Corporations Behaving Badly - Comeuppance
It
almost makes you wish you weren’t a repugican supporting killing jobs
bills and the minimum wage, but oh well, it’s a little late for that
now.
It turns out that when you starve the people with low wages
and put all of your record breaking profits back into your own pocket
or the pockets of your investors instead of doling out a teeny tiny bit
for human capital (employees), and you drive the wages down so low that
your employees are subsidized on the federal dime, eventually those
people can’t afford your products.
Eventually that lower to middle class that you snuffed out with greed does indeed disappear and then—
POOF – there’s no one to buy your crap.
Walmart’s
quarterly numbers reveal that the previous signs of trouble that so
freaked out company executives have not resolved. Walmart U.S. comp
sales declined 0.3 percent in the 13-week period from Apr. 27 and the
company lowered its earnings-per-share forecast.
And yet, The company returned $3.4 billion to shareholders through dividends and share repurchases.
“Across
our International markets, growth in consumer spending is under
pressure,” said Doug McMillon, Walmart International president and CEO.
“Consumers in both mature and emerging markets curbed their spending
during the second quarter, and this led to softer than expected sales.
While this creates a challenging sales environment, we are the best
equipped retailer to address the needs of our customers and help them
save money.
“We expect the third and fourth quarters to be
better than our results in the first half, and we are working hard to
deliver operating expense leverage for Walmart International,” added
McMillon. Yes, Walmart hasn’t learned and they are looking for more ways
to cut costs, which in Walmart-ese will most likely translate into
taking more from the labor pile.
In their press release, Walmart
blamed the “increased” payroll tax (again, it was not an increase) and
inflation, but the truth of the matter is that these are the conditions
of the market, and whining about them instead of addressing the real
problem isn’t helping. If the average worker had a decent paycheck, they
would have more money. This is just math.
They know this, because in February of this year a company executive asked in an email dripping with flop sweat, “Where are all the customers? And where’s their money?”
In
February of this year even WalMart knew there was trouble because same
store sales grew only 1 percent in the fourth quarter where analysts
were expecting the same 1.5 percent they had seen in a year earlier.
Wal-Mart
attributed this to a fall off in sales after Black Friday because, it
said of an unusually long interval between Thanksgiving and Christmas.
Another slowdown in sales hit in late January and continued into this
month.
The company’s explanation for the recent flat sales was the
January 1 payroll tax “increase” and higher gas prices. The former, of
course wasn’t an increase at all but Wal-Mart, without a hint of irony,
complained that the expiration of the tax holiday took $15 a week out of
the pockets of families earning $30,000 a year.
Where are the customers? Well, According to
Bloomberg they fled Wal-Mart’s poor customer service for places like Costco. You know Costco, where they pay their workers a fair wage and back legislation to increase the minimum wage.
Harold Meyerson pointed out at
WaPo
that these bad tidings weren’t contained just to WalMart but other
retailers like Kohls and Macys were suffering as well. Why? Well, gee,
“The United States leads the industrial world in the percentage of its
jobs that are low-wage.”
This isn’t rocket science. In December of 2012,
CNN money
reported that corporate profits were stronger than ever. “But the
record profits come at the same time that workers’ wages have fallen to
their lowest-ever share of GDP.” Things weren’t always like this. “Until
1975, wages almost always accounted for at least half of GDP, and had
been as high as 49% as recently as early 2001.” Oh, the last vestiges of
the Clinton economy. (Insert longing sigh here.)
“But the
downward pressure on wages is hurting consumers’ ability to spend, and
thus the need for businesses to hire more people.”
“[Businesses]
have a capacity to employ more people, but it makes no sense to hire
more people until you have demand for your stuff,” Heidi Shierholz, an
economist with the Economic Policy Institute, a liberal think tank, told
CNN Money.
Corporate profits have finally pushed
labor off the cliff. The disparity has been growing since the great
depression, and it’s reached the point now where working Americans can’t
make it fly anymore. We have no Bush bubbles (tech, housing) to cushion
us from this reality anymore. Until corporate America starts putting
some of their profits back into labor, labor isn’t going to have the
money to buy corporate America’s stuff.
Just like corporate
America threatens workers with moving offshore for cheap labor, the
American worker can now tell American corporations sorry, but a) I don’t
have the money and b) I can get it cheaper in China off the Internet,
or c) I can buy it at Costco.
I guess workers are good for
something after all in the paradigm of the sociopathic corporation. They
always promised us the goodies would trickle down. Of course, they
never did. Instead, the starving of the middle class is finally
trickling up. It couldn’t happen to more deserving people.
