Harold Meyerson, in the Washington Post:
This Wal-Mart low-prices, low-wages thing isn’t working out so well — even for Wal-Mart.
The company released its quarterly numbers last week, and they weren’t pretty. Same-store sales declined by 0.3 percent, and the company lowered its earnings-per-share forecast. Bad news wasn’t limited to Wal-Mart. At the low end of the retail consumer market, Kohl’s reported similarly bad news; Macy’s, a little higher up the food chain, lowered its earnings forecast as well.
While Americans with money are boosting both the housing and auto markets, the growing number of Americans without are curtailing their shopping. As Douglas McMillon, chief executive of Wal-Mart International, noted last week, “When we do see good things in the economy, sometimes they don’t immediately flow through to a paycheck. Remember how the average American lives.”
And who signs more paychecks than any private-sector employer on the planet? Ah, yes: Wal-Mart…
This is not the first time U.S. mass retailers have faced the problem of under-consumption. In the 1920s, as U.S. cities swelled, the low incomes of the new urban consumers posed a constant challenge to merchants. In contrast to today’s Walton family heirs, however, some of those merchants realized that the solution was to raise workers’ incomes.
In the ’20s, Edward Filene, whose family owned both its eponymous chain and the Federated Department stores, called for the establishment of a minimum wage, unemployment insurance, a five-day workweek, legalized unions and cooperatives where people could do their banking. (He helped establish some of the first banking co-ops himself.) The Straus family, which owned Macy’s, and shoe-magnate Milton Florsheim endorsed similar measures and were among the more prominent business leaders who supported Franklin Roosevelt’s New Deal. They were well compensated for their clear understanding of how to make an economy thrive: During the 30 years of broadly shared prosperity that the New Deal reforms made possible, department stores catering to the vast middle class were a smashing success….
scav
Probably not exactly a new development. Remember all the news reports where high-end retailers were the only ones doing well? Wally et all have been cruising along on the migration downward of formerly middle-range plus demand — they may be running out of downward drift and so the continually tightening signal breaks through.
beltane
They gutted the middle class, impoverished their customer base, and then whine that their victims are spending money. This is what happens when your entire business model is built on raw, mindless, almost locust-like greed. Unfortunately, our 1%ers have enough fat deposits on them to make it through several centuries of famine.
MattF
I’ll tell you ancient I am– I can remember when ‘Enlightened self-interest’ was considered a conservative virtue.
GeneJockey
Walmart has always depended upon the kindness of strangers. That is, they have depended for their customer base on other employers paying more than they do. The problem is that the presence of a Walmart in a community depresses wages, so it’s a game destined to eventually fail.
beltane
@MattF: There is a good reason why gluttony and avarice were considered sins until some time around 1980.
Botsplainer
It is supposed to be dripped down parsimoneously via ridiculous excess, but begrudgingly paid. Everyone knows this.
JPL
OT>>> TPM is saying that Beau Biden has a successful procedure done and will be released for the hospital on Thursday. He will then follow-up with local doctors.
I’m not sure what that means…
BTW.. Why are my tax dollars paying for the food stamps and health care of Walmart workers? Is it so the Walton’s can continue wallpapering their houses with hundred dollar bills?
BruceFromOhio
Its dead, wandering around unaware that its dead, and the Meyersons of the world are just starting to notice a peculiar smell resulting from trickle-down economics: the Waltons of the world pissing on everything else.
We had a good run.
@JPL:
Is it so the Walton’s can continue wallpapering their houses with hundred dollar bills?
Yes. This concludes the SATSQ for this thread.
Suffern ACE
@JPL: no. It’s so they can privatize your schools.
