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Thread: Walmart being hurt by their own policies

  1. #1
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    Default Walmart being hurt by their own policies

    Walmart's policy of keeping prices down by paying their employees the lowest possible wages and putting pressure on manufacturers to keep their prices as low as possibly is now hurting Walmart, as now few Americans have much money to spend at Walmart, thanks to those very policies.

    http://agonist.org/numerian/20110714...abor_arbitrage
    Last edited by eagle2; 08-03-2011 at 10:11 PM.

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    Default Re: Walmart being hurt by their own policies

    I must admit that the attempted 'cause and effect' conclusions laid down by your 'less than objective' author are a good source of humor. However, even your author isn't able to escape stating the TRUE reasons why many WalMart shoppers are now 'running out of money' ...

    (snip)"Wal-Mart sees is that consumers are making fewer trips to their stores. They are combining trips in order to conserve gasoline. When they arrive at the store, they do all their deferred food shopping, and they fill up the car with gas. They don’t bother to browse in the clothing or electronics sections, where all the high margin goods are located"(snip)

    the obvious point here is that significant rises in food and gasoline prices are the primary reason that 'tight budget' WalMart shoppers aren't able to spend big money in the clothing or electronics department. And what are the recent causes of higher US food and gasoline prices, you ask ? Hmmm ...

    US environmental / energy policy has restricted domestic energy supplies thus forcing prices up

    US ethanol fuel additive policy has forced up the price of both blended gasoline and food

    US mimimum wage increases forcing up the cost of US farm labor thus US food

    High(er) federal and state taxes on motor fuel

    US deficit spending / money printing policies devaluing the US dollar's exchange rate thus immediately forcing up prices of imported food and energy


    Your author is correct about one aspect though. For years now US consumption has NOT been funded by the creation of real 'added value', but instead by gov't spending via social welfare programs / public sector employment / gov't contractors, via slow liquidation of consumer assets, via borrowed money etc. This is untenable in the long term, and will result in a significant reduction in the US standard of living.

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    Default Re: Walmart being hurt by their own policies

    Quote Originally Posted by Melonie View Post
    I must admit that the attempted 'cause and effect' conclusions laid down by your 'less than objective' author are a good source of humor. However, even your author isn't able to escape stating the TRUE reasons why many WalMart shoppers are now 'running out of money' ...
    They're not TRUE reasons. You're just making stuff up.


    Quote Originally Posted by Melonie View Post
    (snip)"Wal-Mart sees is that consumers are making fewer trips to their stores. They are combining trips in order to conserve gasoline. When they arrive at the store, they do all their deferred food shopping, and they fill up the car with gas. They don’t bother to browse in the clothing or electronics sections, where all the high margin goods are located"(snip)

    the obvious point here is that significant rises in food and gasoline prices are the primary reason that 'tight budget' WalMart shoppers aren't able to spend big money in the clothing or electronics department. And what are the recent causes of higher US food and gasoline prices, you ask ? Hmmm ...

    US environmental / energy policy has restricted domestic energy supplies thus forcing prices up
    You're making stuff up. You don't know how high or low oil production is. You just make up whatever fits in with your ideology.

    http://www.zacks.com/stock/news/5476...+Rises+in+2010

    (snip)
    There were some interesting trends on the production side as well. Despite the Deepwater Horizon disaster that shut down new drilling in the deepwater Gulf of Mexico for much of the year, U.S. production actually rose for the second year in a row, up 3.2% from 2009, and a very impressive 11.6% from 2008. That is a big turnaround as overall U.S. production has been on a declining trend for decades now.
    (snip)


    Quote Originally Posted by Melonie View Post

    US ethanol fuel additive policy has forced up the price of both blended gasoline and food
    more made up stuff. Ethanol is cheaper than gasoline. On average, E85, which is 85% ethanol is approximately 14% cheaper than gasoline.

    http://e85prices.com/

    Quote Originally Posted by Melonie View Post
    US mimimum wage increases forcing up the cost of US farm labor thus US food

    High(er) federal and state taxes on motor fuel

    US deficit spending / money printing policies devaluing the US dollar's exchange rate thus immediately forcing up prices of imported food and energy
    more made up stuff. I doubt that you have the slightest idea of what the cost of farm labor is. You just don't like the minimum wage because it goes against your ideology, so you try to blame it for high food prices.

