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Thread: Minimum Wage and WalMart. Catch 22?

  1. #1
    Helper Gregg's Avatar
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    Minimum Wage and WalMart. Catch 22?

    WalMart only as an example, not a scapegoat this time. Sorry to disappoint. Their stock has dropped from a high around $90/share early this year to a little under $60 now. There are analysts who are blaming WalMart's decision to raise US worker's starting wages to $10 I believe its incremental with that as the ending point, but however it works out it should be a lot less of a hot button than the popular $15/hour movement. Even though WM is one of the largest employers in the country it makes no numeric sense that a company with a ~$200B market cap and almost $500B in annual revenue would lose 1/3 of that market cap because they decided to pay the lowest paid workers in the organization a few extra bucks a week.

    I've heard the opposing argument that the valuation is dropping because of a projected drop in future sales as their customer base continues to be squeezed between higher prices (cost of living) and stagnant or falling wages. That, IMO, seems to be the more logical explanation. If true then it seems WalMart would actually be making a calculated investment by paying more now so the customer base can spend more later. A little smaller slice, but of a bigger pie. As much as I'd love to get away from a consumer based economic model, that seems like a pretty reasonable near term approach.
    "Back when I was a young boy all my aunts and uncles would poke me in the ribs at weddings saying your next! Your next! They stopped doing all that crap when I started doing it to them... at funerals!"

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    I wonder if it has something to do with the constantly declining quality of its merchandise and merchandising, its inability to keep its stores clean and stocked, the proliferation of other sources for people to shop (both local and online), and the decline in wages due to other priorities such as phone plans. I think the wage issue is far down the scale in my opinion.

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    Williamsmith
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    I spar with my conservative friends all the time over this one. Okay, so to be a good conservative apparently you have to back the free market capitalism Milton Friedman party line crap about how raisin the minimum wage will crush the economy. And how if we raise it to $10 then why not $20 or $100 dollars an hour. Well, because there is a difference between surviving and being a filthy rotten capitalist pig. Surviving is $10 an hour. The filthy rotten part is making billions of dollars managing a hedge fund and raising pharmaceutical pills out of reach of anyone but the 1 %.

    All that's being proposed is that if you can't pay workers a wage that allows them to survive on a paycheck to paycheck basis, then maybe your business model got stepped on by the bully next door. You just basically suck as a capitalist because your business sucks and if it is that bad off, why are your CEO flying to the Bahamas all the time on learjets? Maybe you better trade them in for some Piper Cubs.

    So I ask, if the minimum wage right now is just okay, why not make it $5 an hour and our economy will take off like freaking mad. Or maybe, hey how about $1 an hour and we can take over the world. Wait, we already did that by shipping our manufacturing to Mexico where kids can work for free and China where they work like slaves.

    Oh oh and don't forget the argument about how pathetically incompetent and uneducated and just basically worthless the minimum wage workers are. You know what, there are a lot of people with Masters Degrees making minimum wage. And there a lot of high school drop outs. Don't make sense do it?

    WalMart stock is going down. Nobody likes to shop there. D'oh! Man the GOP has got some splainin to do Lucy.

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    Simpleton Alan's Avatar
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    Quote Originally Posted by Williamsmith View Post
    WalMart stock is going down. Nobody likes to shop there. D'oh! Man the GOP has got some splainin to do Lucy.
    Other than being a popular punching bag, what does the GOP have to do with it?
    "Things should be made as simple as possible, but not one bit simpler." ~ Albert Einstein

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    I also have to add that the Walmarts here in Indy have gotten to be fairly dangerous places or the perception is that they are dangerous. The Beech Grove Walmart was deemed a nuisance by the city due to the number of police runs and people have been shot at and robbed in and around the various stores. Several have obvious security guards instead of greeters.

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    Quote Originally Posted by sweetana3 View Post
    I wonder if it has something to do with the constantly declining quality of its merchandise and merchandising, its inability to keep its stores clean and stocked, the proliferation of other sources for people to shop (both local and online), and the decline in wages due to other priorities such as phone plans. I think the wage issue is far down the scale in my opinion.

    That is what I wonder, we are seeing improvement in my area in wages and so I have the choice to not buy junky merchandise or shop in stores that are dirty. I appreciate that I have some more choices about what to support as well,

    I wonder if it is related to fast food chains that are not doing as well also. I don't have the data on that but I know that major fast food chains are overall losing business. Enough people making different choices.

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    Williamsmith
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    Quote Originally Posted by Alan View Post
    Other than being a popular punching bag, what does the GOP have to do with it?
    I had to read that question a second time. okay, I'll take a stab at it. Might be a trick answer. Let's see, every time somebody says raising the minimum wage is a bad thing they seem to have an R in front of their Senate or a house designation. And every time somebody says they are in favor of it, they don't. Except ......Carson seems to be lucid in his thoughts and proposes a minimum wage tied to inflation.

    The GOP is in shambles. When was the last candidate who had a chance? If it weren't for a few hanging chads, you'd have to go back before George to get an answer. Usually, if you have been underperforming for more than a decade....you pretty much get fired Face it, they ain't connecting. When an outsider like Trump can upstage the establishment......you got some splainin to do. Trump has basically slapped them in the face and said, "What are you going to do about it?"

    The biggest problem the GOP has is that half of the electorate thinks Ronald Reagan was a founding father. I mean, they got real problems. And the minimum wage is just one of them.

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    I put Walmart in the same box as McDonalds - people are just getting tired of it. Pretty much the same reason I think all the oid chains went under or are doing so.

    But I do think the drop in sales creates a vicious cycle of dropping store and inventory quality to cut costs which leads to lower sales. Walmart is supposedly putting some serious money into upgrading and refurbishing stores, let's see if it helps.

    As far as the minimum wage question goes, I would think it would not make that big a difference in their bottom line. Given Walmart employees are likely Walmart shoppers, although it might affect their bottom line, you would think it would make sales go up, unless it's being offset by lower government entitlements due to higher wages.

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    Senior Member ctg492's Avatar
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    Once on top no where to go but down. Kresge's, Woolworths,Kmart, Sears and Roebuck. WM time for the next big thing to match the market.

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    Senior Member Miss Cellane's Avatar
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    You'd need to compare Walmart's stock to that of other retailers. Aren't all major retailers doing less well than they expected this year? Target and Macy's also raised their minimum wage to $9/hr--how are they doing? I guess I'm not sure if this is a Walmart specific problem or one that is affecting many retailers this year.

    Walmart may have some lower prices, but just a short while ago, I was behind a couple at the supermarket, a local family-owned chain, and over and over again, I kept hearing, "But this is lower than Walmart!" Smart shoppers don't just trust Walmart to have lower prices, they check prices elsewhere.

    I think Walmart and other brick-and-mortar retailers will need to step up their on-line shopping--making it easier, faster and cheaper to ship goods to people's homes--if they want to stay in business.

    What's happened around here is that stores are stocked with the most popular items, things that sell well. To get specialty things--hobby gear, the "unpopular" color of a shirt--you have to order on-line or find a real store that carries what you want. Add in shipping costs and delivery times of up to two weeks, and the "option" of shopping on-line just isn't as popular as going to a store that has what you want, lets you examine it before buying, and you don't have to pay shipping to get it or return it if you don't like it/it doesn't work. Granted, the further you are from a major city, the harder the specialty stores are to find, but they are out there.

    The hardware store in the downtown area of my little city has been there 50 years. They don't carry everything the big box store at the other end of town does, but they carry a lot of smaller items that the big box store does not or that they carry but you have to order on-line. And you can always find someone to help you out at the smaller store. The big box store has lots of employees who greet you cheerfully, but don't always have any answer to your questions.

    During the holiday season, companies offer free shipping or overnight shipping or at least faster shipping. The rest of the year, some major companies can take days to process an order, and longer to ship it. And then they wonder why they aren't getting much business. If major amounts of your merchandise are only available on-line, you have to make it quick and easy and not too expensive for people to get that merchandise, or people will look elsewhere.

    The major retailers are simply out of step with what people want and how they shop today.

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