Joshua Norton
Ironically, Macy’s took over controlling interest of Federated Stores and after taking over Jordan Marsh in Boston, they shut down Filene’s flagship store across the street, turning that once thriving area into a sad shell of its former self.
piratedan
low prices are great, except when you only make enough to cover your bills, rent, food, then y’know, other shit just tends to wait. Only so many stupid debt free kids are being released into the wild each year and that lotto winners demographic tends to eschew WalMart savings
ruemara
I have 44 cents until payday. Wherein I have to choose between a bit of food for the next 2 weeks or paying my rent on time. Imagine how many fucks I give for the Waltons. May they and their heirs reap what they have sown for decades. I doubt Sam Walton would be proud of them. And if I ever have to shop in Boston, I’ll try to spend a bit at Filene’s. Well, if I have more than 44 cents.
Trollhattan
Great column. It therefore must be killed and buried, out back.
gene108
I always thought the issue with retailers was competition from internet shopping chipping away at already low margins.
Mark S.
I don’t know what the solution is, maybe cut the capital gains tax?
beltane
@ruemara: I prefer to defer purchases and wait until I can afford something that is of decent quality. When money is tight (and it is always tight) the worst thing in the world is buying something only to have it crap out a short time after. Once you realize that Wal-Mart’s merchandise is disposable garbage, their prices no longer seem so appealing.
wasabi gasp
Banquet table is running low on seed corn caviar.
Just Some Fuckhead, Thought Leader
@Mark S.:
Won’t do enough good unless you pair it with a repatriation corporate tax holiday.
RaflW
Gee! The titans of commerce are – just now! – barely noticing the thing progressives have been talking about for years, namely that a recovery that only benefits the 1% will be hollow and will, over time, screw up our consumer-based economy. Because most people can’t afford to consume much these days, even as the luxury end of the market has rebounded quite well.
Whoculdaknowed?
schrodinger's cat
@ruemara: Filenes is a part of Macy’s now. I used to like the old Filenes.
Tone In DC
Henry Ford knew this, too. The other 1 percenters listed in that quote (rich guys with actual brains) knew this 90 years ago. Sad.
Actual, fact-based economics, how does the fuck does it work?
les
Fucking Henry Ford, nobody’s idea of a raving liberal, figured this out. Wal-Mart may be the biggest cautionary tale of our age; so successful at moving money out of local communities and into the hands of a few that they killed themselves, along with the communities. To bad our kids will have to live the history.
RaflW
@GeneJockey:
Yes. But its worse than that. Wallmart’s obsession (shared by Target and many other retailers now) of lower prices uber alles has not only depressed the wages of the businesses in the local markets where Wallmart sells, they’ve also forced the closing of profitable but ‘expensive’ manufacturing in the USA and exported millions of jobs.
RaflW
I’d also add that a lot of what Wallmart sells at low prices is low quality.
It’s not a deal if it wears out or breaks faster than it’s more expensive competitor.
Linnaeus
@beltane:
Sounds like Sam Vimes’ “Boots” theory of economic injustice: in sum, it’s more “expensive” to be poor because you can only afford low-quality goods that wear out/break down more quickly (like $10 boots), and then you have to buy them again. Whereas, wealthier folk can afford $50 boots that last longer and, in the end, cost them less because they have to replace them less frequently.
GeneJockey
@RaflW:
Just so.
And for a while, you can keep folks feeling like they’re not losing too much traction by importing more cheap goods, lowering prices, lowering quality, and feeding cheap credit to folks whose wages aren’t going up, but over time it all goes horribly wrong.
A Conservative friend was japing me last year when I pointed to the corrosive effect of Walmart and such, by saying he was going to invest in them since he thought so well of their business model. I hope he did.
Linnaeus
@GeneJockey:
A friend of mine, who isn’t conservative, but nonetheless likes Wal-Mart, said that Wal-Mart actually serves liberal purposes by making more goods available to people who otherwise couldn’t get them (either due to cost or lack of availability).
I don’t buy that argument, but a surprising number of people do.
Villago Delenda Est
I know I sound like a broken record on this, but an obscure Islamo-socialist-atheist Scotsman figured this out over two centuries ago.
However, no one in modern business has ever read his fucking book, so the knowledge is lost for all time.
