The Liberal Myths Being Told About Wal-Mart

On Black Friday, liberals and unions were out in force protesting Wal-Mart's pay practices; arguing that this mega-retailing giant should pay at least $15 an hour. Of course, most of the protestors were union personnel who don't work at Wal-Mart, and who want them to unionize so their dues collection will increase and then they can help Democrats get elected.

One spokesperson for the protestors claimed that Wal-Mart can afford to pay better wages because the Walton's are billionaires; claiming they collectively are worth $150 billion.  Of course, while he was speaking, you could see a number of bobble-heads in the background nodding in agreement.

Yes, the Walton family is worth billions, but that extraordinary net worth has more to do with the fact that they own stock (51%) in the company and less to do with company profits. In other words, their wealth is separate from Wal-Mart's profits.  This in the same way Bill Gates -- who no longer works for Microsoft -- is worth $81 billion.  Giving workers a raise to $15/hour, will not diminish the Walton Family's wealth one iota.  All it would do is raise prices for the over 100 million people who shop at this retail giant each year.  They are the ones, many with low incomes, that will be hurt the most by this supposed minimum wage hike.

Then there's this;  Wal-Mart, as a company, only makes a modest profit of a little over 3%.  Compare that to every liberal's darling, Apple, who returns profits in excess of 20%.  So, when you buy that iPhone or iPad for, hypothetically, $400, you wind up paying Apple $80 for the privilege of owning their products.  If Apple was Wal-Mart, that same product would only cost you $330; based on a 3% profit margin or a profit of $10 on a product that costs $320 to make.*  Of course, no liberals seems to want to protest at Apple about the fact that about 170,000 underpaid and overworked Chinese are used to help them achieve that very hefty 20% profit margin.

The savings that Wal-Mart offers is what that company is all about.

In this country, we have 48 million people in poverty.  What Wal-Mart gives them is the ability to buy many things that they could not otherwise afford.  At the same time, the average salary at Wal-Mart is $12.94 per hour, which is substantially higher than the President's proposed $10.10 minimum wage.  And, that $12.94 is equivalent to nearly $27,000  on an annualized basis.  A salary that is significantly higher than the $20,600 which the average Mississippian makes in a year; and not far from the $28,000 that the average American makes.

The simple fact is that union personnel want to lower the savings that more than 100 million shoppers receive by shopping at Wal-Mart.  Savings that allows them to buy other products and services from other retail outlets.  In doing so, jobs are being created elsewhere in our economy, but liberals (especially like Senator Elizabeth Warren) would rather that this economic benefit be stopped. Mostly hurting the lower class and the poor; yes, the people they always talk about helping.

*Disclaimer: The profit example is a hypothetical that assumes that both Apple and Wal-Mart are both the manufacturer and the direct sellers of an identical product; and, that, in manufacturing their own products their costs would be the same.  It also assumes that for every product they produce, the profit margins are equal; which is never the case.

References:

Walmart hit with protests on Black Friday: http://money.cnn.com/2014/11/28/news/companies/walmart-black-friday-protests/

America's Richest Families: http://www.forbes.com/families/

Bill Gates Net Worth: https://www.google.com/search?q=net+worth+billl+gates&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a&channel=sb

Wal-Mart Stores Profit Margin (Quarterly): 3.12% for Oct. 31, 2014: http://ycharts.com/companies/WMT/profit_margin

Apple Profit Margin (Quarterly): 20.10% for Sept. 30, 2014: http://ycharts.com/companies/AAPL/profit_margin


Quick Facts: Mississippi Versus U.S. Averages: http://quickfacts.census.gov/qfd/states/28000.html

Apple's Chinese Employee Problems: http://www.forbes.com/sites/connieguglielmo/2013/12/12/apples-labor-practices-in-china-scrutinized-after-foxconn-pegatron-reviewed/

Warren puts pressure on Wal-Mart | TheHill: http://thehill.com/policy/finance/224535-warren-puts-pressure-on-walmart

Obama's Lawless NLRB Hits McDonald's With Pro-Union Rulling

In another effort to increase unionization, the primarily Obama appointed National Labor Relations Board (NLRB) has struck a labor negotiations blow to any McDonald's restaurant franchises. In its recent ruling, the NLRB claimed that as a franchiser, McDonald's is actually a "joint employer"; meaning that they are responsible for the wages and working conditions of all those operations in the U.S.  Therefore, they are being forced to collectively bargain with all labor; rather than have a small group of employees collectively bargain with an independent franchisee.

The problem with this ruling is simply: one of reason.  The NLRB claims that its decision is based on 43 cases that have had poor labor relations "merit" since 2010; roughly 10 cases per year.  McDonald's combined corporate and franchise owned employment is almost one-half million workers in the U.S.   So, 43 cases out of 500,000 employees is an infinitesimal percent of those yet-to-be-litigated labor violations (0.086%).  Further, the vast majority of those cases dealt with the 90% of restaurants that are independently owned. 

