How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More

[CaptainCrunch]

I don't agree with you on this strategy, even if you print money and hand it out like Canadian Tire dollars, when times are tough and the economy is bad, people are more then likely to take that money and ram it into their mattress.

There's no guarantee that it will increase spending, the only guarantee is that we would be stuck with less valuable dollars.

I think that people are going to start spending less anyways because spending habits are going to change. People that were spending like crazy on easy credit are the first people falling now, they're going to come back if they can with a save money frame of mind.

As far as wealth distribution and robin hooding society, I look at it as a cynical form of vote buying, it sounds good in practice. But campaigning on we're going to tax the super rich outrageous tax rates to punish them for being successful seems foolish, and its promoting class warfare, and it comes off as people thinking that the occupation movement was more then wasted motion by people who watched wallstreet 20 times.

fundamentally to me anyways there has to be a better way then just thinking taxation is the solution because its not, to me taxation is economically regressive and a drag on the economy. As much as people laugh at the whole trickle down theory, there has to be some middle ground reached between taxation and getting the people with money to invest in the economy.

By taxing them you discourage it and in what is now a global economy, they're more then likely to invest somewhere else.

[Flash Walken]

The natural mechanism for distributing wealth back into the economy from large salaries is a progressive income tax.

It doesn't penalize the corporation, it's share holders or profitability, creates no artificial drag on or inflation of executive salaries and does not hamstring executives into a specific company tenure to receive their benefit.

It's the natural order of things.

[OMG!WTF!]

Originally Posted by Azure

Might be a good time to buy Walmart stock. Not preforming very well right now but how has to think their efforts will pay off in the long run similar to Costco.

Back to the original thesis for a second...

I predicted that workers would like making more per hour, rather than less (who wouldn’t?), and that this would allow Wal-Mart to attract a better class of worker, or at least keep the workers it had around longer, reducing turnover costs and allowing the company to deliver a better customer experience. But I was less sure that this would actually deliver increased profits; indeed, Irwin notes that it hasn't. Revenue is up, as are ratings in customer surveys. But so far, that’s not translating into enhanced profitability. “Operating income for Walmart’s United States stores was down 6 percent in the most recent quarter,” Irwin writes, “reflecting higher labor costs and other new investments.”

https://www.bloomberg.com/view/artic...ks-for-workers

Maybe don't jump om the WMT train yet.

[jayswin]

Azure religiously responds to every poster who quotes him, for some reason he missed jammies, there. Probably just an honest mistake, but the great thing is now he can respond.

[iggy_oi]

Originally Posted by Frank MetaMusil

Yeah and that's not kosher for a lot of people. I'm definitely not going to work any harder if the government just redistributes my extra efforts and savings to someone else.

Originally Posted by CaptainCrunch

I agree, I make money for me and my family, wealth re-distribution to me is disturbing.

I think that taxing people nearly half of their wages is brutally wrong.

I think you are both looking at this from a different perspective than what I was referring to. I was talking about the minimum wage increase and how one poster claimed it was printing money. What it actually does (or at least the intent of it) is it takes money that would go towards a companies profits and puts it in the hands of workers who are also consumers. This puts that money back into economic circulation rather than into a bank account to collect interest. People will argue that businesses reinvest that money back into the local economy as well, while that may be true to some extent I would argue it is not as impactful for another McDonald's to open up rather than have 20 employees at an existing McDonald's each having more income to spend at existing businesses, while at the same time reducing their reliance on taxpayer funded social support. The same could be done by the government implementing something like mandatory prescription/dental benefits. (That might actually even be an arguably easier route to take for businesses).

People might say I'm anti business or a union shill, but in reality I'm just looking at the big picture. Yes businesses deserve to make money, but so do their workers. People always say "well that worker chose that job" or "that business owner deserves X because they put up the upfront costs, if the workers want to make what the owner makes they could have started their own business". The reality of the situation is that even if everyone who wanted to make more money just started their own business, their would be too many businesses and not enough workers. Not enough workers means not enough customers, which means less businesses are needed.

The economy needs businesses, workers and consumers to thrive. Businesses create jobs, jobs create consumers and consumers create a market for business, nobody can argue that. So everyone plays a role in this. Does that mean everyone should be compensated the exact same amount? No, however there needs to be a shift in how the economy is regulated. The rich have been getting richer, while the poor have been getting poorer. This is a fact. Wealth disparity is becoming a huge problem that many aren't willing to acknowledge, but it is a very real concern. The more wealth and power to consolidate business that the rich have, the more power and control to dictate which way the economy goes and what the quality of life is for upper middle to lower class workers.

As far as the tax argument is concerned, when the gst dropped to 5% from 7% did it really impact your work ethic? Taxes are what they are, I'm not in favour of over the top taxation like 99% over X amount of income. But I don't think the current structure is very fair either. People will argue that businesses won't operate if taxes are too high and it will discourage entrepreneurs from starting up new businesses because there will be no incentive. While that may be partially true, it overlooks one important factor, people are greedy.

If the tax rate for any income over $250k went up to 50%, for every person who is persuaded to not make that extra money because of the taxes, there will be someone who is willing to pay the extra tax for the extra income. At the end of the day business owners spend money to make money, extra expenses for them are not ideal, but at the end of the day they'd rather spend more money to continue to make money than to not spend it and make less or nothing. What Walmart has done here is an example of that. Oil companies do the same, when the price of oil goes up, they have no problem paying the wages they need to in Alberta while making less profit per barrel because it's still enough for them to want to do it. Giving them a break on taxes to lure them here makes as much sense as every worker in the oil and gas industry offering to work for minimum wage. That break will not provide stability for us, it'll just provide them with an opportunity to make money until they find another reason to pack up and stop drilling when it suits their needs.

