Wal-Mart And The Earned Income Tax Credit

“You can’t say that they have a good business model. Their model is efficient. Henry Ford used efficiency to raise standards, to bring his workers into the middle class. Wal-Mart has that choice. Their game is to say that there’s no other way to be efficient. But they’ve driven down wages across the retail industry, and they don’t have to, in order to be profitable.”( Carl Pope cited Costco, the chief rival to Sam’s Club, Wal-Mart’s membership warehouse. “Costco pays their workers well”—the average wage at Costco is $17.46 an hour—“and we know they’re profitable.” )

Mona Williams, the chief spokeswoman for Wal-Mart, disagreed. When she was asked why the company could not simply give two-dollar-per-hour across-the-board raises to its store employees, her reply was free of obfuscation. “Wal-Mart’s profit per associate is six thousand four hundred dollars,” she said. “If we were to pay two dollars more an hour to associates, that would cut four thousand dollars out of our per-employee profit. If anybody ever stopped to do the math, they’d see this. It would take two-thirds of the profit if we gave everyone two dollars more.” ~~~~~~~~"Annals of Spin"--J.Goldberg,The New Yorker-April ‘07

A Congressional study estimated that a typical Wal-Mart store employing 200 people costs the American taxpayer $420,750 a year – about $2,103 per employee. ~~~~~“Wal-Mart’s profit per associate is six thousand four hundred dollars,” she said{Mona Williams}~~~~~~~So, WalMart profit per associate is $6,400 -yet cost to tax payer per WM employee is $2,103. Doesn’t that mean that 1/3 of WalMart’s per employee profit is actually government subsidized profit? $2103 x 3=$6309-------------pretty close to $6400!

DDRB:
The same sort of argument can be made for the EITC. While it is a good way to give money to extremely low wage earners what it does is let employers retain these employees and have the taxpayers subsidize their earnings.

As for Walmart’s claim that increasing the minimum wage would eat into their profits, this is false argument. There are two ends to a business - costs and selling price. If Walmart’s costs go up they can recover some of it through charging higher prices.

One of the cornerstones of their business model is that they try to serve areas where there is little competition, so if they raise prices where are their customers going to go instead?

The real solution is for the government to raise the minimum wage. This would force all employers who use the tricks of socializing their employment costs to incur similar costs and keep their competitive position within their industry about the same.

Of course if Walmart is making a profit by underpaying and using inefficient employees while Costco is paying a better wage and using more productive workers than raising the minimum wage will only hurt Walmart. No wonder they are worried (and lobbying extensively).

Did they ever consider that it might be cheaper to have a workforce without a 50% turnover each year?

If walmarts would give back the hours they have taken away from cashiers and other associates, Example( cashiers only get four hour shifts, they do not hire full time anymore.) Cashier lines at registers are long, if your lucky you mightr find two registers open on grocery side and maybe two open on the gm. side. Policy use to be if you have thirty two registers you are suppose to have at least ninety cashiers thats was enough to cover even for call-ins.  another example is the over night associates, there is not enough coverage to put up the stock on the shelves, so when the morning comes some areas have not been touched and your backroom is still overloaded with freight and they get coached for not doing their job, when if they had enough coverage it would all be worked. Also I never heard of hiring part time for overnights, its a plain fact if you don’T GET THE PRODUCT ON THE SHELF YOU CAN"T SELL IT. If any place needs more associates its definitely overnights. S o what I am saying is give back full time associates and hire enough coverage to get the job done, whether it be cashiers , overnight associates or any othe ateas that need the coverage. Also this woule put a stop to shoplifting either internal or external. I have been ther and I have seenthe change in how Walmarts treats their associates.

Understaffing is a cornerstone of Wal-Mart’s business model. And they wonder why so many people say Wal-Mart’s customer service sucks!

Cashier lines at registers are long...

Perhaps one of you defenders of the Beast can explain to me the ‘efficiency’ of a bottleneck at the point-of-sale?

ddrb,

“If anybody ever stopped to do the math, they’d see this.”

