Ezra Klein thinks constructively about Walmart

Neoliberal über-dweeb Ezra Klein just unleashed one of those “balanced” efforts on the controversies of the day that are so characteristic of his species: “Has Wal-Mart been good or bad?” The conclusion, it might not surprise you to learn: it’s “a complicated question to frame and a devilishly tough one to answer.”

Drawing on—I’m not kidding—Reason editor “Peter Suderman’s 17-part Twitter defense of Wal-Mart,” Klein asserts that Walmart’s low prices are a gift to low-income consumers. (They’ve dropped the hyphen/star, folks; here’s the official timeline.) The Bentonville behemoth’s wages may be low, but not “when compared with the prevailing wages in the retail sector.” Walmart’s influence in setting wages is not a topic that they consider. Nor does either our neoliberal or our libertarian actually look at the history of retail wages, because it would be rather inconvenient for their argument.

Over the last 40 years, as the real value of the hourly wage has fallen—down 9.3% since the January 1973 peak—the real retail wage has fallen three times as hard, 28.7%. The decline in weekly wages is even harsher, as workweeks have gotten shorter: down 17.2% in inflation-adjusted terms for all workers, but 38.3%, more than twice as much, for retail workers.

Or, looked at another way, the average retail hourly wage was 91% of that for all workers in 1972 (when the BLS’s retail wage stats begin) to 70% in October 2012. The decline in the weekly ratio was even steeper—from 87% of the average in 1972 to 63% in October. Here’s a graph of that history.

So clearly there‘s been a massive squeeze not only on the hourly wage, but also the number of weekly hours, in retail. (The average workweek is down about 3 hours since 1972 overall—but about 5 in retail.) And who has been the dominant force in retail over these decades? Walmart, of course. Not only is it famous for everyday low wages—it’s also famous for never providing its workers with as many hours as they’d like to work in a week.

And, yeah, it’s nice that Walmart has been able to provide a working class facing at best stagnant wages with lots of cheap stuff, but Walmart has itself had no small effect on dragging average wages down. It’s not just that they’ve been an inspiring business model for the rest for corporate sector, impressed by the chain’s growth and profitability. That’s led to endless rounds of outsourcing and speedup. But also by lowering the cost of reproduction of the working class, to use the old language, they’ve made it easier for employers to keep a lid on wages. You might think of the minimum feasible wage as the one that would assure that most of the workforce could show up and labor day after day. By lowering the cost of the bare minimum, Walmart makes it a lot easier for all employers to pay less. That brings a smile to the faces of stockholders, of course, but no so much the average worker.

Back in 1985, Alex Cockburn, reflecting on a creepy editorial about what Augusto Pinochet’s proper approach to fighting “terrorism” a decade into his dictatorial term should be, remarked that it was an instance of  “our old friend The Washington Post editorialist trying to think constructively again.” Clearly Ezra Klein is extending a noble tradition, even though the Post is a mere shadow of its once-grand self.

46 Comments on “Ezra Klein thinks constructively about Walmart

  1. You left out one important aspect: the government subsidy. If WalMart workers were not able to get food stamps and other govt aid, they would literally not be able to afford to work there. And of course, they can get those benefits because Walmart does not pay a living wage.

  2. Joanna, its function as a subsidy doesn’t really come out until you factor in how welfare is disbursed in America and its attendant classism. Food-stamps should be a basic way of ensuring social reproduction as far as food is concerned. Walmart exploits this like capitalists exploits ALL social reproduction, but we should be careful not to reduce a really effective program like food-stamps into a liability to be shed, as if it makes workers weak. That would be insanity and perfectly congruent with the anti-worker rhetoric already surrounding the program. Instead it should be used to embolden workers to take more risks in organizing, rather than held over their head as an ugly mark of dependence that keeps them ashamed and, even if they aren’t otherwise very “ambitious”, committed to picking themselves up by their boot-straps.

  3. Nobody is forcing anyone to work for Wal-Mart. If their “associates” are so disappointed with their wages at that job, go find a higher paying job elsewhere, instead of crying and whining that they don’t get paid enough to do a job that could very easily be done way more efficiently and cheaply by robots. It’s laughable that socialists are attempting to blame large employers for the health care costs in this country causing them to suffer in “working poverty”. Compare what “poverty” really is in some African countries, where they set the poverty level at US$1,000 a year income.

  4. Re: Joanna,

    Your response has the flavor of free-market orthodoxy, which, like all orthodoxies, never works the same way in the real world as it does in your head. In point of fact, if social safety nets are destroyed as you seem to be advocating, the result will not be that Wal-Mart is obligated to do the classy thing and quietly raise wages. If they wanted to do that, they would have done it long ago.