    Quote Originally Posted by Melonie View Post
    Your author is correct about one aspect though. For years now US consumption has NOT been funded by the creation of real 'added value', but instead by gov't spending via social welfare programs / public sector employment / gov't contractors, via slow liquidation of consumer assets, via borrowed money etc. This is untenable in the long term, and will result in a significant reduction in the US standard of living.
    Again your making stuff up. What is causing a reduction in the standard of living is the downward pressure on wages, of which Walmart has played a significant role.
    Last edited by eagle2; 08-04-2011 at 07:17 PM.

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    Default Re: Walmart being hurt by their own policies

    I find Walmart one of the most miserable stores in America to shop. Half the lights are burned out or turned off. The aisles are stacked with palates of cheap merchandise making it difficult to walk around. The employes, who are poorly paid, are not helpful at all. (And why would they want to be?) For me, Walmart is the store of last resort. When I am broke and need the cheapest possible box of Ramen noodles, I go to Walmart. Otherwise, I shop elsewhere. And thank goodness, I have not been so broke as to need the cheapest box of Ramen noodles in town since I took up stripping.

    Z

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    Default Re: Walmart being hurt by their own policies

    Here we go with the 'nitpicking' again ...


    A - it does not matter to the US dollar denominated price of oil that US oil production has increased a few percent in a couple of recent years - no more so than Obama's recent decision to release oil from the US strategic reserve having zero lasting effect on US oil / gasoline prices. What truly matters is the global oil market perceiving that American oil imports will or won't be increasing in the 'long term' i.e. the next decade. The USDOE has this to say officially ...

    (snip)Little Change Will Take Place in the Dependence of the US Transportation Sector on Liquid Fuels

    The next section highlights the fact that US energy dependence is not fungible in terms of demand. In spite of improved transportation efficiency, hybrids, and electric cars, US demand for energy liquids is projected to increase through 2035. Industrial demand for liquids is also projected to remain nearly constant.

    Alternative liquids will help reduce total demand for imports, but not the critical impact petroleum has on one sector of the US economy: transportation.

    Rising US and Global Dependence on Gulf Oil Exports

    It is also clear from DOE/EIA projections that the Gulf will become a steadily more strategically critical area in spite of new oil and gas discoveries in other regions – including the US. This will make potential threats like Iran, terrorist groups such as Al Qa’ida, and instability in other countries around the Gulf just as strategically important to the US in the future as it is today.

    It highlights the critical value of: Saudi Arabia and the other Southern Gulf oil exporters; finding ways to contain and defend against Iran that do not paralyze its ability to sustain and expand its future exports; and the need to bring Iraq back on line as a major exporter.(snip)

    US gov't policy that prevents major new development of US oil production ( i.e. sustainable new production amounting to a significant percentage increase in annual domestic oil production over a time period lasting decades ) reinforces future US dependence on imported oil. US gov't policy re Saudi / Iran / Iraq ( and most recently Libya ) then brings into question the future availability of oil exports from these countries, as well as the future price levels of that exported oil if it remains available in the long term.


    B - Ethanol is only cheaper than gasoline outside the USA. Within the country it is subject to a 56 cent per gallon tariff which is in turn used to subsidize US ethanol producers. And the US gov't has enacted import quotas which severely limit the import volumes of low cost ethanol from Brazil and other foreign sources whose ethanol cost structure is based on sugar cane instead of corn. E85 ethanol blend gasoline is specifically subsidized ... with regional pricing levels varying widely depending on difference in state 'road tax' exemptions etc. Even so, the 23% fuel economy penalty of E85 ethanol blend gasoline's lower energy content makes for a poor consumer 'bargain' even if the ( taxpayer subsidized ) price of E85 ethanol blend gasoline is 14% lower than 'regular' gasoline.




    C - the results of the US minimum wage on US food production levels / break-even pricing levels is well documented ...

    (snip)U.S. fruit and vegetable farms rely on seasonal workers who are likely to be unauthorized immigrants; any future immigration reform could reduce the supply of labor or raise wages.