Let’s see, a recent article on this site, said that Wal-Mart’s employees were now up to 2 million (worldwide), if each employee were to get a $2.00 an hour raise, that would be an extra $4 million per hour!!  If the average employee were to work 4 hours per day, that would be an extra $16 million per day!!  And, if Wal-Mart is open 364 days per year, that would be an extra $5.824 billion a year, over and above what they are paid already!!  How much would prices have to be raised to earn another $5.824 billion dollars in profit?

“typical Wal-Mart store employing 200 people”

“Understaffing is a cornerstone of Wal-Mart’s business model.” ~ Ken V.

So, 200 employees per store, is not enough, and think what even MORE employees, being paid $2.00 an hour more would do to PRICES!!  I wonder how many employees a typical Wal-Mart store SHOULD have to be efficent, 400, 500, 600?  Maybe 1 employee for every 20 customers, who basically ‘serve themselves’!!

Sounds like a ‘good’ model for losing customers to your competitors and going out of business!!  No wonder Ken V. likes it so much!!

Lets see 12,000,000,000 profits minus 5.824..  its sounds like a great plan.

So, 200 employees per store, is not enough...

That’s what they are supposed to have but how many are actually staffed to that level?

Wal-Mart’s annual employee turnover rate is somewhere near 50%. Do you honestly think this turnover happens in an orderly fashion? I’ve read about Wal-Marts that have experience a 300% turnover. The entire staff of the store changed three times in one year!

Understaffing: a double-talk phrase that could be translated as “your time is far less important than our overhead.”

NEW REPORT: McCain Would Give America’s 200 Largest Corporations $45 Billion In Tax Breaks------------------
If you’re a CEO of one of America’s largest corporations and have enjoyed the Presidency of George W. Bush, a contribution to the McCain campaign is looking like a pretty good investment.

A new report from the Center For American Progress Action Fund finds that a key piece of John McCain’s tax plan — cutting the corporate tax rate from 35% to 25% — would cut taxes by almost $45 billion every year for America’s 200 largest corporations as identified by Fortune Magazine.

Eight companies — Wal-Mart Stores Inc., Exxon Mobil Corp., ConocoPhillips Co., Bank ƒƒof America Corp., AT&T;, Berkshire Hathaway Inc., JPMorgan Chase & Co., and Microsoft Corp. — would each receive over $1 billion a year.

These giveaways are just one part of McCain’s doubling of the Bush tax cuts for corporations and the wealthy which would create the largest deficits in 25 years and drive the United States into the deepest deficits since World War II.

A recent analysis by the Public Campaign Action Fund found that John McCain’s campaign has received $5.6 million from the PACs and executives of the Fortune 200.

Over the past eight years, under George W. Bush, American workers have seen their wages stagnate as corporate profits have skyrocketed. John McCain’s misguided priorities show he’s more of the same: the same $45 billion in tax cuts for America’s 200 largest companies could be used to lift over 9 million Americans out of poverty.(Think Progress)

hey ken the turnoverover rate in all ufcw union grocery stores you favor in the united states is welll over 50%.got anything to say on that?

Naked Truth Investing: Wal-Mart customers ‘save money’ and ‘live better’ while Wal-Mart employees pay more for their 401(k) plan and retire broke
By Daniel Solin , Blogging Stocks
June 24th, 2008~~~~~~~~~~~~~~
Wal-Mart (NYSE: WMT) is the world’s largest company with over $380 billion in revenues. It’s success is based on it ability to squeeze vendors to the breaking point. The largest manufacturers are no match for this retail giant.
Wal-Mart’s 401(k) plan has over $9.5 billion in assets. Its modestly paid employees count on this plan to fund their retirement.
A recent class action lawsuit makes allegations which, if true, will cause many of these employees to be great disappointed.
The suit alleges that Wal-Mart’s 401(k) plan pays “retail” for its mutual funds, instead of the institutional rate for the same funds. Institutional funds require a minimum investment ranging from $100,000 up to $1 million. Clearly, not a big hurdle for Wal-Mart’s mega 401(k) plan.
The difference in cost between retail and institutional funds is significant. The average annual expense ratio for retail equity mutual funds is around 1.50%. The same expense ratio for an institutional fund is around 0.50%.
A 1% difference in costs doesn’t seem like much but it can add up. On an initial investment of $50,000, it could cost investors as much as $19,000 over 20 years, assuming an 8% rate of return.
The failure to insist on lower cost institutional funds is not the only problem with Wal-Mart’s 401(k) plan. It is populated with high expense ratio, actively managed funds, despite the fact that lower cost, actively manged funds, with similar benchmarks and better performance, are available from fund families like Vanguard.
Yet even these obvious deficiencies still don’t address the primary problem with the plan. Why are actively managed funds included at all? The plan should consist solely of low-cost, broadly diversified, domestic and international stock and bond index funds, and target retirement funds, made up of low-cost index funds. The complaint alleges that, if Wal-Mart had followed this practice, the plan would have increased in value by an additional $140 million for the six-year period ending January 31, 2007.
Has Wal-Mart lost its negotiating mojo? Or has it succumbed to a flawed 401(k) system that places the interests of employers, brokers, consultants and the mutual fund industry above those of its employees?~~~~~~~~~~~Note: Evidently, not ALL vendors are bargained down!

