America’s welfare state: Sponsored by Wal-Mart

Back on September 11th of this year, the President and CEO of Wal-Mart U.S. made a presentation at the Goldman Sachs Global Retail Conference.  His speech, which can be found here, was peppered with the usual information that a company would want investors to hear in order to pump up stock prices.  The hidden gem of his speech is found in this passage here:

“Like to swift gears just for a minute and our business is about people, it’s about serving people and it’s about employing people and for us our company and our business model is about associates and opportunities. Wal-Mart is not a complicated business model. It’s actually quite simple but it’s driven by opportunity. On any given day, we have about at least 15,000 openings and sometimes during the year up to 50,000 openings. So it‘s not hard to get into the company. If you want a job at Wal-Mart, you can find a job at Wal-Mart.

Once you’re in and people join at all different points in their lives whether you’re a teenager, you know looking for a part time job or are you finishing school, whether your senior looking to supplement your income, whether you’re joining us looking for a career. People come in at all different live stages and we provide access points to all different live stages.

Once you are in, I say, its not hard to get in. We have — we promote about a 160,000 people a year. We have still today in retail one of the largest full time workforces, we’re still the majority full time workforce with the opportunity for 75,000 people a year to transition from part time, so they choose to into full time.

We’ve got a lot of associates to make good solid, middle class income some and that’s represented by 300,000 associates who have spent more than 10 years working for our company. We’re going to defend our jobs, we’re proud of our jobs because they can lead to long term career opportunities, 75% of our managers started is hourly and our entry level managers make over $50,000 a year and store managers average is $170,000 a year. So the opportunity to enter and to advance and to achieve your dreams exists for our associates. And I just feel compelled to mention not every time I get to.”

*Emphasis mine

Now, pay attention to the emphasised parts of that passage.  The CEO states that their business is about employing people and about opportunities.  Notice that he doesn’t specify who the opportunities are geared towards.  He also makes mention of the good, solid middle-class income that some of the associates earn.  According to one of the slides from his presentation, there are far fewer middle-class workers than there are lower class.

*click to see actual presentation given at the conference, complete with the above slide.

*click to see actual presentation given at the conference, complete with the above slide.

Wal-Mart employs over 2 million people, with about 1.3 million workers here in the United States.  If they’re bragging about over 475,000 workers earning more than $25,000 a year, that means that there are a little under 825,000 who do not earn $25,000.  That means that almost 2/3 of their workforce earns wages that are at or less than the Federal Poverty Level of $23,550 for a family of four.  Granted, Wal-Mart has a sizable force of part-time workers, and they have locations in rural areas of the country where the cost of living is low.  That doesn’t, however, prevent them from paying wages that would keep their employees from also having to rely on government assistance to make ends meet.

There has been grumbling from their workforce about wages, and the American public has generally dismissed it as nothing more than union griping and such.  To prove it’s more than just grumbling, a study was done and a congressional report was released that showed that one Supercenter location in Wisconsin that employed 300 workers ended up running a tab of about $900,000 in public assistance a year.

According to Wal-Mart, their average salary for full-time workers is $12.83 here in the US.  I interviewed with a store here in the Metro Atlanta area a little more than 10 years ago, and I was not offered that amount for an entry-level management position.  The district manager I interviewed with offered me a management position at $8 per hour, so things must have gotten substantially better based on that $50k number above for entry-level management.  At $8 per hour, I would have had to work two jobs to support my wife and myself here in this area as the cost of living requires earning more than that just to subsist.

If we’re ever going to seriously address economic issues in this country to include welfare reform and income inequality, companies like Wal-Mart will have to be put out front and center as an example of how worker’s pay can contribute to the problems we have.  I’m not going to suggest that everybody should be making $75,000 a year to run a cash register.  We do, however, need to look at how a person’s pay in relation to the cost of living affects everything else around us.  I like to compare our economy with the human circulatory system, as long as money and/or blood flows freely, everything is usually okay.  When you impede the flow, bad things can sometimes result if you don’t repair whats slowing things down.  Not having enough blood/money to circulate is just as bad, if not worse, than having things blocked up.  If we don’t speak up for others, we may end up becoming victims of the Walmartization of this country ourselves.

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8 thoughts on “America’s welfare state: Sponsored by Wal-Mart

  1. Because I’m one of those bleeding heart liberals, I just think it’s outrageous ANYONE could work full time and not be able to support a family of four above the poverty level.

    I also think it’s counterproductive. I don’t understand why it’s not obvious that the more money the average American has to spend, the more he or she can buy goods and services produced by other Americans, who in turn will have more money to spend, People who are holding their breath waiting for the rich to create jobs for them are going to turn blue.

    But if this were Jay’s site, a lot of people would be talking about the Invisible Hand and incenting people to improve their own lives. At the moment, that’s where our society is. That’s why the Waltons are in the top of the top of the 1% and their “associates” are on food stamps.

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    • I don’t understand why it’s not obvious that the more money the average American has to spend, the more he or she can buy goods and services produced by other Americans, who in turn will have more money to spend

      I think that’s correct up to a point, but after you get to an income level where you have everything you need, then I think the dynamic changes. I agree with you to a point that people should be able to earn more and such, and I think part of the problem is that we’ve allowed money that would normally go towards raises to instead get shifted to stock dividends and such.

      I really want to take a good look at the German work council model as I think they give the workforce a seat at the table when it comes to decision making. I think that would help us out a bit as long as all sides were kept in check. Part of the issue is that there is nobody to engage business leaders to ensure that the workers are taken care of. People are nothing more than a number on a P&L sheet now.

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      • Average American. AVERAGE.

        A huge part of the problem is that over the past 30-40 years we’ve managed to take money away from average Americans and give it to the super rich. Average Americans would spend it and create the demand that would create jobs. Instead, we’ve been trying to bribe the super rich to “create” jobs for us. Creating jobs works. “Creating” jobs doesn’t seem to.

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  2. Granted, Wal-Mart has a sizable force of part-time workers, and they have locations in rural areas of the country where the cost of living is low.

    Just a small point here but the lower cost of living in rural areas, while true in some areas of things you have to buy doesn’t always hold true. We pay more for gas, a lot of the retail stuff that we buy, etc, and medical costs are often higher here (plus we have to travel greater distances to get to it). So our cost of living is lower in a lot of ways but higher in others.

    I’ve already told y’all about my relative who has worked for WalMart for 15 years. I guess it comes down to how you look at things. There are always going to be low income people and some of the slack has to be taken up. Would you prefer it be taken up by food stamps and other government benefits or would you prefer some of it come out of the Walton’s pockets? As I said the other week, this is nothing but another form of corporate welfare; it’s just a little more hidden than a direct subsidy. You can’t really make the argument that WalMart’s survival depends on the status quo.

    Being as I live in a rural area, the WalMart turnover here seems to be less than in the more populated areas (people there have more options) and most of the long time employees, that I know personally, all say the same thing, “The place went to hell when old man Sam died”.

    By the way, for those who might not have seen it, Kamchak’s link is worth watching.

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  3. Kam

    I remember that documentary, and it kinda reinforced what I had seen myself and through close friends of mine.

    Hillbilly

    I’d wager that most of their long term employees outside of management are from their smaller populated areas. Even in my hometown which is between 30-40k in population, Wal-Mart is one of the primary employers as there are not really any major businesses there outside of retail and food outlets. I’ve heard people say the same thing about the difference between the Sam and post-Sam years too.

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