    You seem to be assuming that if workers “can’t afford to work there,” they would just go out, and in free-market fashion, get a better-paying job, as if they hadn’t thought of that before. No, the same retail job market will be there (except consumer spending will have been strangled further by the elimination of SNAP programs for the poorest Americans).

    Workers will still take whatever jobs they can get, even if it’s sub-poverty wages at Wal-Mart. If that is not enough to survive, well, people get pretty resourceful. They might steal, solicit aid from neighbors and families and non-profits, or encourage their children to work more during their high school years, compromising their education and furthering the cycle of poverty.

    Just because Wal-Mart is currently shifting their workforce’s cost-of-living to public assistance programs does not mean that Wal-Mart will suddenly take up those costs if public assistance programs are eliminated. There are still a lot of places left to shift those costs. Destroying poor people’s port in a storm is not the way to ensure a good port is built.

  5. Earth to Charles: how easy do you think it is to go find another job? You’re either callous or ignorant or both.

  6. It is so easy to blame the poor for being poor. People who make Remarks like they should work harder, find another job, or been a better student are completely naive to what is happening in the real world. Do they actually think people want to be poor? Do some people abuse the system, sure, but just because you see a news piece on Fox about the abuse of the system does not mean that minority speaks for everyone. WalMart and corporations are abusing the system too, but they are only operating within the system our government has created. Employers only have to pay the minimum wage and as long as people are wiling to work at that wage then that is their right. Nobody will pay more than they have to … Are you going to pay more in taxes because the government needs the extra money? I think not. Maybe the government should step in and force the corporations to pay more by increasing the minimum wage. Just a thought …

  7. Reality to Doug: How difficult is it to find any entry level job in America that requires: basic literacy, moderate communication skills, good attendance, basic hygiene, and the ability to take direction from management? These seem to be fairly basic requirements, even if we were talking about countries like France or Sweden, right? If an applicant could satisfy those requirements, pass a drug test, and not be a violent criminal they have a good chance of being hired for any job that they make application. Of course no matter where or by whom anyone is employed by, Wal-Mart would still be responsible for all of society’s ills in your mind, at least, until they agreed to be good socialists by becoming unionized and joined in your new world order beliefs.

  8. @Charles: Really?? You mean that robots will unload the merchandise from the shelves and stock the counters?? Or, will all stores have “self-checkouts” where thieves will have a free run, and only security cameras will monitor them? And, what about the personal touch of customer service? I guess that anyone complaining about the quality of an item can simply drop it in a box and collect their refund on the spot, then?? Typical wingnut attitude.

    @Joanna: I get the appeal to some conservatives on the idea that Walmart deliberately games the social welfare system as a ruse to undercut their hourly associates…but like the other commenters here, I would say that emphasizing that aspect would be counterproductive; especially since social welfare does do so much, when it is properly distributed and not so miserly, to mitigate the rough edges of poverty. Far better would be to push legislation and social protest to change the labor laws to allow Walmart workers to organize and push the company (and other exploiters) to provide better wages and hours and benefits. The social welfare system deserves to exist on its own merits.

  9. How much “customer service” is required to stock shelves? Is it that big of stretch to believe that the world’s largest and most efficient distributor of goods would have any problems converting the unloading of pallets off trucks and placing those items on shelves to be fully robotic? I’d imagine that would be a socialists’ nightmare, as I hear robots are anti-union. Many retailers have successfully already implemented self-checkout systems, and passed on those savings to its customers in the form of lower prices.

  10. g2-b2f76b0002ab675a123411c801: [….]

    Ah, a God-forsaken Randroid and libertard, spouting the usual tripe about how workers can always find another job (as if underemployment, unemployment and the reserve army of labor mean nothing), how robots can do all the work (glorifying the means of producing relative surplus value yet ignoring the fact that people have to buy goods and services so that the capitalist class can realize surplus value), and how “good socialists” and “trade unions” are part of the “new world order” (conspiracist delusion that can easily degenerate into nativism, racism, ant-Semitism, neo-fascism, etc.).

    Please find someplace else to be a troll and leave spam.

    I won’t extend the courtesy of thanking you.

    And don’t let the door hit you on the way out, either.

