business news in context, analysis with attitude

Responding to our story about how Amazon is taking on fulfillment duties for the magazines published by Conde Nast, one MNB user wrote:

Amazon is going to manage Conde Nast's digital and print subscription process. Didn't Amazon do the online work for Borders' Books? How did that work out? For Borders' Books that is.

Not well. Point taken.

Got the following email from MNB user Stan Barrett:

Just dropped off son at college - had the choice of a Wal-mart vs. Target to do some last-minute shopping.  Not knowing the town, we picked the closest one - WalMart.  Later we went to Target, where we should have gone in the first place.  Walmart - haphazard shelf sets, merchandise piled high in aisles, no room for more than one cart in an aisle, poor lighting, carts scattered all over the parking lot, etc.  Target - well lit, wide aisles, all “college stuff” in one section, carts back in store where they belong.  Prices - roughly the same.  Summary - well, next time we will just go to Target.
I think that explains most Wal-Mart issues……I know that in some areas they have nice, organized stores, but this was not the case here.

Responding to an email yesterday that accused me of being snarky when I wrote that 20 companies' 5-year, $45 million commitment to upgrade safety problems at foreign factories constituted a "shallow" response, I wrote:

A $45 million commitment by 20 companies over five years amounts to about $450,000 a year apiece, or a little more than a thousand bucks a day per company. For some, that's a rounding error. Or a mediocre bribe to a foreign official. (Sorry. That was a cheap shot. Couldn't help myself.)

Which prompted MNB reader Brian Blank to write:

Kevin, you should be ashamed of your comment that $450,000 a year is a “mediocre bribe to a foreign official”!
$450,000 would be a mediocre bribe to a DOMESTIC official.  In a locale such as Bangladesh, that sum would qualify as riches beyond measure.  (Now, if that sum needs to be spread around to bribe a number of officials and not just one…)

Good point.

We had a piece yesterday about Amazon's warehouse building spree, and what that could mean down the road. Which led one MNB user to write:

Relative to your own story today ... (And, I love Amazon.) How many retail jobs are dying because of their lower pricing and efficiency? I never thought I’d see Barnes & Noble on the brink of bankruptcy. People aren’t paying for newspapers anymore or magazines. Those are more jobs gone. A living wage is actually less of an issue than the fact that entire sectors of jobs for the middle class are disappearing. And, I’m part of the problem because I’m interested in what Amazon is doing and will take advantage of their warehouses being nearby.

We've had a lot of stories about WinCo lately, prompting one MNB user to write:

I have called on WinCo since they were called Waremart in 1973. I am with a large CPG company and my company sales have grown exponentially over the past 40 years. I have been reading all the articles that you have written about, and the comments that your readers have made about Winco. The one thing that that really stands out from what I have seen over the years is the commitment that Winco has made not only to their employees, but to the vendors and the salespeople who call on them. They have been very loyal to those companies and the people who have been calling on them since their humble beginnings when the customer wrote the prices on the grocery articles with a grease pencil and pushed around big carts.

There are many reasons that people have written about as why Winco has been successful, but the one thing that I have not seen is anything written about the quality of their executive management over the years. Bill Long the retired Chairman and CEO, Scott Preece, former COO and President, Gary Pivas, former CFO, now, Chairman of the Board, Dave Strausborger, the VP of Promotional Buying, and many other VP’s set the cornerstone for today’s success of Winco.  They all had or have values, principles, honesty, integrity, focus on the customer, a vision that they instilled in all of their employees, and the ESOP program that fostered these common values helped to grow a culture that I have not seen in very many grocery companies. From day one, the new employees are engaged in embracing the Winco culture. Not like drinking Kool-Aid, but a culture that shows that any employee can be successful and work their way up the ladder into management positions if they work hard. Winco has people in place to recognize these people and then they work them into MIT programs. Lots of opportunities for the ladies and the guys with Winco.
The current CEO Steven Goddard and COO, and EVP, Rich Charrier are continuing to lead their company and the employees into one of the finest companies in the food industry in the US. Those of us who have watched this company grow into what it has become have been on one heck of a great ride with Winco. The great ride is not over, hang on., as Winco truly is a Winning Company.