RWDSU President Slams Wal-Mart Hypocrisy
June 27th, 2008
The president of the Retail, Wholesale and Department Store Union today blasted the announcement by Wal-Mart that it would notify its employees about the Earned Income Tax Credit (EITC) and challenged the giant retailer to take similar steps to notify workers of their legal right to organize for union representation.

RWDSU President Stuart Appelbaum, whose union has led efforts to prevent Wal-Mart from opening in New York City, said that “rather than encourage employees to sign up for a tax credit for low income workers, Wal-Mart ought to respect the right of workers to a union contract and middle-class wages.”

“If hypocrisy was an Olympic sport Wal-Mart would hold the record for gold medals,” Appelbaum said, adding that the company, whose revenues now top $300 billion, has “ruthlessly fought every effort by workers to organize.”

Pointing out that Wal-Mart officials said they would inform workers about the EITC through its internal Web site, messages on pay stubs, and notices in store break rooms, Appelbaum said the retail giant should use the same means to inform its employees of their legal right to organize for union representation.

“Since none of Wal-Mart’s executives seem to understand that workers actually have the legal right to organize I’m more than happy to send them a copy of the law,” Appelbaum said.~~~~~~~~~~~~~~~~~~~~~

“Wal-Mart that it would notify its employees about the Earned Income Tax Credit (EITC) and challenged the giant retailer to take similar steps to notify workers of their legal right to organize for union representation.”

The EITC is guaranteed to help employees, financially, joining a union gives no such guarantee!!

““Since none of Wal-Mart’s executives seem to understand that workers actually have the legal right to organize I’m more than happy to send them a copy of the law,” Appelbaum said”

Maybe Appelbaum should read that law as well, as it provides for employers rights to desuade employees from joining a union!!  If the union wants people to join, convince them, that it would be to their benefit!!  In other words, “What are you actually going to do for me, not what are you going to do against my company?”!! 

Calling employees names, saying they give poor customer service and downgrading them and their company, trying to put it out of business, won’t win them over!!

“Maybe Appelbaum should read that law as well, as it provides for employers rights to desuade employees from joining a union!!”....RDS

Dissuade, does NOT include threats to fire employees for union activities! Dissuade, does NOT include threats and harassment of employees and their families for union activity! Dissuade, does NOT include shutting down whole departments because the employees voted in union representation (as the meat cutters in Jacksonville Texas did)! Lastly dissuade, does not include the illegal closing of a store to break a union that was legally voted in (like the one in Jonquiere Quebec)!

RDS if the unions have to follow the LAW so then should the Business, even if it is SPHINCTER INC.!

Big D,

GM, FORD and CHRYSLER are ‘shutting down whole departments’ and ‘closing plants’ is that because they are trying to ‘break the union’?  Or, is it because the business environment has changed? Could it be, that the union changed the environment of the stores involved?

RDS (aka Bob)

That doesn’t justfy or excuse the ILLEGAL union busting methods that SPHINCTER INC has used in the past , present,(and if nothing is done), in the future.

Try to stay with the subject that you started!