  11. Thew New York Times recently reported that MSNBC is considering Klein for a permanent anchor job. That would represent a continuation of the Walmartization of everything that I have argued for years is the history of my principal employment, i.e., radio and TV broadcasting. The essence of my claim is that consumers can be trained to accept crap and that capital has no shame in selling it.
    As for the spokesman for the robot interest: surely you know that wageless machines will not boy the imported flimsies that fill the big box stores, and that one day wealth will be concentrated in a very few hands. At that time the wealthy will learn the lesson given by the example of King Midas.

  12. Do you suppose Walmart’s real objective is to turn Red China!? This is Mafiosi China! Idea for HBO;Soprano Walmart

  13. @g2, it is a typical right wing fantasy that workers can be replaced wholesale with automation. It is actually originally a left wing fantasy, the idea being that under communism robots — the word comes from Slavic cognates for robotnik, worker– would do the boring, dangerous, and dirty work. The fact is that while you can in fact reduce human labor by automating, you cannot eliminate it. A small example: do you ever use those auto checkout lines at stores? There are always workers detailed to assist customers with the inevitable and frequent problems that arise. Any inventory manager who entrusted every aspect of shelf stocking to machine would soon have a major catastrophe on his hands. On a more complex level an autoworker friend of mine survived the now-shutdown Ypsilanti GM plant’s transition to orbits by learning to repair them, because they were constantly breaking. He’s still UAW, btw. You cannot, contrary to Taylorist fantasy, eliminate all thought from even simple and low level labor. And speaking from bitter current personal experience, no, you cannot always find another job that pays even Walmart wages.

  14. @Anjie Zheng

    Ah, a God-forsaken Randroid and libertard, spouting the usual tripe about how workers can always find another job (as if underemployment, unemployment and the reserve army of labor mean nothing)

    In better economic times, they can and do find other jobs – as workers have done for more than two centuries as employment dried up in mature economic sectors. Look at the boom in the late 1990s, or (on the flip side) ask what happened to the 2 million Americans who used to operate independent grocery stores before the A & P and Wal-Mart.

    The real problem in the economy today is not enough aggregate demand, which would cause the supply side of the economy to pick up and increase the demand for labor (also increasing worker’s bargaining power, since it would be easier for them to leave and find other jobs).

    @Anjie Zheng

    how robots can do all the work (glorifying the means of producing relative surplus value yet ignoring the fact that people have to buy goods and services so that the capitalist class can realize surplus value),

    If the automation leads to drastically lower prices, then people will be able to buy more with either the same or even less income. There’s no danger that people are going to stop buying goods and services, at least on some level.

    @Alan Bickley

    As for the spokesman for the robot interest: surely you know that wageless machines will not boy the imported flimsies that fill the big box stores, and that one day wealth will be concentrated in a very few hands.

    If there’s no one to buy the products, then nobody will build the machines – or they’ll go bankrupt after buying them. That said, I don’t think greater automation is going to lead to the “Oh noes, nobody is buying our consumer goods”, in part because it hasn’t after two centuries of increasing automation and mechanization.

  15. I had conversations this week that in 1972 Wal-Mart was a reasonable place to work with standard retail wages and benefits and a better profit sharing in a rapidly growing company. By the 80’s that was rapidly changing for the worse.

  16. g2: “New world order”? *yawn* Enjoy your slow decline from societal relevance, you delightful right wing troll, you.

    easytolo: It takes a special kind of person to White Knight in blog comments. What basis do you have for claiming her post wasn’t a critique of social welfare programs? There’s only three sentences there, and the argument is pretty clear and straightforward.

  17. I assumed it was the other way around, that low wages and part-time hours allow Walmart to use the social welfare system as another form of corporate welfare. Also please don’t use the phrase ‘white knight’, but thank you for calling me special =)

  18. What I find most striking in the declining-retail-wages chart is that this is in relation to *average* wages — which themselves have been incredibly stagnant when compared to real GDP growth in that period.

  19. Marx would have had a fun time analyzing Walmart. Ok, so let’s see… The avg. annual rate of growth of the number of employees from 1981-2011 was 15.8% while its gross capital stock (PP&E) grew by about 26.8%; I guess the capial-labor ratio makes Walmart about as capital intensive as your avg. steel company. OK, so what has Walmart done for its owners? Well, here the bad news is that from 2000-2011, the stock is up only 0.6%, but dividends grew by about 18.4% – so the stock’s been a real dog after inflation for the last decade. On the other hand, if your Sam’s kids, the average annual rate of growth of your dividends and stock price from 1981-2011 has been about 47% and 58%, respectively. Shirt factories in Bangladesh don’t get those kind of long-term returns. So yes, crushing your workers through crappy wages and automation is a great strategy. Like Bud Fox asked, “How much is enough, Gekko?” Apparently, Henry Ford had a more refined view of exploitation. By the way, for all you conspiracy folks: Walmart’s “salaries and benefits” numbers came up “N/A” from 1980-2011 on my Thomson-Reuters database. Somebody should check the SEC filings. I think they’ve been reading too much of Joe Stalin’s collected works in Bentonville.

