business news in context, analysis with attitude

The other day, we took note of a Washington Post report about how Walmart executives and Sen. Bernie Sanders (I-Vermont), who is running for the 2020 Democratic presidential nomination, found common ground yesterday - that America needs a higher minimum wage.

They did not, however, agree on how much higher. And not on much else.

Walmart CEO Doug McMillon said at Walmart’s annual shareholders meeting that Congress should raise the $7.25/hour federal minimum wage, saying that it is “lagging behind” Walmart’s national minimum of $11/hour. “It’s clear by our actions and those of other companies that the federal minimum wage is . . . too low,” McMillon said. “It’s time for Congress to put a thoughtful plan in place to increase the minimum wage.”

Sanders, who was invited to the meeting by Walmart employees hoping to advance a proposal that would give them a seat on Walmart’s board, argued that Walmart ought to raise its minimum wage of $15/hour, which he said already is being paid by the likes of Costco and Amazon.

I commented, in part:

This story certainly is a reminder of the fact that Walmart will continue to be a lightning rod for politicians of a certain stripe. The extent of the examination that Walmart will get - cursory or proctological - all depends on how elections go.

While I do think that retailers traditionally have undervalued the importance of front line employees who often determine the effectiveness of a shopping environment, and should pay them more, I cannot imagine that there many out there who are spending $7.25/hour on workers. There are a lot of states with higher minimums, plus the high demand and low supply of workers mean if you want employees, you have to pay more. (If you’re paying your store employees $7.25/hour, you probably have crappy customer service and you’re whining about how unfair competition is.)

While I understand why Walmart wouldn’t want someone from the rank and file on the board, I think it might be well-served to have such a person in on the decision-making process. It might get a different perspective, and maybe some understanding from labor about the issues with which it deals on a daily basis.

One MNB reader, however, took issue with my comments:

I'm a huge fan of Morning News Beat and have read your content for years. You are always timely and spot on with regard to the retail industry's trends and news.

However, I have to take issue with your comments regarding Wal-Mart and Bernie Sanders' entreaty for a board member devoted to workers compensation as way off the mark.

Doug McMillon's call for Congress to increase the federal minimum wage was, at best, disingenuous. How a person making 1000X more than his average worker could suggest that some other entity (in this case Congress) is responsible for low wages is laughable. The sad truth is that Mr. McMillon is in charge of his own destiny and it is completely within his purview to raise workers' wages to a livable amount. I would argue that $20.00 / hour is closer to "livable" than $15.00, but I digress.

In today's hyper competitive retail industry, wouldn't it be an advantage to fairly compensate your front line workers? Case in point is Costco, who pays their workers fairly and, by all measures, out performs its competitors, each and every day. Most industry pundits, yourself included, tout the store experience and the critical role front line workers play. So, it seems to me that Mr. McMillon and Wal-Mart would benefit from a little fairness. 

I think you are missing a huge shift in the world today, which disconcerts me, as you are usually laser focused on shifting trends in the marketplace. The concentration of wealth in our country (in the hands of the 1/2 of 1%) has resulted in the disappearance of the middle class. History shows that this form of society never excels. In fact, a strong middle class has resulted in most of our major achievements and we are in danger of continuing to decline, if this continues. 

Like climate change, we need bold measures to rebuild the middle class in order to reverse this disturbing trend in our country. We ignore it at our peril, just like climate change. Half measures, such as your suggestion of having a person in Wal-Mart devoted to workers compensation, simply aren't enough. A board member is appropriate although I wonder if even that will be enough. It's time for action if we are to leave our children and grandchildren a world where they can thrive and achieve, just like climate change.

Finally, as I was once told  "You pretend to pay me, I pretend to work here". I note this anecdote is from a friend who emigrated from the former Soviet Union, where this was a common refrain. They remember standing in line for toilet paper. I don't want our great country to descend into this type of society. I hope you don't either.  Let's turn it around while we still can.

On another subject, referring to a recommendation I made a few weeks ago, an MNB reader wrote:

I was in LA this week visiting my son and, based on your article, we visited the Dreamscape Experience in the Westfield Century City Mall.  We had an awesome time.  Thanks for the referral.

My pleasure. I’m glad I can please some of the people some of the time.
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