As McDonald's has noted,  their corporation makes no decision as to who is hired, fired, or paid in any of its franchises.  While they have a say as to what the buildings, equipment, and operations must entail, they has no input beyond that.  Pricing for products is independently determined by each of its franchisees. Each sets its own pay scales (assuming they are within federal and state laws) and also files and pays taxes independently.  It is the independent payment and collection of taxes and the private issuance of paychecks which undermines the NLRB claim that McDonald's is, somehow, a "joint employer". 

This is just another case where the left thinks they can break the dam and create mass unionization by going after the biggest.  In the past, the NLRB went after Boeing for moving manufacturing of the 787 to a non-unionized plant in South Carolina.  It's the reason that there have been so many attempts at trying to unionize the nation's largest retail employer Wal-Mart.  And, now, with the McDonald's decision, Obama, the NLRB, and the unions think they can end up unionizing all fast food operations in the country if they could only force it on the big guy, McDonald's.

As with most of what the President has done, this too will be found lawless when its constitutionality  is invalidated by the courts.  This is the same reason the Boeing decision was withdrawn in 2011 and it will be the reason that this decision, too, will ultimately be dropped or negated in law.

References:

NLRB goes after McDonald’s and franchise systems everywhere: http://legalinsurrection.com/2014/07/nlrb-goes-after-mcdonalds-and-franchise-systems-everywhere/

McDonald's Ruling Sets Ominous Tone for Franchisers: http://online.wsj.com/articles/nlrb-decision-could-make-mcdonalds-liable-for-labor-practices-of-franchisees-1406660591

NLRB withdraws Boeing complaint: http://thehill.com/policy/transportation/198399-labor-board-withdraws-boeing-complaint

George F. Will: Illegitimate NLRB ignores the rule of law: http://www.washingtonpost.com/opinions/george-f-will-illegitimate-nlrb-ignores-the-rule-of-law/2013/05/22/4be5db9a-c248-11e2-8c3b-0b5e9247e8ca_story.html

Retailers Are Signalling Economic Woes For 2014

In the first quarter of this year, the nation's economy, as measured by Gross Domestic Product (GDP), grew at a barely measurable rate of one-tenth of one percent. That was a 93% miss from the 1.5% that the economists were originally projecting.  In defense of this horrible number, the Obama Administration blamed the lack of economic growth on low consumer spending; all because of the bad weather in the Northeast and Midwest in January through March of this year.

However, having lived in the Midwest for many years, the forecast of a bad storm actually forces store shelves to be emptied.  People buy things they otherwise might not buy; like snow blowers, generators, space heaters and a whole host of other products.  They stock up on food and water.  And, after the storm has passed, consumers replenish what they used and typically buy the things they weren't able to   during the storm.  So, typically, the economic impact is not that significant; especially since most of the rest of the country is unaffected by any regional activity.

The problem with the "bad weather" excuse is that it ignores a deeper problem that is hurting our economy.  That problem that consumers aren't buying like they used to. The major retailers such as Wal-Mart, Kroger, Target and Macy's are all seeing changes in buying habits.  People aren't splurging on non-essential products.  In fact, they also aren't buying as much food. Wal-Mart, despite having lower grocery pricing than their competitors, has consistently seen a drop in grocery revenues.  Last quarter, grocery sales, among all the stores that were in operation a year or more, dropped nearly 1%.

Going forward, every retailer is warning that their earnings are at risk this year due to a slow down in consumer spending.  Since consumer spending makes up 70% of GDP, any drop could cause the economy to stall and, as a result, fall into another recession.  If the next revision of the current GDP growth of 0.1% goes negative in a couple of weeks, it could signal the first of two quarters of negative growth which, by definition, is a recession.

References:

Target echoes warnings about cautious consumer patterns: http://www.ktvu.com/videos/business/economy/target-echoes-warnings-about-cautious-consumer/v9dRG/

Wal-Mart is hurting for shoppers: Wal-Mart woes deeper than winter snow: http://money.cnn.com/2014/05/15/investing/wal-mart-weather-earnings/

Wal-Mart's biggest problem: Its customers: http://www.cnbc.com/id/101680657

Kroger...cautious in its earnings guidance for the year, citing uncertainty around the economy: http://supermarketnews.com/retail-amp-financial/kroger-marks-10-years-positive-comps

First-Quarter U.S. Economic Slump Looking Uglier by the Day: http://www.bloomberg.com/news/2014-05-06/first-quarter-u-s-economic-slump-looking-uglier-by-the-day.html