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….
Our Current Gilded Age: Always Low Wages…Post + Comments (77)