Wal-Mart is the new General Motors for the Middle Class

Posted by PITHOCRATES - February 22nd, 2014

Week in Review

The left hates Wal-Mart.  Because they are nonunion.  And their low prices make it difficult for small mom & pop shops to stay in business charging their customers higher prices.  But being nonunion lets them hire more people.  And their low prices allow people to buy more with their paychecks.  Good things.  Yet the left hates Wal-Mart.  Because they would rather have union jobs even if it means fewer jobs.  And higher prices.  Despite Wal-Mart being the best thing for the middle class since General Motors (see Walmart and the middle class, sinking together by Rick Newman posted 2/21/2014 on Yahoo! Finance).

It was once General Motors (GM) whose fortunes reflected those of the middle-class Americans who bought its products. Now, that bellwether Goliath is Walmart (WMT)…

A chronically weak job market is pinching lower-income consumers — some of whom can’t even afford to shop at Walmart anymore.

The digital revolution has left Walmart at a disadvantage against etailers such as Amazon (AMZN), which has 7 times’ Walmart’s online revenue, and a much smaller physical footprint to manage.

With Walmart tied so closely to the fortunes lower-middle-class Americans, it’s no exaggeration to say that, as goes Walmart, so goes America. And vice versa…

A century ago, Henry Ford famously doubled the pay of his workers — to $5 per day — to reduce turnover and make his production lines more efficient. That move had the added benefit of raising living standards for Ford workers and helping establish the modern middle class.

Even though Walmart is the nation’s largest employer — with 1.3 million U.S. workers — it seems highly unlikely it could achieve anything similar to what Henry Ford did. Global competition gives retailers little room to raise costs without giving away pricing advantages. And fading demand for lesser-skilled workers lacking a college degree leaves few companies with a real incentive to raise wages, aside from earning a bit of public goodwill. Before Henry Ford doubled wages, his workers often left for other blue-collar jobs in a booming industrial economy. Most Walmart workers lack such options.

Amazon is nonunion, too.  But Amazon founder, Jeff Bezos, donated $2.5 million to support gay marriage in Washington State.  Donates primarily to Democrat candidates.  And supports an Internet sales tax (see What Are Jeff Bezos’s Political Leanings, and How Might They Shape the Washington Post? by David A. Graham, The Atlantic, posted 8/5/2013 on the National Journal).  So there are things the left likes about Amazon.  But they only have about 100,000 employees to Wal-Mart’s 2.2 million.  Which is why the left has an all out assault on Wal-Mart.  Because they want to unionize those 2.2 million.  For 2.2 million people would provide a lot of union dues.

Unionization or a higher minimum wage does not build a strong middle class.  A strong economy does.  That’s what helped Henry Ford raise his wages.  To keep his best workers from quitting so they could take higher paying jobs elsewhere.  Which is how people earn more money.  When an economy is so robust that there are more jobs than people to fill them.  Requiring employers to pay more to attract workers.  Not by forcing employers to pay more.  Especially during a weak economy.  When a business’ margins couldn’t be thinner.  Leaving them unable to raise wages without cutting workers.  Which the left will be glad to see.  Lost jobs.  As long as those remaining are union jobs.

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Henry Ford built a Strong Middle Class with Nonunion Labor

Posted by PITHOCRATES - February 9th, 2014

Week in Review

President Obama’s new message is the horror of income inequality.  As his friends on Wall Street and in Hollywood make so much more money than the ‘folks’ do.  Of course, if it weren’t for his abysmal economic policies the ‘folks’ would be able to get a better-paying job.  Since he’s been president his policies have destroyed some 11,301,000 jobs (see The BLS Employment Situation Summary for December 2013 posted 1/13/2014 on PITHOCRATES).  The Affordable Care Act, new taxation, costly regulatory policies and his support for union labor all help to kill jobs.  Forcing a lot of people to work a couple of low-paying part-time jobs to pay the bills.  While his friends on Wall Street and in Hollywood have never been richer.

The economy wouldn’t as bad as it is if President Obama didn’t attack business so much.  And, instead, embraced it.  Like Henry Ford (see The Internet Is the Greatest Legal Facilitator of Inequality in Human History by Bill Davidow posted 1/28/2014 on The Atlantic).

In the past, the most efficient businesses created lots of middle class jobs. In 1914, Henry Ford shocked the industrial world by doubling the pay of assembly line workers to $5 a day. Ford wasn’t merely being generous. He helped to create the middle class, by reasoning that a higher paid workforce would be able them to buy more cars and thus would grow his business.

Yes, Henry Ford did want to pay people enough so they could afford to buy his cars.  But this did something else.  It attracted the best workers to his company.  Because of the incentive of the higher pay.  And if they were lucky enough to have gotten hired in they busted their butts so they could keep those high-paying jobs.  It was a meritocracy.  If a worker wasn’t performing they got rid of that worker.  And offered that job to another person willing to bust their butt to keep that job.

Of course, the unions changed all of that.  The Keynesians will point to Ford to justify their consumption policies (putting more money into consumers’ pockets as the be-all and end-all of their economic policies).  And NOT on how attracting the best workers with the best pay helped make Ford the most efficient.  Allowing Ford to produce cars at prices working people could afford.  Once the unions came in they decreased efficiencies.  Slowed down those assembly lines.  And raised the cost of cars.  So only unionized working people could afford them.  While most other working people had to settle on used cars.  Unless they had a relative that worked for one of the automotive companies that could give them a car at an automotive worker’s discounted price.

Surprisingly, the much-vilified Walmart probably does more to help middle class families raise their median income than the more productive Amazon. Walmart hires about one employee for every $200,000 in sales, which translates to roughly three times more jobs per dollar of sales than Amazon.

Why do some vilify Wal-Mart?  Because like Henry Ford was in the beginning they are nonunion.  Helping them not only to hire the best workers but to provide goods at a lower price so those not in a union can afford to buy them.  So Wal-Mart helps middle class families in two ways.  They help to raise the median family income.  And they allow that median family income go further.  Perhaps the greatest weapon in the arsenal to fight income inequality.  As they help those not in privileged jobs (such as a UAW job or a government job) to live as well as someone in those privileged jobs.

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Nancy Pelosi Hates Nonunion Workers because She Can’t Collect Tribute from Them Like She Can from Union Workers

Posted by PITHOCRATES - November 6th, 2011

Week in Review

Nancy Pelosi believes there is such a thing as a bad job.  And I’m not talking about flipping burgers.  I’m talking about building jet planes.  Normally good.  As jet planes dominate U.S. exports.  But these jobs are only good jobs when they are in Seattle.  Not in nonunion South Carolina (see Pelosi Vs. Boeing — And Jobs posted 11/1/2011 on Investors.com).

“Do you think it’s right that Boeing has to close down that plant in South Carolina because it’s nonunion?” asked host Maria Bartiromo.

Pelosi’s quick answer was “yes.”

Pelosi said she preferred the plant in the right-to-work state would unionize; failing that, the National Labor Relations Board is right to shut down the plant where Boeing hopes to build its Dreamliner passenger aircraft.

So instead of adding jobs to the economy Ms. Pelosi would prefer these people collect unemployment checks.  Why?

Union representation must be forced on them so they can be forced to pay union dues, a big chunk of which is funneled into Democratic campaign coffers. Over the past two years, the [International Association of Machinists] donated $1.98 million to Democratic candidates and $34,000 to Republicans.

Similarly, the trillion dollars in wasted stimulus and other legislation have gone mostly to projects using union workers, in particular teacher and construction unions. Stimulus money has also gone to failing but politically connected firms like Solyndra, whose major investors are big Democratic donors.

Nancy and her Democrat colleagues are greedy.  And pine for the days when people like them ruled over others.  Simply by being born into the nobility.  With democracy putting the kibosh on aristocracy they have come up with this clever ruse to put taxpayer dollars into their pockets.

They still steal it.  But not directly.  They give it to someone else.  Who then gives some of it back to them.  If this sounds familiar you may have seen this in the movies.  We call it ‘money laundering’.  She calls it tribute.  The proper respect paid to her privileged class.

This is what it’s all about in the Democrat party.  The money.  So when you hear them talk about creating jobs and stimulating the economy it’s what we call in politics ‘lying’.

They just want the money.  And could care less whether or not they create a job.  If you disagree answer me this.  After 5 years of Pelosi/Obama and all of that stimulus, where are the jobs?

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