Posted on 01/01/2006 3:06:28 PM PST by flixxx
The Wal-Mart Model
The American economy continues to surge ahead, though you won't read much about it in mainstream media. Economic growth in the third quarter was 4.1 percent--despite Hurricane Katrina!--the 10th consecutive quarter with growth over 3 percent. Unemployment is 5.0 percent--lower than the average for the 1970s, 1980s, or 1990s. Since April 2003 the economy has created a net 5.1 million new jobs. Core inflation is only 2.1 percent, and gas prices, which surged above $3 a gallon after Katrina, are now down around $2. Productivity growth for the five-year period of 2000-2005 is 3.4 percent, the highest of any five-year period in 50 years.
This is a remarkable performance and owes something surely to the Bush tax cuts and to Alan Greenspan's stewardship at the Federal Reserve. But it also tells us something broader about the American economy. Mainstream media coverage about the economy tends to be full of bad news, especially during Republican administrations, and to focus on economic problems. But over the longer term the story of the American economy is one of success. A quarter century ago many economic commentators said that the era of low-inflation, high-job-creation economic growth was over. In the ensuing 25 years it has come to be the norm.
The negative bias of economic coverage can be seen in stories about the current No. 1 private-sector employer in America, Wal-Mart, and the No. 1 employer back in the 1970s, General Motors. The GM story is genuinely grim: The company is laying off thousands of workers and closing plants and is threatened with bankruptcy. Stories about Wal-Mart tend to focus on allegedly low wages and healthcare benefits, and to say less about the company's continual profitability and the low prices that benefit consumers. These companies are not entirely comparable; they're in different businesses. But some of the differences between them illustrate why the American economy, which seemed to have run out of gas 25 years ago, is now doing so well.
One big difference is this: General Motors' business model was designed for a static economy; Wal-Mart's for a dynamic economy. From the 1930s, GM--as one of only three major automakers--was able to pass along to consumers the high costs imposed by wages, pensions, and health benefits negotiated with the United Auto Workers. When emerging foreign competition started to make life tougher for Detroit executives in the 1970s, they tried to insulate themselves with government tariffs and domestic-content requirements. More recently, they've tried to offload their high healthcare costs onto the government. Wal-Mart, in contrast, started off with many retail competitors and has sought more, by taking on supermarkets. It competes by holding down costs and prices for consumers.
Quick reaction. Wal-Mart has been much more skilled at adapting to market conditions. Its computers keep it instantly apprised of sales, and its distribution system keeps stores stocked with items consumers want. Someone making a 3-ton car cannot adapt so quickly, but even so it still takes GM years to get new models on the market--and often they're not what consumers turn out to want.
Then there are employment costs. Yes, Wal-Mart does not pay high wages or provide healthcare benefits to all employees. But not all workers today want full-time jobs (they may want to be home when kids return from school) or health insurance (many are covered by a spouse's policy or Medicare). And Wal-Mart promotes from within: You can work your way up from the store floor to management ranks. GM and the UAW, in contrast, insist on a sharp line between labor and management, with all employees working full time and getting full benefits. That made sense when almost all workers were men supporting families. But it is a poor fit with a labor market in which many workers are women, teenagers, or retirees seeking extra income.
In retrospect it's not so surprising that 25 years ago, when GM was deemed the prototypical firm, experts were pessimistic about the American economy. They failed to foresee that more nimble firms like Wal-Mart would rise and would supply the amazing resilience that has enabled the American economy to thrive, as Greenspan has observed, even when hit by calamities like September 11 and Katrina.
ROFL!!!!
Yup........Happy New Year!
Never forget that all the trouble in the world is caused by only 3 things, according to liberals:
1)George Bush
2)Global warming
3)Walmart !!!!!!
Happy New Year!!
BUMP
That is too funny!!!!!!
But if that cart pusher is there for a couple of years then management is disappointed because he's getting a higher salary than a new hire and isn't a whole lot more productive. In fact any person in the same job for more than a year or two becomes more of a liability because a new person can be hired for less, or so management memos seem to indicate. And that lowly cart pusher you promoted to manager? Upper management is debating how much money can be saved on him by cutting the company matching on is 401K. Yep, really concerned about their employees alright.
