The world needs ditchdiggers too
Posted on 06/16/2006 12:33:44 PM PDT by KneelBeforeZod
Wal-Mart Stores Inc. (NYSE:WMT - news) could significantly increase employee wages and benefits without raising prices, and still earn a healthy -- albeit smaller -- profit, research released on Thursday concluded.
The Economic Policy Institute study comes as the world's biggest retailer faces a barrage of criticism from labor unions, politicians and community activists, who say it pays poverty-level wages and drives competitors out of business.
Wal-Mart, which has taken steps to improve its health care and other benefits, argues that its low prices boost consumers' buying power and increase their standard of living. The retailer regularly cites a Global Insight study that found Wal-Mart saves U.S. families more than $2,000 per year.
"The more important question for the future isn't whether Wal-Mart is a force for good or evil in the American economy, but whether the economic benefits provided by Wal-Mart can be preserved even if their labor compensation is dramatically improved," economists Jared Bernstein and Josh Bivens wrote.
They concluded that if Wal-Mart reduced its profit margin to about 2.9 percent, where it stood in 1997, from the 3.6 percent margin it recorded last year, that would free up some $2.3 billion to pay workers without raising prices. That works out to just under $2,100 per non-managerial employee, the researchers calculated.
They noted that rival Costco Wholesale Corp. (Nasdaq:COST - news) posted a profit margin of about 2 percent in 2005. The study did not mention Target Corp. (NYSE:TGT - news), Wal-Mart's biggest competitor in the discount sector, which reported a 4.7 percent profit margin for last year.
In a telephone interview, Bivens said his research was aimed at refuting "outsized" claims that Wal-Mart saved consumers hundreds of billions of dollars and that its margins were so thin that it simply could not afford to pay employees more without forcing low-income consumers to foot the bill.
"I always thought that they had really, really tight profit margins," he said. "They're really a microcosm of the U.S. economy. They are very, very good at generating income, but it needs to be spread out more equitably."
His research refuted many of the findings from the Global Insight study released last year regarding how much money Wal-Mart saved consumers.
Jim Dorsey, a spokesman for Global Insight, said the research firm stood by the accuracy and methodology of its study, which was independently reviewed.
"Our study produced estimates of Wal-Mart's impact on prices and consumer savings that make common sense and are consistent with the findings of other rigorous, peer-reviewed studies on the subject," he said.
"In its criticism of Global Insight's findings, the Economic Policy Institute's paper does not properly account for the indirect impact of Wal-Mart on prices."
Wal-Mart said that its stores were good for U.S. working families, and noted that they created tens of thousands of jobs last year, many of them in underserved neighborhoods.
The retailer also criticized the Economic Policy Institute as "funded by big labor."
"We will treat the findings of this study with the same amount of skepticism as other statements made by labor leaders who oppose us," Wal-Mart spokesman Kevin Thornton said. "We are proud of the economic impact we have on communities -- from the job opportunities we provide, to the money we save working families, to the tax revenue we generate, to the contribution we make to local charitable organizations," he added.
Thornton said Wal-Mart's average full-time wage is $10.11 per hour, and the retailer does market analysis to ensure its wages are competitive. He noted that Wal-Mart offers 18 different health care plans that cost as little as $11 per month in some areas.
Bivens and Bernstein concluded: "Wal-Mart does a lot right. It has expanded productivity by being more efficient and leaner than many other companies. Many of the benefits shoppers accrue from Wal-Mart's expansion could be preserved even if the retailer had to meet the expectations of its critics regarding fair worker compensation."
The world needs ditchdiggers too
The Economic Policy Institute should set an example and give their employees a 20% pay raise.
I love how folks with little business experience are all of the sudden experts on running a business when it comes to eeeeevvvviiiilll corporations.
Since the author's of this report know more about running a successful company,they should go into competition with WM just so they can prove their point.
So sayeth Karl Marx...
Here is a link to the page on their site identifying their board. You will recognize the activist's names.
MSM drive by d#uche alert!!!!!
Why is there no study on the wages lost and health care at Air America?
And Emily Kaiser could earn a lower salary or donate 20% to charity, but I will bet a $1000 that she would do neither!
These "labor unions, politicians, and community activists" should start their own store chain, Left-Mart, and see how long it lasts.
Exactly right - It is pathetic how much press coverage this type of silly report will be given by the MSM - With absolute no serious critic of how foolish it is.
At 3.6% profit, why bother running a business at all? Just fire all your workers, cash out and put the money in bonds at 6%.
"increase employee wages and benefits without raising prices, and still earn a healthy -- albeit smaller -- profit"
Duh. Really.
And then watch the stock price decline due to lower EPS, of course hurting many of the Wal-Mart employees (and others) who have Wal-Mart stock.
There really isn't any free lunch, Economic Policy Institute.
Ya pays da bill, ya gets the "economic research" results ya want......
That would be fine if retail stores were in the business of EMPLOYING people, like Goodwill Industries, you dumb socialists. But they are not! Walmart and all other retail stores are in the business of selling goods to make a PROFIT.
Therefore reducing profit to increase wages would be a really STUPID and counterproductive thing to do for the investors -- if they had any investors left after such a dumb-ass scheme.
Let's see. Reduce profit from 3.6 to 3.9 or about 20%. What do you suppose would happen to the value of Wilma's stock if it was announced that their net fell 20% because they wanted to hand out raises so they could be seen as "good guys"? How many of the directors of the company would be put behind bars for fiduciary and corporate incompetence after being sued by the shareholders, of which I am one.
We could raise the minimum wage to $50/hour and wipe out poverty, too!
"Wal-Mart Stores Inc. (NYSE:WMT - news) could significantly increase employee wages and benefits without raising prices, and still earn a healthy -- albeit smaller -- profit, research released on Thursday concluded."
Yeah, and the oil companies could stabilize gas prices at the pump by sacraficing a little profit!
Totally. This is "to each according to his need" garbage. Also, the idea that profits are BAD and should be given to the workers instead of the eeeeeevilllllll capitalist shareholders is straight outta Marx. Labor theory of value and all that.
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