business news in context, analysis with attitude

A number of people weighed in on yesterday’s analysis of the debate about whether Wal-Mart should pay its people better.

One MNB user wrote:

This issue is a microcosm of the debate that rages in our country between the political right and left. Between those that believe the government has a duty to take care of citizens on a social level and those that believe each individual has a responsibility to take care of his or her self.

I’ve worked in food retailing for over thirty years, the last eight in the Southeast. I know first hand the impact of Wal-Mart on local rural economies and conventional retail outlets. I know the pain of dealing with Wal-Mart expansion first hand. But, no one has the right to tell Wal-Mart how to pay their employees or run their business beyond the legal parameters involved in those activities.

Our country was built on overcoming adversity, finding new ways to accomplish tasks, developing new ideas to overcome old hurdles, and standing on our own two feet. If someone is of the mind that Wal-Mart pays their employees too little money, then whip our your check book and send them a check with specific directions of how those funds should be dispersed to their employee base, or better yet, start your own retail food chain, take a poll and pay your employees what others tell you is a fair wage. If you work for Wal-Mart and don’t like what they are paying you, quit!

Our great capitalistic system has always worked and will always work if we let it. As you said in your report, the success of Wal-Mart should inspire retailers to find a better way to go to market, find ways to involve and inspire their workers as partners in their company’s success. Although slow on the uptake, retailers will find the weaknesses of Wal-Mart and capitalize on them. That’s what we do in this great country of ours. At least it should be.

MNB user David Livingston wrote:

If Wal-Mart took all its worldwide profits and gave just the US workers a $7,000 per year increase in wages and benefits, it would wiped out all their profits. Market forces determine wages. Sure Costco pays more. But there are no Costco stores out in Bugtussle, USA. Plus most Wal-Mart employees do not have the wherewithal required to work at a Costco. I would suggest that Wal-Mart make bonuses more lucrative and the stock purchase plan more affordable. Maybe they could learn a lesson or two from Publix. If they could put more of the employee's compensation and retirement related to the profits of each store, profits from the entire company, stock growth, and dividends , they might be able to get the employees to start turning the tables on these radical anti-Wal-Mart extremists. Poor employee morale is just more fuel for the anti-Wal-Mart crowd to burn.

MNB user Al Nissen wrote:

In the 1960's, right out of High School I went to work in a chain grocery store in So. Calif. as income to help put me through college. Like many, the pay was so good, it kept me in the business for what became a career in buying and category management.

Most Retail Clerks in those days were full time, and turnover was low. It was not uncommon to find a female checker who has been in that store for 10-15 years, and customers would wait in line to be served by their favorite checker who not only knew their name, she probably knew her kids names and where she went on vacation that year.

The Walmartization of retail, in my opinion is a downward push on hours and pay which results in the quality of the employees and service. The service you get in a typical chain grocery store today, is no comparison with what you once received ( and it's even worse in Wal-Mart) , because there is no incentive for those who have initiative and drive to make a career at retail. When you pay $17,000/yr. and poor health care coverage for positions that once paid in the mid 20's and higher with excellent health care, you attract people who can't find jobs elsewhere.

They brag about all the jobs and extra revenue they will bring to a new area....then they cause layoffs and store closures for workers who were making 50% more. How does that not adversely affect a town financially?

One MNB user questioned some of the numbers cited by Wal-Mart:

How do you have 76% full timers but only 48% covered by health insurance? Only two ways I can think of – lots of new full timers who are not yet qualified or people who do not want the benefit. Therefore full timers leave? Or is even a full time job a “second job” for the family and health care comes from the “first job” holders? Is Wal-Mart really such a great place to work?

Another MNB user (and Wal-Mart employee) questioned a statement made by one retail consultant in the piece:

Tell Burt Flickinger that his statement, "A lot of its new workers, for instance, don't know where to stock things" is so full of crap it makes me wonder why people pay him any mind.

A new Wal-Mart associate will learn the fundamentals of stocking the merchandise in whatever department they work or they won't be around too long. Say....maybe that's the reason for the high turnover.

Kidding aside, an associate will become very familiar with the ins and outs of his department in short order. That's what we spend the first couple of hours every day doing. Should they work, say in sporting goods, they may not know where the bloomers are in Ladiesware, but you can be sure they can give, or take a customer to the proper area. The company preaches, "Take the customer to where they want to go", but unfortunately, me included, we tend to give directions rather than taking them, least we not get our job done in our department.

Another MNB user wrote:

Easy to say that adding $3.5/hr for wages and medical would only add $6.5B to costs, but W-M only netted $10B or 3% on sales of $287B in
2004. How thin does that margin have to be?

It is such a witch hunt.

And MNB user Mark Heckman wrote:

Free enterprise is a wonderful thing. If Wal-Mart is indeed paying sub-standard wages and benefits, why do they seem to have very little problem staffing their stores? One explanation could be that those that join the Wal-Mart team have few other employment choices, perhaps in part due to that other retailers who used to pay higher wages are no longer in business or are not healthy enough to hire. Another explanation could lie in the possibility that even though Wal-Mart's wages and benefits are not exactly robust by some standards, an employee can get all the hours they can work, unlike other retailers or employers.

Ironically, if Wal-Mart were forced to increase wages and benefits as some would prescribe, it would result in higher prices on the shelf. Nobody should be naive and think otherwise. These higher prices would in turn be a financial detriment to the same lower income families that the pay raise was intended to help. Wal-Mart, through lowering prices at their stores and consequently lowering their competitor's prices, have indirectly given all shoppers a pay raise! This is especially true for lower-income families.

There are built-in controls in the marketplace for wages and conditions, it's called competition. If another enterprise (retailer or otherwise) covets Wal-Mart employees and can offer them more pay and benefits, while providing them the same flexibility and volume of hours, I don't think it would take Wal-Mart long to adapt accordingly.

Until then, forcing higher wages and benefits at Wal-Mart will result in a host of "unintended consequences", all of them bad!

And MNB user Janine Bauer concluded:

I'm surprised that the inevitable point that treating your employees well means they will treat your customers well hasn't come up. Shouldn't companies, especially executives, lead by example, treat your employees well and care about their well-being. Be a reflection of how you want customers to be treated. Wal-Mart's CEO should not only be concerned by the low wages but the quality of workers and how they will treat their customers.

Even if I can save $.10 on an item at Wal-Mart, I'm not likely to shop there if I'm treated poorly by the employees and will likely go to a competitor. Think of that possible lost customer base and revenue.

We got several emails responding to Giant of Landover’s announced decision to close down its longtime Landover, Maryland, headquarters.

MNB user Daniel Fulham wrote:

On the final closing of Giant Landover HQ and manufacturing, it seems very unlikely this will be the magic pill for the ailing stores. As an occasional shopper in the suburban Maryland stores, it has been incredible to watch the deplorable deterioration of stock levels in the grocery aisles and poor quality perishables. Since being taken over by Stop & Shop things have only gotten worse.

If selling off the remaining warehouses to third party suppliers like C&S is the plan, get ready to watch the conditions erode even more precipitously. It seems hardly the right formula to remove local control and think conditions will improve for the customers.

MNB user Glenn Cantor wrote:

Giant was an integral part of the culture of Baltimore, Washington, and Northern Virginia. It is why they earned and enjoyed a dominant share of these markets, in their heyday.

Now, there is no compelling reason to shop there. This is never a good thing, despite economic benefits.
KC's View: