The Looters' war against wealth

[Dozer523]

Originally Posted by SF-TX

If Costco offers a better pay and incentive package to its employees, I suspect they attract and hire more qualified entry-level employees.

Which then makes those less qualified (remember quality is subjective to quantity when it comes to the hiring pool) less likely to earn a livable wage at Walmart because they won't have to pay it (unemployed people are desperate people in a Grapes of Wrath sorta way) which means shopping at Walmart sucks worse. Walmart has to stop buying Made in America and instead buys from China and American manufacturing jobs are lost. Now fewer people buy at Costco and more people look like People of Walmart. But even with lower revenue Walmart still makes the bottom line by reducing expenses.
And as long as we think of people as expenses to be minimized this is what will continue to happen.
BTW I hope like the dickens y'all have a merry Christmas.

[Trapper John]

Originally Posted by Dozer523

And as long as we think of people as expenses to be minimized this is what will continue to happen.

But unskilled labor is, in a purely economic sense, a commodity - nothing more and nothing less. (I recognize that labor is comprised of real breathing people, but I have qualified this as a "purely economic" POV).

The issue, as I see it, is one of incentive and motivation for people to move out of the "commodity" pool and move into the skilled labor pool. If we believe in the right of self determination, then we cannot legislate or mandate social engineering at the government level. The consequences of doing so result in making the situation worse - fewer jobs, fewer new businesses, lower GDP, more taxes to compensate, and on and on.

Labor unions (big labor) are counter-productive IMO so that isn't the answer either. Case in point - Hostess.

I know its trite to say it, but IMO the approach lies in education and this requires not only great teachers and good schools, but involved parents most of all. How we get parents involved, particularly in the inner cities, is the real problem IMO. Policies that strengthen and reinforce families might be a start?

[Dozer523]

Trapper,
Maybe is China and India unskilled labor is a commodity but not in America.

When I was reading your post and got to the part,"...then we cannot legislate or mandate social engineering at the government level." I thought what about NCLB and the current state of education in America. I disagree, we do most certainly mandate when it comes to national standards. And, it appears the schools aren't meeting the goals, and there are plenty of arguments that lower class parents are incapable, disinterested in doing what you suggest. I don't mean to be unkind, but your last sentence seems to call for the same social engineering you don't like.
Thus i come to my conclussion that treating workers as commodities is not the way to go?

Hostess? I think the court decided that had devolved into A pecker measuring contest that was not good for anyone or the country. (I admit I haven't looked at that in a while but ...) as a Suzie Q fan I'm hopeful.

Did you know that (at least in the STL area) the labor unions run outstanding trade schools?

[SomethingWitty]

I get in quite a bit of trouble when I loudly voice my "opinion" that unions are just "Socialists in disguise trying to extort business owners out of their hard earned money. Unions should be completely out-lawed so that everyone has the freedom to negotiate the wage they want to be paid."

I say "opinion" because it's the opposite of the point I am trying to make. A lot of my friends are union millrights, machinists, or firefighters, and I do not know of one that is a progressive.

One of the points that union members is that unions serve as a barrier to stupid management, and actually help run a company better.

On the mill-side of things, the example is usually given that the company is adding a new machine to the production line, or adding a new turbine, or whatever it is. What usually happens is that management does not take into consideration the maintence needs of the machine, and when left to it's own devices, would put it in a place where it makes maintence more difficult; to the extent of having to shut down other working machines to make way to transport a part for the broken machine. A good union foreman (because there are bad ones too like any other place) keeps management from making stupid/uninformed decisions that save company time and money in the long run.

In the public service sector, it is much of the same thing. City managers who are facing budget constraints look at the Fire Departments of their cities, and want to make staffing cuts but receive the same kind of services. A lot of the times, it is something that is simply not possible to do without compromising the service that they are providing. There is a bare minimum number of people that are needed to put out a structure fire and still maintain some degree of safety, and when you have to wake people up in the night that are not on duty to be the first responders to a fire, then your response time is going to go up, and your house is going to be a "surround and drowned" operation by the time an adequate number of people get there.

[craigepo]

Originally Posted by Dozer523

Trapper,
Maybe is China and India unskilled labor is a commodity but not in America.

Please explain.

[Trapper John]

Dozer- I did not mean to imply that individual "workers" should be looked at as commodity. But in the retail industry (Walmart v. Costco) "labor" and the cost of unskilled labor (wages, FICA, FUTA, health insurance cost) is viewed as a commodity. One unskilled worker is interchangeable with another unskilled worker and they are not in short supply. This is purely an economic view. We all probably at one time or another were in that labor pool.

My point with respect to labor unions is that although they can get the individuals in their union a higher wage, the macro effect is fewer people get employed. Fewer jobs (albeit at marginally higher wage per worker) means less taxable revenue and therefore higher tax rates on higher earners to make up the difference. You see the conundrum. BTW I am referring only to unskilled workers - not skilled or professionals in other industries. In low skill requiring businesses (Walmart) labor unions will have a very negative economic impact IMO. Re: Hostess as my case in point.

As to the social engineering point, like you, I believe that government has a very important role in regulating certain industries (Pharmaceuticals for instance with which I know something). What I am referring to is the temptation through tax and other policy to "redistribute wealth" because the poor need it, or because company XYZ is just making too much profit and it needs to be redistributed to the workers (raising minimum wage is doing just that), or a host of any other justifications trying to right perceived social injustices. It is just that I am very skeptical of any legislative effort that is proffered to correct inequalities (see my post re: equality v equity). In my view the Law of Unintended Consequences must always be, but is rarely, considered. Case in point: the Fair Housing Act (good intention) may have actually been the initial driver behind the collapse of the housing market (bad outcome).

It was good to hear about the labor unions and trade schools in STL. Now that is something I can get behind. If you have any literature that you can send me on that, I would love to read it.

Dozer, my biggest frustration is that I believe that most D's and R's have the best interests of this great nation at heart (may be naive, but I believe that). You and I are on opposite ends of the political spectrum, but we can discuss the issues coming from two different POV, and arrive at solutions to the problems. Why the F can't our elected leaders do the same

Thanks for the provocations

[GratefulCitizen]

Originally Posted by Pete

I am where I am at because of the choices I made. You are where you are at because of the choices you made.

Some people make mostly wise choices - others make uniformly poor choices.

If you pay attention to how you spend your minutes,
the hours and days will tend to themselves.

If you pay attention to the little decisions,
the big decisions will tend to themselves.

[Richard]

My train of thought just derailed - there were no survivors.

Richard

[SomethingWitty]

Originally Posted by Trapper John

Dozer- I did not mean to imply that individual "workers" should be looked at as commodity. But in the retail industry (Walmart v. Costco) "labor" and the cost of unskilled labor (wages, FICA, FUTA, health insurance cost) is viewed as a commodity. One unskilled worker is interchangeable with another unskilled worker and they are not in short supply. This is purely an economic view. We all probably at one time or another were in that labor pool.

I think the point here is the differing way that Costco and Walmart view their employees.

Walmart simply views their employees as economic inputs/outputs, which has became the norm over the past 30 or so years. If an analysis says that they can get away with paying their employees just enough where turnover does not begin to impact their bottom line, they will do it. There is very little ethical considerations from people that do not see the human impact their decisions they make. The only thing that matters is to convince the share holders that they are doing everything they can to maximize share value. The short term is that we are directly subsidizing Walmart profits with our hospitals, housing programs, because they do not pay anywhere near a living wage.

Costco on the other hand views their employees as a resource, part of the team that makes Costco what it is, and part of their long-term strength. Costco can provide a living wage to it's employees, and still make a damn nice profit to boot without passing that cost on to it's customers. In turn, the higher paid workers of Costco do not need to rely on federal or state programs to 'get by', and are also out there in the marketplace buying more things, qualifying for loans that are sensible because they have a stable paying job, and are increasing the 'demand' side of our 'supply and demand' economy.

[afchic]

Originally Posted by Richard

My train of thought just derailed - there were no survivors.

Richard

I am going to start charging you!

[Trapper John]

[QUOTE=SomethingWitty;478247]I think the point here is the differing way that Costco and Walmart view their employees.[QUOTE]

Agreed. Costco and Walmart have two very different business models regarding valuing their employees. Time will tell which one will prevail. All things being equal - my money would be on Costco. But that is more an emotional statement than a purely analytical one.

[afchic]

Originally Posted by SomethingWitty

I think the point here is the differing way that Costco and Walmart view their employees.

Walmart simply views their employees as economic inputs/outputs, which has became the norm over the past 30 or so years. If an analysis says that they can get away with paying their employees just enough where turnover does not begin to impact their bottom line, they will do it. There is very little ethical considerations from people that do not see the human impact their decisions they make. The only thing that matters is to convince the share holders that they are doing everything they can to maximize share value. The short term is that we are directly subsidizing Walmart profits with our hospitals, housing programs, because they do not pay anywhere near a living wage.

Costco on the other hand views their employees as a resource, part of the team that makes Costco what it is, and part of their long-term strength. Costco can provide a living wage to it's employees, and still make a damn nice profit to boot without passing that cost on to it's customers. In turn, the higher paid workers of Costco do not need to rely on federal or state programs to 'get by', and are also out there in the marketplace buying more things, qualifying for loans that are sensible because they have a stable paying job, and are increasing the 'demand' side of our 'supply and demand' economy.

I will say this upfront, I HATE Walmart. I will not step in the door unless it is a DIRE emergency, and even then.... maybe not.

Walmart would not be doing as well as it does, if it didn't have a product that people wanted. So if everyone is as deeply offended at how Walmart treats its employees, then stop shopping there!!!!

[Trapper John]

Originally Posted by afchic

I will say this upfront, I HATE Walmart. I will not step in the door unless it is a DIRE emergency, and even then.... maybe not.

Walmart would not be doing as well as it does, if it didn't have a product that people wanted. So if everyone is as deeply offended at how Walmart treats its employees, then stop shopping there!!!!

The problem is that Sam Walton employed a business strategy that was successful in the turn of the 19th-20th century and modified it for retail and it has worked in the near term. Of course at the cost of many a small retail businesses in every small town across the country. And now it would appear at the cost of a "livable wage" for its employees that is in part hoisted off on us through increased health-care costs, food stamp programs and the like. I think a good case can be made that Walmart is not behaving as a responsible corporate citizen. The fatal flaw in that business model may be exposed by the efforts to unionize the workers of Walmart. We will just need to wait and see.

As a side note, I heard a report on the news the other day that among the top 10 wealthiest families in the US that the Waltons were at the bottom or near the bottom in terms of charitable giving. That may tell you something about their mindset.

[mark46th]

Walmart hires people that have difficulty working eslewhere. They hire the elderly, physically impaired and those with Abby Normal brains. They give jobs to a lot of people who would otherwise be unemployed....

[SomethingWitty]

[QUOTE=Trapper John;478251][QUOTE=SomethingWitty;478247]I think the point here is the differing way that Costco and Walmart view their employees.

Agreed. Costco and Walmart have two very different business models regarding valuing their employees. Time will tell which one will prevail. All things being equal - my money would be on Costco. But that is more an emotional statement than a purely analytical one.

As long as the current CEO/co-founder has control, the Costco model will remain the same. The whole model might go out the window when he retires or dies. Shareholders have been trying to get Costco to cut wages and increase the profit margins on the products they sell. If I recall correctly, Costco only sells products at 10-15% mark up, instead of around 25% which is typical of most retail outfits.

It would be too easy for a new CEO to cut wages/benefits, and increase the mark-up and say "look how much profitable we are" and proclaim to be a great success. It would be short term profits at the expense of long-term strength.

However, there is other economic good news in manufacturing. GE has brought some of it's appliance production back to the US because of increased wages in China, increased transportation costs, and the fact that the US has a more robust workforce. The end design of a hot water heater is quicker and cheaper to produce when workers are allowed to have input on how something is produced.

I should find the article somewhere. It is kind of interesting how outsourcing all manufacturing may no longer be the popular thing to do.