GeneJockey
@Linnaeus:
I hope you have other, smarter friends. ;-)
Southern Beale
The tremendous irony here that the country’s largest employer is also underpaying their primary customer … it’s like that snake eating its tail thingie. If Walmart gave every one of their employees a big raise they’d see their sales go up exponentially.
Stupid greedy mo-fo’s…. they never learn.
EconWatcher
Marx identified the tendency toward underconsumption as one of the central contradictions of the capitalist system. And they say he’s no longer relevant….
Chris
But admitting that today would be heresy against the Cult of Ayn Rand, as it implies that Little People play a role in the cycle of wealth creation, and that wealth isn’t simply something that Job Creators conjure out of thin air solely through their own genius, hard work and awesomeness, and then give to the Little People out of their infinite generosity.
Even worse, it implies that increasing wealth at the bottom (raising poor and regular people’s wages) will have a beneficial effect on the people at the top. That would contradict decades of people screeching “it would ruin us to have to pay higher wages! RUIN us!” as well as officializing the exact opposite of Reagan’s trickle down gospel.
danimal
@Just Some Fuckhead, Thought Leader: Gonna have to advise we go for the whole package and reduce the minimum wage as well.
RaflW
@Chris:
Which I believe is summed up as “shit rolls down hill”
(OK, that’s technically not trickling, but you get the gist)
Roger Moore
@danimal:
FTFY. Getting rid of the 40 hour work week, overtime pay, and restrictions on child labor would supercharge the economy, also, too.
J R in WV
@Linnaeus:
I had a fellow working as my helper who was really down, lost his wife, then his job, then his house, moved to his sister’s where there were no jobs.
He had a pair of boots from Walmart: they hurt (damaged ! ) his feet, they left ugly marks on the new floor we were working on. I gave him a pair of extra boots I threw in the truck when I left to go work the job away from home.
His feet healed in about a week, and there were no more marks on the floor.
Nothing for sale at wallyworld is worth anything. No matter how inexpensive it is, it is even cheaper and more worthless.
Never darken the door of Walmart, drive however far you need to to get to a real store.
RaflW
@danimal:
Not nearly bold enough. This Wall-Mart profit crisis demands expansive, risk-taking thinking. Like the total elimination of the minimum wage, work hour rules, and child labor bans.
Do all that and you’ll have a prosperity boom the likes of which you never imagined.
Ever.
(ETA: Or what Roger Moore said)
Ken J.
I repeat myself, but Reagan brought us the concept of “surplus people,” and middle-class Americans have largely bought into this thinking, never realizing that eventually they too would form part of the surplus.
Also, the Union movement has failed utterly at political education.
HeartlandLiberal
Well, when you destroy the middle class, and reduce 90% of the populace to wage slaves, and create an imaginary demon of debt that results in making it impossible to continue the credit spending required to sustain the engine of consumption, what do you expect?
It is not just people protesting Walmart, it is just the fact that the vast majority of American’s have seen their savings, their personal wealth, and their housing investment disappear in a puff of smoke, and they do not have the money or credit to keep spending.
Quod erat demonstrandum.
FWIW, we try to avoid Walmart out conscience, but honestly, for certain generic over the counter drugs in large quantities, they and Sam’s Club simply cannot be beat. It is a dilemma.
danimal
@Roger Moore: @RaflW: Obviously I’m not thinking outside the big box.
Comrade Dread
@Roger Moore: You should probably gut environmental protections too. Just to be sure.
Belafon
@HeartlandLiberal: I’m trying to break my wife of the Wal-Mart habit, but CostCo and Aldi do not have everything, and it can be hard to find some things at Target. It’s easier to shop at one big place. And sometimes you need something at 11:30 in the evening.
Villago Delenda Est
@RaflW:
Or, alternatively, don’t piss on me and tell me it’s raining.
Kristine
The estimable Pterry on the topic of cheap vs good:
“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness.”
Chris
@HeartlandLiberal:
But if the middle class society goes up in smoke, in its place is a disenfranchised peasantry… sure, the 1%’s wealth takes a hit, but they’re left even more powerful relative to the rest of us than they used to be. (And it’s not like they’ll ever be impoverished in any meaningful way).
The only question to me is whether they’re consciously trying to reduce the U.S. all the way into a Central American style oligarchy, or whether they’re insulated enough that they don’t realize it’s happening and actually believe all their “if we prosper, so will you!” bullshit.
Or maybe I should be asking which of them fall under category A and which fall under category B.
Roger Moore
@danimal:
Not at all. Your problem is that you’re failing to think inside the big box store.
beltane
@Chris:
Whatever their intent is, you can be sure that when the inevitable Chavez or Castro type come along they will except sympathy from those whose livelihoods and futures they so systematically destroyed. Alas, we will all be too poor to afford even the cheapest and tiniest of Wal Mart’s violins.
NotMax
Serious question: Wonder how many people get ill because most Wal-marts are just so freaking filthy?
MattF
I do think that the word on WalMart, that all they sell is crap, has gotten out. And I think the powers-that-be in WalMart management think that the answer to their problems is to squeeze their suppliers and squeeze their serfs just that much harder.
scav
@NotMax: Does it matter? So long as they buy at least some of the (palliative) drugs from there, it’s all in the black. Just needs to be good enough to avoid major lawsuits and those are few and far between.
The Moar You Know
@Ken J.: With a totality that is actually somewhat surprising, given their origins as an explicitly political movement. Never fought back against those who argued they were unneeded. Now there’s not one in 10 Americans working union jobs, and their outreach and education is still…zilch.
I think there was an assumption made by some of the more corrupt (Teamsters) unions in the 1970s that the buying of politicians was enough. Lethal mistake. A movement that doesn’t have popular support is a dead movement.
gbear
I’ve only bought from a Walmart store one in my life about 12 years ago (spent about $10) but I have been a regular Target shopper (hard not to in MN). Now that I’ve been hearing that Target is just as bad, I’m trying to figure out where to go. Costco has a good reputation, but I don’t buy in bulk, don’t buy enough to want to pay for the privilege, and don’t want to drive that far. There are some union shop grocery stores that I go to. I buy my shirts and shoes at a local shop called Nokomis Shoe and I know the stuff I buy there will last for years and years (as compared to Kohl’s where everything falls apart the second time you wash it).I stop at Fleet Farm on occasion because they have clothes for fat guys, but they’re probably no better than Target.
It’s hard to find a store for general goods where you don’t walk in feeling like you’re lining some bastard’s pockets and contributing to the misery of their employees.
The Moar You Know
@NotMax: We have one in our wealthy local enclave here that is as clean as anything you ever saw. It’s because there are no customers.
I’ve been to most of the others in the county, which range from “borderline unacceptable” to “utterly horrifying, and was that a rat? oh fuck yes it was”.
Roger Moore
@MattF:
When all you have is a hammer…
Linnaeus
@The Moar You Know:
Unions certainly could have done more to forestall their current condition, but we shouldn’t understate the power of the forces arrayed against them. It would be hard for any social movement to withstand that without any losses.
bemused
@MattF:
There is a Wallyworld coming to a small town near me and I was shocked to see letters in the town’s newspaper from people saying they won’t shop there, hoping the corp wasn’t getting tax subsidies and worried about the impact on local businesses. I didn’t think the usual rightwing letter writers turned off Fox long enough to learn that big box stores aren’t exactly a boon to their communities.
Linnaeus
@J R in WV:
It’s easy to avoid Wal-Mart here in Seattle (the city proper, that is), because as far as I know, there aren’t any.
ruemara
@bemused: Even they can get the facts,once it hits enough of them hard enough.
gbear
@Linnaeus: Agreed. It was the union shops that took the huge hit when jobs got moved out of the country, and moving jobs overseas became the expected way to raise corporate profits during the Reagan years.
Scotius
@Roger Moore:
When the only tool you have is a strap on, every problem starts to look like a butthole.
Enhanced Voting Techniques
Going into a Wallmart and the reasons for their woes is pretty obvious – trash on the floor, visibly depressed staff and empty shelves. I can’t imagine even poor people being to keen on shopping there.