    Fruit and vegetable growers may respond to any potential wage increases by reducing the number of seasonal workers employed, adopting mechanized harvesters or other labor-saving technologies in the field, or reducing production.(snip)

    (snip)"U.S. fruit and vegetable producers have reason to be concerned about the cost and availability of labor to harvest their crops. For most crops, a harvest delayed by lack of labor means less profit for growers because even a short delay can reduce quality and price. Longer delays may mean that the entire crop is lost if the quality deteriorates to the point that it cannot be marketed. Growers’ competitiveness is affected by wage rates. In 2010, the Federal minimum wage is $7.25 per hour ($8.00 per hour in California), while the minimum wage in Mexico ranges from $4.17 to $4.40 per day, depending on the region."(snip) from

    thus gov't policy which has increased the US minimum wage, in conjunction with more effective enforcement against the illegal employment by US growers of illegal immigrant farm workers at pay levels far below that minimum wage ( see ) , has resulted in increased price levels for domestically grown fruits and vegetables. It has also resulted in reduced domestic production, with the resulting supply deficit being filled by increased importation of foreign grown agricultural products.


    What is causing a reduction in the standard of living is the downward pressure on wages
    This is a clear case of 'putting the cart before the horse'. Global wage rates are a function of relative worker productivity versus relative cost. In this regard, a huge number of American workers are / have been vastly overpaid. As long as the USA remains part of a global economy, vastly overpaid US workers are going to see their jobs moving to much lower cost foreign countries, automated out of existance, etc. This will stabilize on its own if and when the relative productivity versus relative cost of US labor adjusts downward to the point where it is at least partially competetive with the productivity versus relative cost of labor in foreign countries. In the meantime, gov't policies such as minimum wage, Davis-Bacon, prevailing wage, Jones Act, import duties on particular foreign products, etc. perpetuate overpaid US employment at the 'cost' of higher than necessary US price / tax levels ... which in turn actually creates the downward pressure on the US standard of living.

    Going a step further, as the farm labor and WalMart labor examples both show, when US gov't mandate forces an employer to pay a wage rate that is higher than the 'added value' the worker is actually able to produce for that employer, in order for that employer to remain economically viable ( without relocating / outsourcing ) the primary option is automation i.e. reducing the number of workers without reducing overall productivity. Be it automatic farm harvesting machinery or automated WalMart self-checkout equipment, the end result is that the employer trades off 2-4-10 former low skill workers in exchange for 1-2 remaining workers with slightly higher skill levels and slightly higher pay rates plus a large capital investment. This automation effort in turn permanently reduces the number of jobs available for unskilled Americans ... with predictable consequences such as reduced WalMart sales volumes beyond the necessities of food and gasoline by 'structurally unemployed' unskilled Americans increasingly dependent on unemployment checks / social welfare benefits for their 'income' !!!

    If you'd also like additional 'proof' check out Dollar General and Family Dollar recent financial news blurbs ...

    (snip)"The chain of 6,900 neighborhood discount stores saw more customer visits compared to the same quarter a year ago, the company said. That helped drive a 4.7 increase in sales at stores open a year or more, often considered a key measure of a retailer's health."(snip)

    (snip)Family Dollar said the decline was caused by higher sales of consumable goods, which tend to have lower profit margins. The retailer has increased its assortment of those items, such as food, as a strategy to help draw in consumers. Such goods now make up more than 67 percent of the retailer's sales.

    Cost pressures, such as diesel fuel that averaged nearly a third higher than during the same quarter last year, hurt margins as well.'(snip) from

    ... in other words, WalMart's severely 'tight budget' former customers are now shifting to even more 'downscale' retailers in an effort to save a few extra dollars !!!


    I find Walmart one of the most miserable stores in America to shop
    Count yourself lucky that you haven't shopped in a Mexican WalMart !!!!!!!!!!!

    ~
    Last edited by Melonie; 08-05-2011 at 03:59 AM.

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    Default Re: Walmart being hurt by their own policies

    ^^^^ You both could use a time out in the "hyberbolic chamber" lol.

