says:

    @👽 Martin:

    That Comment Is Awesome. I want to use that stuff. Have you got links?

  55. 55
    mtraven says:

    @Villago Delenda Est: Wall Street may loathe Costco but the stock has done quite well over the last decade. I bought some of it back then and it is one of the better investments I’ve made, both in financial and moral returns.

  56. 56
    karen marie says:

    @Walmart’s serf: I shared this on FB, with a link back to your original comment. I fixed the typos for you. :)

    Thanks for writing it. It’s so easy for people to ignore the reality of life at the bottom, but once they read something like this it’s hard to forget when you’re in that store and face-to-face with “those people.”

    Although I was aware of the hardship, your essay really drove it home. Thank you.

  57. 57
    chris9059 says:

    @👽 Martin: Not to mention the increase in payroll tax revenue. Funny how all the “very serious people” pontificate about the need to “fix social security” but it never occurs to them that the way to do that is to increase wages.

Comments are closed.