Woodrowfan
Ford figured it out by accident. He had to pay twice the going rate (from $2.50 to $5.00 a day) to keep workers, because working on a moving assembly line is so mind-blowingly boring, that he couldn’t keep workers. Then he discovered hey, paying his workers a good wage meant they spent money and his own customer base expanded…
Enhanced Voting Techniques
You know another implication in this article is basically the mass consumption society that was the foundation of the US economy is gone now. Ironically killed off by the very companies that depended on it.
boatboy_srq
@Joshua Norton: Macy’s bought Emporium out West and promptly learned they didn’t know what the BLEEP to do with it. The flagship store in SFO – left untended for years – was finally turned into a Bloomingdale’s after years of haggling with The City over whether the neighborhood (which also houses the San Francisco Center and Nordstrom’s) was good enough. I haven’t knowingly shopped a Federated store since. There’s something about the modern Macy’s – a far cry from it’s upscale days not two decades ago – that makes me think it’s just marketing for Bloomingdale’s rather than a retailer in its own right; but there’s something else that makes me think they want to be the new Kmart only shinier.
@ruemara: Don’t bother looking for Filene’s. They were another Federated casualty (along with Jordan Marsh, Marshall Field, Maas Brothers and Burdine’s, among others) years ago. Federated is Walmart with the memory of a conscience.
@beltane: If the US understood just how much it was wasting in supposedly-durable consumer goods there’d be riots in the streets. I have stainless flatware that’s over sixty years old and still aging better than the stuff on the shelves today. “This season’s fashions” used to be a plaything of the wealthy because they could afford to discard otherwise-good clothing/furniture/whatever: in the 2010s it’s become necessity since most of what’s available in the retail channel isn’t designed or fabricated to last through to the next season. The trouble with durable is that it usually isn’t inexpensive, and inexpensive these days tends to be cheap: the latest gadget/blouse/mower/microwave isn’t built to last – between planned obsolescence and lowest-cost manufacturing replacement is frequently less costly than repair. The modern US doesn’t patch its jeans, darn its socks or do the other heavy lifting of long-term maintenance because new is still less expensive and time-consuming, and too many below the median are too busy working their a##es off just making ends meet to have the time to do the little maintenance tasks themselves.
@beltane: THIS is why I have no patience for either Ted Cruz or the GOTea pandering to the Cuban-American contingent. There’s a measurable plurality to the old-school die-hard anti-Castro crowd who are convinced beyond persuasion that their haciendas and maquiladoras are still ringing Havana waiting for them to return once
FidelRaul kicks the bucket. They know the Cuban situation is far from sunny and that the state controls the economy, but they’re equally convinced it hasn’t affected them. And when it comes to US politics they’re similarly blinkered simply because anyone besides the rabid antiCommie set is willing to discuss the realpolitik of working with Cuba. I’m reminded less of the Robber Barons of the Gilded Age as I am of the Court of Louis XVI: sheltered, clueless, isolated from the plight of the average citizen and totally unaware that the pretty new construction outside their windows (which they take as a sign of progress and return to normalcy – and yes that IS a Harding reference) is rank on rank of guillotines.@The Moar You Know: Why clean when your customers are too poor to afford soap?
SectarianSofa
Walmart has American flags in their ads, sometimes. So, Freedom. Fuck you if you can’t see past the depressed employees and the aisles full of the blood of the dying middle class.
Cathy W
@Enhanced Voting Techniques: And it’s only going to get worse, because Walmart’s official response to a store’s sales declining is to cut employee hours budgeted for that store. If the employees already can’t keep up with shelf-stocking and basic cleaning duties, the stores will be less attractive to anyone who can manage to shop anywhere else at all, and the employees will be even sadder.
balconesfault
Filene, Strauss, Florsheim … all German-Jewish descent.
Waltons? Most likely, Scots-Irish.
boatboy_srq
@balconesfault: Please explain Merkel and Cameron, then, in context – because I sense some role reversal there.