    Eagle - Instead of accusing Melonie ( and less often me ) of "making things up" , why don't you present "better" FACTS. More accurate; more up to date; from a more "objective" source ( if that is still somehow possible these days ). It would really add a lot more to your arguments than your continual childish chirping about "Ideology" or "making things up".

    The facts are that oil production has increased. Demand is stable and the stronger dollar has caused oil to drop to about $86 a barrel.

    Domestic ethanol is NOT cheaper than gasoline. Not if you include the higher price of corn, the energy needed to produce it ( the heat has to come from somewhere ) and the government subsidy and import quotas. It COULD be a LOT cheaper if we copied the Brazilians and made it out of sugar cane instead of corn.

    Actually you're both right about the stagnant standard of living for the average American. What neither of you seems to remember is that the lifestyles of 2000 to about 2007 were financed on credit cards and home equity borrowing by too many Americans. Rather than blame Wal-Mart for depressed wages, the real culprits were illegal immigrants. Wal-Mart jobs are almost entirely low-skill to no-skill and many Wal-mart workers are part time.While wages have been stagnant over the past ten years or so, health care; health insurance; gasoline and other energy; imports; and state and local taxes have all gone UP. The fact remains that American workers, by and large, are the leaders in worker productivity.

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    Default Re: Walmart being hurt by their own policies

    Quote Originally Posted by Zofia View Post
    I find Walmart one of the most miserable stores in America to shop. Half the lights are burned out or turned off. The aisles are stacked with palates of cheap merchandise making it difficult to walk around. The employes, who are poorly paid, are not helpful at all. (And why would they want to be?) For me, Walmart is the store of last resort. When I am broke and need the cheapest possible box of Ramen noodles, I go to Walmart. Otherwise, I shop elsewhere. And thank goodness, I have not been so broke as to need the cheapest box of Ramen noodles in town since I took up stripping.

    Z
    I've never been to a nice Wal-Mart. Every one I was ever in was less than spotless and rather sloppy. Most of their merchandise is cheap crap. Target is a much better and much nicer store. The merchandise is better and the prices were comparable.

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    Default Re: Walmart being hurt by their own policies

    What neither of you seems to remember is that the lifestyles of 2000 to about 2007 were financed on credit cards and home equity borrowing by too many Americans.
    ... definitely not forgotten, just not mentioned in this particular thread - although it is a very valid consideration re WalMart and other retailer sales of 'non-essential' consumer goods declining. Along similar lines, the fact that hundreds of thousands of Americans are now exhausting their 'extended' 'emergency' unemployment benefit check eligibility also explains why more and more 'tight budget' former WalMart customers are now forced to shop at even more downscale retailers.

    Rather than blame Wal-Mart for depressed wages, the real culprits were illegal immigrants
    I'll concede that this is a contributing factor ... but certainly no more of a factor than US business bankruptcies / outsourcing / offshoring / automation etc. However, illegal immigrant labor ... or more specifically the busting of US agricultural employers who previously depended on large numbers of sub-minimum wage illegal farm workers, WAS a major contributing factor toward recently higher US food prices !!! It was a 'dirty little secret' that the economic viability of many US growers was dependent on the availability of illegal farm worker labor for decades, and last year's targeted busts of US growers has fundamentally changed that paradigm.

    The fact remains that American workers, by and large, are the leaders in worker productivity.
    Again, no argument on this point. However, the proportional relationship between US versus foreign worker productivity relative to 'all in' US versus foreign labor costs clearly favors the foreign option ( i.e. foreign workers might only provide 1/2 the productivity but they also provide only 1/4th the 'all in' labor cost or less ). Granted that many elements of that 'all in' US labor cost equation do not stem from the workers themselves, but from gov't mandates and taxes. Even WalMart's supposedly underpaid low skill workers involve 'employer' costs for unemployment insurance, for worker's comp, for the employer's share of Social Security tax, for overtime pay rates etc. that foreign employers do not have to bear.

    I've never been to a nice Wal-Mart. Every one I was ever in was less than spotless and rather sloppy
    If you think US WalMarts are bad, you ought to tag along during my next ex-pat shopping trip to the WalMart in Chetumal ...



    ~
    Last edited by Melonie; 08-05-2011 at 07:57 AM.

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