WAL-MART CEO: Things Aren't Getting Better For America's Middle Class

His comments are about the economy in general not about personal wage scales.

soot said:

That isn't how Walmart keeps people in poverty.

Of course general retail help is going to earn minimum wage or close to it. That's the nature of the entry-level retail world.

But what Walmart does, and has the power to do as the result of economies of scale, is negotiate wholesale prices down to the point that they force their vendors to either manufacture overseas or import from overseas (where manufacturing labor is dirt cheap) if they want to sell through Walmart.

Since most consumer packaged goods manufacturers and jobbers can't continue doing business unless they sell through Walmart (because their competition certainly will and since everyone shops as Walmart the lack of sales would drive them out of business) they're forced to either move operations offshore or contract with foreign-owned operations that are already capitalizing on third-world labor.

That's one of the biggest reasons that "good paying middle-class manufacturing jobs" are now so scarce in America.

Yes, we still have an enormous manufacturing sector here, probably the largest in the world.

But it used to be, in a general sense, the only manufacturing sector in the world for American purposes and was significantly larger than it currently is.

All the folks that used to do those good-paying (relatively speaking) manufacturing jobs (the 60% of Americans who have traditionally been the high school diploma bearing blue-collar backbone of the economy) are now taking minimum wage jobs at Walmart and McDonalds and etc...

Without that middle-class purchasing power driving the economy we have no real hope of a real recovery.

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Can you really blame Walmart for U.S. labor pricing itself out of business?

Competitive wages are important but they are only one factor. At this point in an increasingly anti-business United States, those low wages only moderately offset the losses from absurd labor, environmental, etc. policies. It doesn’t matter how low wages are when the work force is on strike and environmentalists are closing down factories.

joG said:

True. It was not explained to the public that if the consumer wanted to t-shirts to cost almost nothing the labor producing it would be less than before. Nobody told the public that winning the Cold War would accelerate the process of equalization aggregate income between the low income regions and the rich areas nor that the addition of the people freed by the fall of the Iron Curtain would shift the relativ rarity of labor towards capital which is now much more in demand relatively.

But, would you really have said: Let the other half starve.

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What people freed by the cold war are being outsourced to?

And it wasn't cheap goods but more markets for ours that were promised.

And we didn't get the choice of letting them starve or accepting a multi-generation reduction in standard of living with no guarantee that it will ever go up again while increasing capitals advantage the whole time.

And seriously, so you honestly believe that there are adequate resources and energy to raise all those starving people to a first world level? Because that's what it will take for first world peoples' incomes to start going up again.

"Bait and switch" is an applicable term. What we're getting is nothing like what we were promised.

fmw said:

He pays what the marketplace decides he has to pay. He wouldn't be doing his job if he paid more. When the supply/demand curve moves in favor of demand, he will have to pay more and will pay more. We have a free market economy and that is how it works. If you want wages to increase, the economy has to get better and unemployment has to decrease. I won't write a book here on how to get the economy to be better.

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So how many generations before all the desperate people on the planet come up to a level where it starts to push up American wages again?

What if...? said:

So how many generations before all the desperate people on the planet come up to a level where it starts to push up American wages again?

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That has nothing to do with it. It is a matter of supply/demand within the U.S. economy.

What if...? said:

So how many generations before all the desperate people on the planet come up to a level where it starts to push up American wages again?

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When the working population wakes up on an individual level and decides that a particular job is worth more than what is being offered in pay....If an employer can't get, or keep people in a certain job because of wage, then they will raise the wage.

fmw said:

That has nothing to do with it. It is a matter of supply/demand within the U.S. economy.

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"Within" my ass.

Its the direct competition with desperate people ELSEWHERE that is depressing wages here.

j-mac said:

When the working population wakes up on an individual level and decides that a particular job is worth more than what is being offered in pay....If an employer can't get, or keep people in a certain job because of wage, then they will raise the wage.

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When that happened in china, business started moving to the next desperate population.

So how long until there are no new desperate populations to move to?

Its already been almost forty years, so that's two. Two three more, minimum?

And do you think that will happen before fighting breaks out over resources?

What if...? said:

When that happened in china, business started moving to the next desperate population.

So how long until there are no new desperate populations to move to?

Its already been almost forty years, so that's two. Two three more, minimum?

And do you think that will happen before fighting breaks out over resources?

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I think China's system is slightly different than ours, but with that said, some will listen to their employees, some won't..My guess is that those that won't will be out of business long before those that did...

They say much is cyclical in our society, and that is true to an extent I guess...Another answer to your question is Unions....AS MUCH as I DETEST Unions, I think that if business doesn't respond to people's desires for better wage in a rational, fair way, then it leaves the door open.

j-mac said:

I think China's system is slightly different than ours, but with that said, some will listen to their employees, some won't..My guess is that those that won't will be out of business long before those that did...

They say much is cyclical in our society, and that is true to an extent I guess...Another answer to your question is Unions....AS MUCH as I DETEST Unions, I think that if business doesn't respond to people's desires for better wage in a rational, fair way, then it leaves the door open.

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I think they try that from time to time in the third world.

Doesn't end well for them.

DA60 said:

'BENTONVILLE Arkansas (Reuters) - U.S. employers may be hiring again, but the job market's recovery is not giving ordinary consumers enough confidence to increase their spending, a top Wal-Mart <WMT.N> executive said on Monday.
In an interview with Reuters at the retailer’s headquarters, Bill Simon, the president and chief executive officer of Wal-Mart U.S., said, “It's really hard to see in our business today … that it's gotten any better.”

He added: “We’ve reached a point where it’s not getting any better but it’s not getting any worse – at least for the middle (class) and down."'

Wal-Mart: US Job Rebound Not Spurring Spending - Business Insider


So much for this great recovery...

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Took him twenty years to admit!!

Henry David said:

On a fairly regular basis, Paul Craig Roberts explains the tiny details of how and why the government's numbers regarding employment and inflation are but smoke & mirrors.

I know too many people who cannot find a job to believe the government's numbers on unemployment.

I'm surprised to see the WalMart dude make his comments public. He is much closer to the truth than so many others.

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He's the co-author of Reaganomics!

DA60 said:

I don't think the government is lying (they are too smart for that)...but I think they are knowingly tabulating and presenting the numbers (both the CPI and the U-3) in a way that provides a greatly distorted view of the reality on Main Street.

The CPI as an inflation indicator is a joke....it is at best an inflation/cost-of-living hybrid.

And the unemployment rate is falling because people are leaving the workforce...period.

Just look at last month...288,000 jobs created.
But look at the household survey numbers and you see that 799K part time jobs were created but 523K full time jobs were lost for a net loss in total hours worked. So it was a negative report but is reported as a good one.

The U-3 is the same...it's a joke because it ignores discouraged workers.

I ignore the headline numbers and the major media reports (they are clueless, IMO) and read the fine print...that is where the story is.


It seems clear to me that this is a Mercedes/McDonald's recovery - with little in between; the Fed is indirectly pumping up the stock markets (GREATLY helping the rich) and gov't./Fed programs are causing rises in crappy jobs for a reduction in solid jobs (quantity over quality).

So the rich get richer and the economy looks decent because the U-3 does not count discouraged workers AND part time jobs are counted equal to full time jobs.

And the masses/media are too naive and/or too ignorant and/or too partisan to notice.

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"Figures lie, and liars figure" Samuel Clemens

DA60 said:

'BENTONVILLE Arkansas (Reuters) - U.S. employers may be hiring again, but the job market's recovery is not giving ordinary consumers enough confidence to increase their spending, a top Wal-Mart <WMT.N> executive said on Monday.
In an interview with Reuters at the retailer’s headquarters, Bill Simon, the president and chief executive officer of Wal-Mart U.S., said, “It's really hard to see in our business today … that it's gotten any better.”

He added: “We’ve reached a point where it’s not getting any better but it’s not getting any worse – at least for the middle (class) and down."'

Wal-Mart: US Job Rebound Not Spurring Spending - Business Insider


So much for this great recovery...

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1. This guy is clearly a racist. President Obama's policies have lifted us out of the recession, out of the ditch, and we are now all doing wonderfully. So Mr Wal-Mart CEO is obviously wrong.


2. This also only goes to prove that even rich evil corporatist republicans admit when you catch them off-guard that wealth inequality is causing the middle class and poor people to see artificially depressed wages, proving that President Obama's call for higher wealth redistribution is the only thing that can save us from this crises. Which doesn't exist. Until it needs to.

What if...? said:

"Within" my ass.

Its the direct competition with desperate people ELSEWHERE that is depressing wages here.

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That's not true. It's absurd labor and environmental laws that are depressing wages here.

Manufacturers wouldn't bring jobs back to the United States even if workers agreed to half what a Chinese factory worker was making.

shavingcollywob said:

That's not true. It's absurd labor and environmental laws that are depressing wages here.

Manufacturers wouldn't bring jobs back to the United States even if workers agreed to half what a Chinese factory worker was making.

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Nonsense.

A minimum wage worker here gets $64 (appx) for an eight hour day. Plus labor burden.

You can get as many as 32 semi skilled workers for 14-16 hours out the door for $64 overseas. At least a dozen. For your premise to be accurate, compliance would be say $50 per worker per day.

I would have to see proof of this.

What if...? said:

Nonsense.

A minimum wage worker here gets $64 (appx) for an eight hour day. Plus labor burden.

You can get as many as 32 semi skilled workers for 14-16 hours out the door for $64 overseas. At least a dozen. For your premise to be accurate, compliance would be say $50 per worker per day.

I would have to see proof of this.

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It doesn’t matter how low wages are when the work force is on strike and environmentalists are closing down factories.

shavingcollywob said:

It doesn’t matter how low wages are when the work force is on strike and environmentalists are closing down factories.

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Got some proof that that was the case?

General strikes and wholesale factory closings?

Or are you just repeating dogma?

cpgrad08 said:

Wal-mart does not keep people on the poverty. Individuals employees do that themselves. They don't put the work in to move up, or require more skills that would make worth more to company or able to to a better paying job outside of wal-mart.

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Except that they do. Walmart don't want their low level employees to progress as they would have to pay them more and bring in more cashiers etc to replace them. They keep their drones mostly on part-time hours and when it comes time to give them a pay-rise or offer them full-time hours they get rid of them and replace them with more drones.

DA60 said:

I don't think the government is lying (they are too smart for that)...but I think they are knowingly tabulating and presenting the numbers (both the CPI and the U-3) in a way that provides a greatly distorted view of the reality on Main Street.

Click to expand...

There is some truth to that, but U-3 hasn't changed for a couple of decades, and neither has CPI.

And the unemployment rate is falling because people are leaving the workforce...period.

Just look at last month...288,000 jobs created.
But look at the household survey numbers and you see that 799K part time jobs were created but 523K full time jobs were lost for a net loss in total hours worked. So it was a negative report but is reported as a good one.

The U-3 is the same...it's a joke because it ignores discouraged workers.

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I'm not picking on you here, but this is why I ignore Zero Hedge when they discuss the jobs report. Yes, this month there was an increase of 800k in voluntary unemployed, for NONeconomic reasons. People who wanted part time work, seasonally adjusted. NSA it decreased from last month. Looks weird statistically because there is no reason to have that big a jump with nothing really going on in the economy.

So, what typically happens is there is a technical correction to a month like this that is WAY out of the normal month to month variation, or next month the number reverses and we have a bunch FEWER part time jobs, and that's ignored.

Bottom line is from the bottom in 2009, full time positions are up about 6 million, and part time jobs haven't changed much. Part time for economic reasons have dropped 1.2 million, part time for NONeconomic reasons up about 800k, including the 800k increase last month.

I ignore the headline numbers and the major media reports (they are clueless, IMO) and read the fine print...that is where the story is.

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I agree - the details, and the long term trends. The month to month variation is often just noise.

It seems clear to me that this is a Mercedes/McDonald's recovery - with little in between; the Fed is indirectly pumping up the stock markets (GREATLY helping the rich) and gov't./Fed programs are causing rises in crappy jobs for a reduction in solid jobs (quantity over quality).

So the rich get richer and the economy looks decent because the U-3 does not count discouraged workers AND part time jobs are counted equal to full time jobs.

And the masses/media are too naive and/or too ignorant and/or too partisan to notice.

Click to expand...

We've lost industry - that's why we don't have a robust recovery. The wealth is created offshore where stuff is made, we import it, so low wage workers can sell it. There is little value created in selling a TV made in China, but that is our entire piece of that transaction now, so if spending goes up, an order is received by a factory offshore, which makes it, converts plastic and glass etc. into something valuable and all we do is put it on a shelf in a box, then some kid hauls it to the car in the parking lot.

But let's sign some more 'free trade' agreements. The next one should do wonders for U.S. industry!

cpgrad08 said:

Wal-mart does not keep people on the poverty. Individuals employees do that themselves. They don't put the work in to move up, or require more skills that would make worth more to company or able to to a better paying job outside of wal-mart.

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Individually people can move from a Walmart job to a better job - no doubt that's true. But that Walmart job is and will always be a low value added and therefore low wage job, so if someone manages to move up and out of Walmart, someone else will be in that crap job. Micro versus macro.

Further, they're a leader in the low cost strategy and are relentless in demanding their suppliers cut the price of their goods, which the suppliers can ONLY do by offshoring the production. So the choice for a supplier is offshore, or not get stocked by the largest U.S. retailer, so they rationally shut down the U.S. plant and move offshore, where production is subsidized by the host countries, good for employment growth in the offshore locations, but not so good for U.S. workers making stuff.

Finally, a memo came out a few years ago where they really do NOT like long term employees for most positions (obviously different for managers etc.) They have consciously decided on a strategy of high turnover, low wage labor.

JasperL said:

There is some truth to that, but U-3 hasn't changed for a couple of decades, and neither has CPI.

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Actually, the calculation process for the CPI has changed quite a bit over the last couple of decades.

'Originally, the CPI was determined by comparing the price of a fixed basket of goods and services in two different periods. Determined as such, the CPI was a cost of goods index (COGI). However, over time, the U.S. Congress embraced the view that the CPI should reflect changes in the cost to maintain a constant standard of living. Consequently, the CPI has been moving toward becoming a cost of living index (COLI).

Over the years, the methodology used to calculate the CPI has also undergone numerous revisions. According to the BLS, the changes removed biases that caused the CPI to overstate the inflation rate. The new methodology takes into account changes in the quality of goods and substitution. Substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket. The overall result tends to be a lower CPI. However, critics view the methodological changes and the switch from a COGI to a COLI focus as a purposeful manipulation that allows the U.S. government to report a lower CPI.'

Why The Consumer Price Index Is Controversial

I'm not picking on you here, but this is why I ignore Zero Hedge when they discuss the jobs report. Yes, this month there was an increase of 800k in voluntary unemployed, for NONeconomic reasons. People who wanted part time work, seasonally adjusted. NSA it decreased from last month. Looks weird statistically because there is no reason to have that big a jump with nothing really going on in the economy.

So, what typically happens is there is a technical correction to a month like this that is WAY out of the normal month to month variation, or next month the number reverses and we have a bunch FEWER part time jobs, and that's ignored.

Bottom line is from the bottom in 2009, full time positions are up about 6 million, and part time jobs haven't changed much. Part time for economic reasons have dropped 1.2 million, part time for NONeconomic reasons up about 800k, including the 800k increase last month.

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actually, the numbers I quoted were from the BLS website...though I admit Zero Hedge put me on to the idea - but I always like to double check ZH's numbers with a second source.

Table A-9. Selected employment indicators

I am taking the numbers from the household data under 'full time' and 'part time' number of employed...seasonally adjusted (near the bottom of the page).

And from May to June there were 799K more part time people employed and 523K less full time people employed.

I agree - the details, and the long term trends. The month to month variation is often just noise.



We've lost industry - that's why we don't have a robust recovery. The wealth is created offshore where stuff is made, we import it, so low wage workers can sell it. There is little value created in selling a TV made in China, but that is our entire piece of that transaction now, so if spending goes up, an order is received by a factory offshore, which makes it, converts plastic and glass etc. into something valuable and all we do is put it on a shelf in a box, then some kid hauls it to the car in the parking lot.

But let's sign some more 'free trade' agreements. The next one should do wonders for U.S. industry!

Click to expand...

DA60 said:

'BENTONVILLE Arkansas (Reuters) - U.S. employers may be hiring again, but the job market's recovery is not giving ordinary consumers enough confidence to increase their spending, a top Wal-Mart <WMT.N> executive said on Monday.
In an interview with Reuters at the retailer’s headquarters, Bill Simon, the president and chief executive officer of Wal-Mart U.S., said, “It's really hard to see in our business today … that it's gotten any better.”

He added: “We’ve reached a point where it’s not getting any better but it’s not getting any worse – at least for the middle (class) and down."'

Wal-Mart: US Job Rebound Not Spurring Spending - Business Insider


So much for this great recovery...

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I'd personally like to thank walk marts CEO for suppressing the economic recovery because instead of spending money on infrastructure and creating more jobs, we are instead all forced to pay for his employees food stamps and other subsidies because they pay their employees so poorly.

poweRob said:

I'd personally like to thank walk marts CEO for suppressing the economic recovery because instead of spending money on infrastructure and creating more jobs, we are instead all forced to pay for his employees food stamps and other subsidies because they pay their employees so poorly.

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Lol, isn't that the truth!

DA60 said:

Actually, the calculation process for the CPI has changed quite a bit over the last couple of decades.

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I agree, but the last big changes were in the early 1990s, Greenspan/Clinton.

actually, the numbers I quoted were from the BLS website...though I admit Zero Hedge put me on to the idea - but I always like to double check ZH's numbers with a second source.

Table A-9. Selected employment indicators

I am taking the numbers from the household data under 'full time' and 'part time' number of employed...seasonally adjusted (near the bottom of the page).

And from May to June there were 799K more part time people employed and 523K less full time people employed.

Click to expand...

I figured - this kind of thing is a ZH special. Been seeing it for years, which is why I now ignore them on employment reports. Calculated Risk does a good job analysing the reports each month, and he has no partisan bias that I can see.

And I could follow your numbers fine - A-8 and A-9. My point was those figures make no sense. From Feb to May, part time workers went all the way from 27,330 to 27,219 (minus 111 thousand, over 3 months, almost no monthly change). Then from May to June, went from 27,219 to 28,018 (up 799k in one month). We can't know what the actual numbers are, but that's just not a believable series. Finally, almost all that change is due to part time for NONeconomic reasons - 840k more WANTED to work part time in June versus May.

So it's noise. Whether the numbers were too low for the past few months, this month's numbers have some weird flaw, something is distorting the month to month comparison, which is why the short term variations are often not much use. If the number stays high next month, and in August, we have a trend. For now, who the heck knows....