Although the Scots-Irish
convictsimmigrants the Brits shipped here do seem to be a special variety of opportunistic cheapskates to make pre-Xmas Scrooge proud.Chris
@boatboy_srq:
Oy. Living in Miami, I totally hear you on the die hard anti Castro contingent. Obnoxious as fuck.
daverave
Trollhattan may have already mentioned this but there was a motion in front of the Sacramento City Council last night to eliminate an ordinance that put restrictions on Walmarts in the city. The ordinance, that had been on the books for 7 or 8 years or so, mandated that WM produce a study of their economic impacts on existing retail (and of having poorly paid employees) before they could build one of their mini-hells. Walmart naturally built in all of the surrounding communities rather than show their cards. The council of course folded last night and struck the ordinance so that there would possibly be a few const jobs and some possible sales tax benefits to their coffers.
http://www.sacbee.com/2013/08/21/5667971/sacramento-city-council-eases.html
The side issue was that WM has been lining the mayor and councils pockets the last few years but it would be unseemly to suggest that that may have influenced the voting in any way.
boatboy_srq
@Chris: Why I laugh when the GOTea talks about “Hispanic voters” and trots out Rubio and Cruz as proof they have some.
Schlemizel
I’m reminded of the Simpsons episode where Homer goes to a seminar & learns that the secret to having money is finding ways to save. The drive past the 99 cent store “What, you think we are made of money?” then past the 69 cent store “Not if you want to go to Hawaii!”
They end up at the 49 cent store
“But dad, this krill is way past its expiration date.”
Enhanced Voting Techniques
@Cathy W: Yes, I’ve seen that at the local Wallmart. And you can see the local Target taking up the slack. I am amazed how Wallmart refuses to act in even their own self interest.
Bubblegum Tate
@ruemara:
A guy I know went to school with some of the heirs (Sam’s grandchildren). He says they were pretty much the polars opposites of their parents: Total liberals, unassuming, and just generally really awesome people dedicated to using their family fortune for good works that would truly help poor people.
I guess their parents are so odious that the kids said, “Fuck that, I want to be as far from what you are as possible.” Good on ’em for that.
Ken J.
@Chris:
Not quite, because a peasantry implies a role in economic production. What we are seeing is a collapse, or an end, to the demand for the labor of an awful lot of people.
See my comment above about how the Reagan era brought us the concept of “surplus people.” We are now looking at an era in which a growing number of people have no reason to exist: their labor cannot be sold, which in turn implies that they have no value as consumers.
The only historical analogy that comes to mind is the unemployed urban population of Imperial Rome.
(Please note: this is descriptive of where we are, not prescriptive or approved.)
johnny aquitard
@JPL: Hundred-dollar bills? More like million-dollar bills. I’m serious.
With the kind of wealth the Waltons have extracted from their host communities they could paper the walls of a 10,000 square foot mansion with million-dollar bills.
The Walton family is worth about $115 billion, according to Wiki. It takes 6.26 US bills to cover one square foot. $115 billion makes for 115,000 millon-dollar bills to paper walls with. That would cover about 18,500 s.f. of wall area.
An average american 2,000 sf home has about 8 rooms and about 2,800 sf of wall area, a ratio of 1.4. I am inclined to think the ratio for a much larger house is less because the rooms tend to be larger.
So a 10,000 sf mansion? Easily under 18,000 sf of wall area. 115,000 million-dollar bills would paper every wall and they’d still have enough left over to be among the Forbes 500 richest people on the planet.
johnny aquitard
@johnny aquitard: I made a mistake. I forgot to account for the Scrooge McDuck Money Bin Viewing Room, housed in special wing of the house a hundred feet long and a 50 foot high wall with floor to ceiling triple pane low-e glass so they can view the entirety of their money bin in one uninterrupted vista.
Of course they could still paper that room with millon-dollar bills, but that would mean they’d have maybe only 800 or 900 million left and alas would not make Forbes Richest Richie Rich list.