MNB user John Coan wrote:

It is hard to compare an employee owned company like WinCo to a public company like Wal-Mart from an employee satisfaction standpoint. WinCo has certainly fostered the ownership behavior and culture with their employee owners. On average an employee owned company outperforms non-employee owned companies by 11 to 12%.

You're right, it is hard to compare. But not in the way I think you mean.

On the subject that has taken up a lot of attention here on MNB over the past few weeks, one MNB user wrote:

I love the back and forth going on regarding the living wage issue. I especially loved the email form MNB reader Chuck Jolley.

Chuck ended his email with this: “Do Sam’s Club and Walmart get a free pass on dipping into what amounts to corporate welfare to help pay their employees?”

That my friends is the question.

We have options as a society which in my mind are as simple as this.

Would you like to:

A - legislate a living wage - say $15 an hour


B - continue to let low wage employers hire people at low hourly wage and let government safety net programs take care of them?
If you picked B, let them pay whatever they want and let the low wage earners draw welfare, food stamps and healthcare because they are poor then answer this question.

Who is paying for the Government safety net programs? Last time I checked all of us are.

Me personally I’d rather legislate a living wage, get them off government assistance programs and deal with whatever inflationary implications are created.

Henry Ford nailed it…people making more are going to spend more. Our economy will benefit from that.

In my opinion this issue is a core tenant of how we strengthen the middle class in our country. I believe a stronger middle class will make for a very vibrant economy and much larger tax revenue stream.

So think about it this way  – if we legislate a living wage we can REDUCE SPENDING on assistance programs and our income tax revenues will GO UP!

That sounds like (part of) a recipe for reducing the deficit and potentially the debt we all own.

It’s never just as easy as “stay out of business’s way." Staying out of the way has created a working poor that we ALL are subsidizing through tax dollars.

Meanwhile the worst of the worst paying employers get the biggest pass…and that is not the American way and sure as hell is not what conservatives claim to be all about.

From another reader:

According to Payscale the median salary of a Wal-Mart associate is $22,400.  Wal-Mart has 2.1 Million employees worldwide and 1.4 Million in the US alone.  Let’s take look at the numbers.

• 700,000 US people at or below $22,400
• ~$15 Billion in wages to the bottom half
• Mike Duke’s 2012 Compensation: $23.5 Million

If Mike Duke gave his entire salary to the bottom half of paid employees, an associate’s compensation would increase $33.57 for the entire year or less than 65 cents a week.

I don't think I've suggested that Mike Duke's salary should simply be redistributed. My broader argument is about whether some corporations ought to have a different perspective on the wage issue. Do higher wages only lead to lower revenue and profits? Or, can higher wages actually lead to greater productivity and efficiency? And, when you add the potentially damaging effects of income disparity in this country to the equation, does that mean that there needs to be a fundamental rethinking of this issue?

I think these are questions worth addressing.

From another reader:

My argument on a highly increased minimum wage is simply this; if I owned a company that made widgets and I paid the minimum $15.00 p/h and my competition from across the sea somewhere paid their workers .50 cents an hour to make same widgets. Which one would Walmart buy and sell for the lowest retail? Which one would the American shopper buy? Nine times out of ten lowest retail wins, which simply explains why Walmart is so powerful.

MNB reader John Kopecky wrote:

It’s real simple;  If you don’t like what you are being paid and think you can do better, QUIT and look for another job!!!  Stop trying to run someone else’s business.  If you REALLY think you are worth double what you are being paid, go out and test the market.  Everyone wants to make twice the amount they are being paid.  I want twice the pay, too.  I wish you a lotta luck.

I understand your point of view, but I think it oversimplifies and even misstates the issue.