I think we need to create a WalMart ping list :)
Well actually it is, when part of that plan involves salary and benefits and treatment of employees.
And you know all of this to be fact?
According to published reports on that Susan Chambers memo, which I don't believe Wal-mart ever denied.
walmart is a company for people either looking for something better, houswifes or old people, or teen agers. I dont know to many career wal-mart cashiers.
And people also dont take into account that target and other stores like wal-mart pay much better and tend to have better customer service, perhaps and I know this will make a liberal scream, there not worth more then what they get (if they are why the hell are they not at target or that fabled small town hardware store that pays $20 an hour with benefits thats being crushed by wal-mart that democrats are always talking about?)
Personally I hate wal-marts, there crap sucks and there employees are rude as hell. Im a target man, but wal-mart definitely is a good company and employs a lot of unemployable people.
So the question is - would the American economy be better off if GM imports all of its cars from China?
The cart pusher is most likely going to be part of the classification of Wal-Mart workers I already outlined in post #13. Why would Wal-Mart replace a part-time, teenage cart pusher making slightly higher than the minimum-wage but who goes about his job and waste their time and money replacing him with someone who may say "screw this, I can make more at McDonald's" and quit within days?
In fact any person in the same job for more than a year or two becomes more of a liability because a new person can be hired for less
You are assuming that most Wal-Mart workers see Wal-Mart as a lifetime career choice. I stated that the opportunity for such a choice exists because Wal-Mart has a proud tradition of seeing its employees climb the ladder. Really though, most Wal-Mart workers are content at working the same mundane position for a year or two (because it's their 2nd job or they're in school) and the feeling is mutual with Wal-Mart because they get the qualified associates who plug the scheduling holes around the full-time staff.
How dare you confuse a Wally-basher with "facts"!! You know dang well that if the guy had any command of facts, rather than a knee-jerk negative reaction every time he reads the words "Wal-Mart", he wouldn't have a word to say.
walmart will only get bigger since now they are big enough to bully their vendors, down to things like making them show up with deliveries within a 15 minute time frame, or come back later.
then again if these vendors want to bend over for walmart like that, thats their problem
Please explain to me how Costco's supposed better treatment of its employees affects Wal-Mart's status as America's biggest employer?
So people who work at Target plan to be cashiers all their lives? No wonder they love unions. If I planned on a lifetime of unskilled 8-hour labor, I'd be a union man, too.
Please explain to me how Costco's supposed better treatment of its employees affects Wal-Mart's status as America's biggest employer?
If you have a costco and a wal-mart in the same market and costco pays a buck an hour more than wal-mart, then they are going to get the first pick of employees.
no, for the most part they tend to be under 21 from my experience. But they tend to be more knowledgeable and nicer. But this is just from my experience and opinion.
walmart gets what they pay for. They tend to hire the least employable employees because they will work for less and customers dont shop at walmart for customer service, they shop there for $30 DVD players.
But for me, I would rather pay $39 for a DVD player at target and get someone who knows what they are talking about (and one who wont yell at me.)
Because he's making slightly higher than their entry level wage, that's why. What other reason is necessary? As Susan Chambers pointed out in her memo, "The cost of an associate with seven years of tenure is almost 55% more than the cost of an associate with one year of tenure, yet there is no difference in his or her productivity. Moreover, because we pay an associate more in salary and benefits as his or her tenure increases, we are pricing that associate out of the labor market, increasing the likelihood that he or she will stay with Wal-Mart." The overwhelming majority of employees are replacable at a moment's notice in Wal-Mart corporate thinking. Turnover is to be encouraged because new hires are brought on at the entry level wage and can be made as productive as a longer term, higher paid employee in a short period of time. That's why employee turnover rates approaching 50 percent aren't an issue for concern. More like a matter of corporate pride.
You are assuming that most Wal-Mart workers see Wal-Mart as a lifetime career choice.
Chambers didn't differentiate between career employees and part timers in her memo, though the fact that she pointed out that a 7 year employee costs the company 55% more than a recent hire is a good indication that such employees are not considered assets.
We were talking business plans, which was what the article at the beginning of this thread was about. Costco and Wal-Mart have different business plans where one company, Costco, looks on their employees as assets and the other company, Wal-Mart, looks on them as disposable liabilities.
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