  20. America is the poorest rich country I’ve ever lived in – as opposed to Italy which is the richest poor country I’ve ever lived in.

  21. Henry Ford is an interesting case with some relevance; he famously raised wages so that his workers could afford to buy cars. Sam Walton is perhaps the Anti-Ford: he cut wages so that workers would have no choice but to shop at discount big box stores.

  22. I don’t read Joanna’s comment as pushing for reductions in the safety net in any way. If people want the safety net to use fewer government dollars, the clear implication is that the onus is on employers to pay true living wages so that the safety net doesn’t have to pick up the slack. How is pointing out that relationship between private sector wages and public sector income support helping the neoliberal agenda? How does ignoring this hidden subsidy of WalMart and employers generally help the politics of defending the safety net?

    g2: Latest number of officially unemployed in the US (a widely acknowledged undercount of actual unemployment let alone underemployment) = 12.3 million (http://www.bls.gov/news.release/empsit.nr0.htm). Latest number of job openings in the US = 3.6 million (http://www.bls.gov/jlt/). Ratio = 0.29 jobs per unemployed job seeker. Throw in well over 1 million underemployed WalMart “associates” and other underemployed persons who would like better jobs and your question, “How difficult is it to find any entry level job?” is definitively answered: possible for a lucky handful–impossible for the vast majority. A musical chairs economy is not the same thing as a land of opportunity.

  23. g2: P.S. the number of people working part-time who would like full time work = 8.3 million, far more than the total number of job openings (http://www.bls.gov/news.release/empsit.t08.htm). In other words, you are flat wrong that people can simply get a better job if they want it. Yes, enough people can do it to fill hours of inspiring CBS After School Specials about bootstrap successes, which makes for entertaining status-quo propaganda. The non-photogenic numbers show that the basic society-wide reality is mass economic stagnation.

  24. I disagree that Joanna’s remarks about food stamps are “clearly” part of a libertarian agenda. To me Joanna’s comment simply reports that Walmart wages are below the cost of reproduction and that Walmart has managed to socialise a portion of its labour costs through the mechanisms of food stamps etc.

    If that’s what Walmart do, that’s what they do. The dispute seems to be whether or not Joanna “says ‘food stamps’ like it’s a bad thing.” Not sure there’s enough context to say one way or another, but so what? The argument is about Walmart, not Joanna.

  25. Curious that Suderman chose to tweet his points – perhaps he thought it would seem clever while hiding his lack of substance. Klein’s piece seems pointless since it offers nothing of any use to the conversation.

    I know very little about economics but I wonder if low wage earners spend a higher percentage of income on food precisely because they earn less (tweet 2). And do any of us really think that $7.25/hour, which is the current minimum wage, makes it possible for an individual to support themselves, let alone a family, even if they get to work a 40 hour week?

    All of his points about Costco I think could be used to demonstrate why Walmart’s business model is predatory but it would take more words than tweets allow to have that conversation.

    It is aggravating and alarming when people who have obviously never had to face working for very little while trying to make ends meet and stay alive try to justify their smug, supercilious and dangerous assumptions about how things are in the world.

    If Walmart’s low prices benefit low income people than the company store is a blessing to migrant workers and the company town is heaven.

  26. i’ve always seen walmart as a company store – they put their own workers in a position where they can only afford to shop there [making their wages more like gift certificates than $]. not scientific analysis, just impression

    things like medicaid for walmart employees are certainly a public subsidy of walmart, since the program helps to maintain and reproduce new workers. Like energy assistance programs for the poor are only public subsidy of oil companies

  27. jp, energy assistance programs definitely work as indirect subsidies for the oil companies, but they aren’t ONLY subsidies for oil companies. They also have the direct effect of preventing people from freezing to death. I get the argument that someone might make that they want to devote their energy towards systemic change that makes things like energy assistance or food stamps unnecessary. I don’t get the idea that someone else is wrong or foolish to choose to focus their energy on the life and death of people in the here and now under the existing system. That’s the implication I get from your statement that energy assistance is “only” a public subsidy for oil companies. Maybe that’s not what you intended.

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  30. They should visit any main street small town in America before unloading their bullshit .The stores in such places were once open, the squares vibrant, but are no longer.

    Our meritocracy is rather stupid except when it comes to administering the jackboots. And their understanding of mathematics seems to uniformly come from a few graduate level stat classes. It’s all rather sad.

  31. “Compare what “poverty” really is in some African countries, where they set the poverty level at US$1,000 a year income.”

    The new American dream, where “we” are richer than sub-Saharn Africa, a land despoiled by centuries of wanton exploitation.

    Fewer and fewer countries to to make ourselves seem rich against. Remember the days when Asians were uniformly mocked ?

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  33. JP, I think your comparison is reactionary. It’s has a subsidizing effect, but it’s not “for walmart” in the way that could be argued of energy-assistance subsidizes the energy industry. Medical care and food assistance are *for* people, not just Wal-Mart workers. They are forced to work at Wal-Mart because of a great many of economic forces acting on their access to the rest of what they “need” (i.e. money), but we sow confusion when we complain that the public is supporting social reproduction that businesses like Wal-Mart. It’s one of the many little ways people re-enforce negative perceptions of publicly supported social reproduction.

  34. Pingback: The National Memo » Walmart To Pass More Of Its Costs On To Taxpayers

  35. Joe,i think you are misnterpreting my comment [although i’m glad you took the time to read it] – i am not complaining, i am fully in support of all public subsidies that support each of us, acording to our needs. [not that the current health care subsidies are sufficent – only single payer can do that and obama’s giveaway to the insurance industry has set us way back in that effort.] and of course health care is only one need.

    my comment was a stament of what i believe to be factual, and was not intended as language in a health care campaign flyer. i think we need first of all to accurately assess what’s in front of us, and as long as capitalism reigns, giving walmart employees just enough health care to be ale to reproduce themsleves constitutes a public subsidy of private exploitation.

    in other words,socialism or barbarism, as they say.

  36. Pingback: “Blue Light Special”: Walmart To Pass More Of Its Costs On To Taxpayers « mykeystrokes.com

  37. Joe, im not opposed- i’m in full support of each getting what they need [as half of the equation], and we all need healthcare [not health insurance]. but under our system of economic barbarism, using public funds to keep walmart’s profits up is a subsidy. that’s clarity,not confusion.

  38. So how is Walmart able to supply the cheap goods? Because they import them from places like China and South-East Asia, where the labour costs and currency rates are very low, with maximum cost efficiency. US consumers are the beneficiaries of labour arbitrage (actually, Walmart is now expanding in China itself).

  39. Kind of ridiculous reading all these ideological debates from people who obviously have NEVER EVER owned a business or even been a manager in a retail store. Especially this one”Do they actually think people want to be poor?”

    Nobody WANTS to be poor but a large percentage of these so called POOR are poor by life choices rejecting the ethic of education, hard work and managing their lives RESPONSIBLY. Stop having kids if you can’t afford, turn off the TV and stop the partying and FOCUS on LEARNING how to be a self sufficient person by beginning in an entry level job.

    I’ve never fired a good employee, I’ve only given them raises.

  40. People who make bad choices are going to have a rough time of it in any system. Even if you believe that heaping extra punishment on people who make bad choices is worthwhile as a social control, you can get to a point of diminishing returns where the punishment you inflict on the poor and especially on the working poor starts to degrade society as a whole and make us all worse off. I believe that we’ve passed that point some time ago, and it’s time to turn back.

    As business owner myself, I have sympathy for the plight of all of us entrepreneurs who are trying to provide jobs and getting shafted by big business, the government, and sometimes unfortunately from our own employee. I believe that a more equitable society with a legal system that values fairness and a stronger social safety net can actually be a better environment in which to grow a small business.

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  42. I dunno Doug.

    Blaming Wal-Mart for social change doesn’t make sense to me, at least not directly. (If you want to say they opposed unions–then ok, fine.) The real issue in my opinion is the diminished power of retail/service workers.

    A very significant part of what’s seen as “the Wal-Mart effect” is, in my opinion, actually due to decline in manufacturing opportunities. WM didn’t hollow out the middle-American geographies where the only job you can get is at Wal-Mart.

    I’m not going to blame low-margin retailers for only giving people 30 hours in order to save on labour costs. The issue is a structural one and blaming the businesses that happen to be in a market that actually employs people with shitty opportunities, is mostly misdirected hostility. Why don’t retail workers have power ***in general***? Mall shops, fast food, and general stores, even if they’re owned by a public conglomerate, are not the answer to that question.

  43. (No issues with what you’re saying about liberals, which I get is the point of this article. Just your retail-wage data.)

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