From still another reader:

Yesterday, a friend of mine shared a link on FB titled "McBulls**t" in support of a nationwide boycott of McDonalds for "forcing workers to smile at customers and pretend they're happy about being paid minimum wage in horrific conditions with no sick days and no healthcare." 

How true that is, I don't know. Employees are certainly free to peacefully protest and seek better wages and conditions. However, when they are performing their duties, doing so enthusiastically and with competence while smiling at customers are not unreasonable standards for any employer to set. The surest way to ensure that you are paid the minimum, whatever that may be, is to do the minimum with a lousy attitude. Let's raise the minimum wage high enough so that miserable service and incompetence will still pay the bills. 

In this age where EVERYONE on every team gets a trophy, maybe that's the goal.

I would absolutely agree with the notion that if you are working for a company and accepting a paycheck, you have a responsibility to do your job right - to be enthusiastic, cheerful, and competent. Mrs. Content Guy went to the local Staples the other day and had to listen to a checkout person tell her about how much she hated her manager and disliked her job. This isn't a wage issue. It is a character issue. (Though I think questions could legitimately be asked about how she managed to keep her job, and whether her manager has any clue about howe she comports herself.)

And, from another reader:

While it is a stretch to say you are supporting legislation for a living wage, I would certainly infer from the “companies should do the right thing” reference that you support the principle of higher wages than what legislation (we do have a minimum wage!) already exists.  This is the conundrum.  We do have legislation and what is being debated in the grand scheme is what should the minimum wage be?  As the MNB debate has raged on, our online community correctly acknowledges that this is far from an easy answer.

Does a low wage earner who is a head of household have a need for greater earnings?  Does a high school student working the same job have an identical need?  Is income equality in every location in the United States necessary?  Clearly, we have seen instances where companies have elected to pay more under the “right thing to do” principle and they have been greatly rewarded with more productivity, less absenteeism and far less turnover.  This has largely offset the cost of the higher wages. 
Would the same hold true if an across the board wage increase was legislated?  I have great concerns.  And because of that, the cost of goods would likely rise rapidly which would all but negate the impact of the higher wages. 
I’m sensitive to the issue.  When my son got his first job at minimum wage, I did some quick math on his buying power relative to what my buying power was many years ago at the same minimum and I quickly came to the conclusion that inflation has outpaced minimum wage growth (I had to work roughly 25 minutes for a gallon of gas while he had to work 35 minutes for the same gallon).  So what happened?  He discovered that a local grocery store was paying more than minimum wage and quickly applied.  With some retail experience, he was immediately hired and has caught up.  In other words, the free market worked.

Agreed. As I've said, I prefer a free market solution to this problem.

MNB user James P. Scher wrote:

One comment that I think has probably been said many times is that if you pay people a fair wage they can live on and feel good about they will be better, more dedicated and more loyal.  We all know the cost of inconsistency and the cost to replace employees.
Another comment that I do not think I have heard yet would be, why don’t we consider a tiered wage system that is not based upon the business (e.g. Walmart in D.C.) but based upon life stage.  I have a hard time arguing that your average 16 year old really needs an increase in his minimum wage or that she needs health insurance provided by their employer.  However, there is, in my mind, very little doubt that the 24 year old mother supporting (trying) needs and deserves both a higher wage and health benefits of some sort.  Perhaps this is a potential compromise that would make more sense all around.

And, for the last word in "Your Views" until after Labor Day, we turn to MNB reader Marty Gillen:

Kevin,  you've really stirred things up with some people.  I for one understand what you are saying and what you are doing.  I agree with you.

That being said, and this is a little tongue in cheek, what has really got my goat these days is this:

Double Stuff Oreos really do not have double the icing or white stuff than regular Oreos.

Ritz Crackers have recently been downsized to 13.7 ounces per package from 15.1 ounces but the price is the same.  I understand this is being done to maintain margins and keep retail prices from going up, but gee whiz.

What is this world coming to?

Good question. I'll ponder that as we hit the road....
KC's View: