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The Rise of Wal-Mart

Harold Meyerson tells us a story:

Around the time that the young Sam Walton opened his first stores, John Kennedy redeemed a presidential campaign promise by persuading Congress to extend the minimum wage to retail workers, who had until then not been covered by the law. Congress granted an exclusion, however, to small businesses with annual sales beneath $1 million -- a figure that in 1965 it lowered to $250,000.

Walton was furious. The mechanization of agriculture had finally reached the backwaters of the Ozark Plateau, where he was opening one store after another. The men and women who had formerly worked on small farms suddenly found themselves redundant, and he could scoop them up for a song, as little as 50 cents an hour. Now the goddamn federal government was telling him he had to pay his workers the $1.15 hourly minimum. Walton's response was to divide up his stores into individual companies whose revenues did not exceed the $250,000 threshold. Eventually, though, a federal court ruled that this was simply a scheme to avoid paying the minimum wage, and he was ordered to pay his workers the accumulated sums he owed them, plus a double-time penalty thrown in for good measure.

Wal-Mart cut the checks, but Walton also summoned the employees at a major cluster of his stores to a meeting. "I'll fire anyone who cashes the check," he told them.

By Ezra Klein  |  September 11, 2009; 8:30 AM ET
Categories:  Economic Policy  
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Comments

the article by harold meyerson is very interesting.
thank you for the link.

and also, for adding a new word to my life this morning...
"whingeing."
i am putting it next to "wheezing" on my word cabinet.
(if i were choosing definitions though,
it sounds like it would mean a kite in the wind.)
but, it is fine as it is,
and i wont whinge about it.

Posted by: jkaren | September 11, 2009 8:56 AM | Report abuse

From the Wall St journal:

Wal-Mart Stores Inc., the nation's largest private employer, is eliminating paper payroll checks in the U.S., transferring workers' earnings to a debit card if they decline direct deposit to a bank.

Wal-Mart is the biggest company yet to make the move that it said will save paper and money. It estimates the move will save 257,572 pounds of paper a year. It declined to specify the savings but said the shift will reduce its payroll costs.

It said employees' first ATM transaction a pay period is free; subsequent ones cost $2 each.

Posted by: harold3 | September 11, 2009 9:12 AM | Report abuse

Ezra, thank you for the link. Meyerson's review of "The Retail Revolution" by Lichtenstein is excellent. Our family as well as a lot of our friends here in South Carolina refuse to shop at Wal-Mart because of their harsh labor policies.

On the rare occasions (we're out of town and no other alternative exist) when we do venture into a Wal-Mart for a few basic necessities, the experience is informative. I usually ask a few sales associates and/or cashiers what their experience with the company is like. Open-ended questions, no bias intended. The answers have been consistent over the years and across the country: uniformly negative toward the company, even from employees who have been helpful, courteous and positive in their interactions with customers. This is hardly a scientific survey, but they satisfy me in that the responses I get from the ground level Wal Mart associates match up to the stories about legendary reluctance to pay decent wages or offer decent health insurance.

One July 4 while on vacation in North Carolina, I asked a cashier who we had chatted with if she was getting overtime or some sort of holiday differential: "Are you kidding?" she replied.

How very American this great American retailer is! I hope Sam Walton and his descendants enjoy counting their money.

Posted by: opal22 | September 11, 2009 9:59 AM | Report abuse

Sam Walton became the richest billionaire in America by refusing to pay his employees a livable wage.

A true American hero.

Barbara Ehrenreich's book, Nickled and Dimed in America, also talks about the devastating employment policies of Wal-Mart.

Posted by: anne3 | September 11, 2009 10:02 AM | Report abuse

I think the Federal Government should mandate that every company pay all of their employees the same exact wage. We're all equal right?

Posted by: fallsmeadjc | September 11, 2009 10:44 AM | Report abuse

You know the original Wal-Mart employees have made out pretty well with stock options. If only the Federal Government hadn't made it illegal for Walton to employ more people.

You know the minimum wage increases unemployment right? Why would the Federal Government want to do that? Is paying one person a $1 more egalitarian than paying two people 50 cents? Doesn't the Government want to maximize employment? Could it be that politicians are more concerned with helping their political interests than with actually being fair. Cloaking your political interests in phony egalitarianism is one of the oldest tricks in the book. The Kennedy's were masters at it.

On a moral scale Sam Walton is so much higher than any of the 3 Kennedy boys.

Posted by: fallsmeadjc | September 11, 2009 11:02 AM | Report abuse

Whatever, dude.

Posted by: pseudonymousinnc | September 11, 2009 11:21 AM | Report abuse

fallsmeadhjc was always annoying but I didn't think he was just plain stupid. I think his user name has been hijacked by an idiot. Only explanation I can think of. O.o

Posted by: luko | September 11, 2009 11:36 AM | Report abuse

I haven't gotten a paper pay check in a long time, but my company will still cut you one if you want. We used to get a stub by mail, but now you need to look on line. I think it saves them money.

Posted by: obrier2 | September 11, 2009 11:51 AM | Report abuse

@fallsmeadhjc You know the minimum wage increases unemployment right?

False right wing canard. The minimum wage, counterintuitively, does not appreciably add to unemployment.

Is paying one person a $1 more egalitarian than paying two people 50 cents?

Sure and debt peonage, serfdom, and slavery kept the slaves, serfs, and sharecroppers employed. Of course, they were either pretty much owned by their employers or had no path out of their ever increasing debt. Still they should be grateful to massa for what he gives them.

It is also quite lucrative to hire children to work in mines and factories as you can pay them less than adults. Plus their little fingers are so adept at threading the shuttles.

I hear illegal aliens will work for half of what an American citizen will accept.

fallsmeadhjc just makes me sick. I hope that fallsmeadhjc is reincarnated as a tannery boy in Pakistan or a Chinese garment worker in Saipan.

Posted by: srw3 | September 11, 2009 11:51 AM | Report abuse

"You know the minimum wage increases unemployment right?"

No, I didn't know that. Prove it.

Posted by: steveh46 | September 11, 2009 11:55 AM | Report abuse

""You know the minimum wage increases unemployment right?"

No, I didn't know that. Prove it.""

Well, here is some (but by no means all) data and research on the reduction in employment caused by the minimum wage

http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm

or

http://www.clevelandfed.org/Research/Commentary/2007/050107.cfm

The impact is felt most by the least skilled workers. Think about it, if setting the minimum wage above the productivity capacity of certain workers didn't increase unemployment, then we could set the minimum wage at $100 per hour and no one would lose their job. Obviously, that is ridiculous. Someone working at the cash register of a fast food restaurant, for example, can't be paid $100 per hour because he/she doesn't produce more than $100 per hour through his/her work.

Posted by: mbp3 | September 11, 2009 1:40 PM | Report abuse

For years many retail jobs paid a reasonable middle class wage see Macy's, Nordstrom's, Bambergers. They even included health ins., commission,bonuses as well as a pension plan.

Sadly Sam Walton lowered the bar for all Americans.

Posted by: MerrillFrank | September 11, 2009 3:32 PM | Report abuse

If I were running the show I would make the minimum wage really high to create a lot of frustrated unemployed people that I could exploit to gain even more power. I would promise them all kinds of things like free healthcare and better schools but I would adopt policies like the minimum wage to insure that they remain dependent upon my benevolence. I need me some worshipful peons.

Posted by: fallsmeadjc | September 11, 2009 3:35 PM | Report abuse

Not proof. Your links and a lot of other economic literature actually seem to indicate one thing: there isn't enough empirical evidence and follow-up validations of a so-called linkage between minimum wage policy and unemployment. There are a lot of untested hypotheses, literature surveys, and surveys of economists. I want to see more empirical studies like those conducted by Card and Krueger with large not small sample sizes. At least those guys made an actual attempt to observe reality even if there are those who are both criticizing and validating their results.

Posted by: keithmo | September 11, 2009 3:37 PM | Report abuse

"If I were running the show I would make the minimum wage really high to create a lot of frustrated unemployed people that I could exploit to gain even more power."

I have a friend who says that he would like to see a higher minimum wage and higher unemployment because in times of low unemployment the service in fast food and retail is worse. Costco pays more that Wal-Mart and gets much better employees. The post office pays much much more than they need to and so 12% of letter carriers have college degrees.

I think that an hourly wage subsidy to replace minimum wage is worth a try.

Posted by: jwogdn | September 11, 2009 5:34 PM | Report abuse

fallsmeadjc says" "...to insure that they remain dependent upon my benevolence. I need me some worshipful peons.”

Surely a financial titan like you could afford at least two mirrors for worshipful peon gazing.

Posted by: klcscott | September 11, 2009 5:59 PM | Report abuse

as an employer i absolutely see the concept of minimum wage affecting employment. My employees are well over minimum wage but even in non-minimum wage situations if myself and my two employees do the normal work of 2 then it saves me money. Has anyone ever seen how understaffed HR departments are? Ever talked to employers? I have hundreds of clients who are employers large and small and wages are still their highest expense. if they can cut a job and make two current employees do that work they'll do it, especially in this work climate. See the below article from Time about unemployment:

http://www.time.com/time/business/article/0,8599,1921439,00.html

Posted by: visionbrkr | September 11, 2009 11:58 PM | Report abuse

as an employer i absolutely see the concept of minimum wage affecting employment. My employees are well over minimum wage but even in non-minimum wage situations if myself and my two employees do the normal work of 2 then it saves me money. Has anyone ever seen how understaffed HR departments are? Ever talked to employers? I have hundreds of clients who are employers large and small and wages are still their highest expense. if they can cut a job and make two current employees do that work they'll do it, especially in this work climate. See the below article from Time about unemployment:

http://www.time.com/time/business/article/0,8599,1921439,00.html

Posted by: visionbrkr | September 11, 2009 11:58 PM | Report abuse

The comments to this entry are closed.

 
 
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