[Handsome B. Wonderful]

Originally Posted by iggy_oi

As far as the tax argument is concerned, when the gst dropped to 5% from 7% did it really impact your work ethic?

What is this nonsense and how is it related to taxing my income?

[OMG!WTF!]

At the end of the day business owners spend money to make money, extra expenses for them are not ideal, but at the end of the day they'd rather spend more money to continue to make money than to not spend it and make less or nothing. What Walmart has done here is an example of that.

Except that's not what happened here. WalMart spent more money, sold more stuff, and netted less profit. If that continues, it's not going to be a sustainable model for most companies.

[iggy_oi]

Originally Posted by Handsome B. Wonderful

What is this nonsense and how is it related to taxing my income?

The GST is a tax charged on goods and services, hope that clarifies for you what that nonsense is. The original posters were stating that higher taxes dissuade them from working harder and that wealth redistribution was disturbing to them, so I wanted to know how the change to that tax affected them in those regards. Is it a tax directly related to your income? No, but logic would lead someone to believe that if you make more money you are likely buying more things which would mean a greater amount of your earnings would be going to gst than someone who has less money to spend.

[Bownesian]

Originally Posted by iggy_oi

I think you are both looking at this from a different perspective than what I was referring to. I was talking about the minimum wage increase and how one poster claimed it was printing money. What it actually does (or at least the intent of it) is it takes money that would go towards a companies profits and puts it in the hands of workers who are also consumers.

It also strongly incents companies to use fewer minimum wage workers in favour of more efficient ones or automated replacements (as I outlined in another thread using my company as an example).

Take for analogy the concept of a carbon tax.

The idea is we increase the cost of carbon-intensive goods and services by, say, 20% and that will lead to an increase in efficiency of some kind and a migration of spending (capital) away from carbon-intensive goods and services to less carbon-intensive ones. Makes sense to me. The taxpayer as a collective could be mostly made whole through rebates and whatnot (barring the cost lost to collect and then redistribute) while individuals who live more sparingly will be better off and those who waste more will be worse off, and some will muddle by in the middle with a lower standard of living due to increased costs that they don't do much about. The same pressure would be applied to companies and utilities to decrease their carbon footprint - the efficient ones (and industries) will do better, some will muddle by, some marginal businesses and industries will go out of business.

What I can't get is why someone who accepts the carbon tax logic outlined above, does not see that there will be pressure to reduce minimum wage labour when the cost of that low-value labour increases by 47% ($10.20 in 2014 to $15.00 in a couple years).

Businesses will not accept a loss in profits to accept more expensive labour on a one-to-one basis. The winning businesses will become more efficient in terms of consumption of that labour (i.e. will automate and/or focus the hours on the higher performers while turfing the low performers), some will muddle by with reduced profits and some combination of labour consumption reduction and the losers will eat the costs with many going out of business.

There will increased spending power from a number of people making up to 47% more than before. This will be offset by a bunch of people making 100% less as their jobs cease to exist through automation and cuts in hours, or their industries shipped overseas. The question is whether the winners will offset the losers or not, but there will be people (and companies and industries) in both camps.

[iggy_oi]

Originally Posted by OMG!WTF!

Except that's not what happened here. WalMart spent more money, sold more stuff, and netted less profit. If that continues, it's not going to be a sustainable model for most companies.

There business was declining, which means lost profits. They invested money to improve their service and their business has grown. Are their labour costs up? Yes, but so are their sales. Which model is more sustainable in your opinion? Low labour costs with declining sales or higher labour costs with increased sales?

[OMG!WTF!]

Originally Posted by iggy_oi

There business was declining, which means lost profits. They invested money to improve their service and their business has grown. Are their labour costs up? Yes, but so are their sales. Which model is more sustainable in your opinion? Low labour costs with declining sales or higher labour costs with increased sales?

Ummm I'm going to go with the one that nets the most profit. I would imagine that the one that has turned WalMart into the gigantic retailer it is today is the best for WalMart. It might change. And that does not mean it is also the best option for other retailers. All these businesses are different. You can't say one paradigm is the vest for every business.

[AltaGuy]

You know what grinds my gears about executive pay? Not the marginal tax rate, and not how much they make, but tax breaks and loopholes for the wealthy.

Take your typical law firm or accounting firm: your associates are all being taxed at the highest marginal rate making $150k or $200k a year. Then you make partner and your pay increases massively, while magically your effective tax rate goes way down.

Good old professional corps.

And that's just one example of the way the tax system is currently malfunctioning for high income earners.

[iggy_oi]

Originally Posted by Bownesian

Businesses will not accept a loss in profits to accept more expensive labour on a one-to-one basis. The winning businesses will become more efficient in terms of consumption of that labour (i.e. will automate and/or focus the hours on the higher performers while turfing the low performers), some will muddle by with reduced profits and some combination of labour consumption reduction and the losers will eat the costs with many going out of business.

There will increased spending power from a number of people making up to 47% more than before. This will be offset by a bunch of people making 100% less as their jobs cease to exist through automation and cuts in hours, or their industries shipped overseas. The question is whether the winners will offset the losers or not, but there will be people (and companies and industries) in both camps.

Companies are already taking these cost cutting initiatives. Companies can only cut back their work forces so much until it, much like it did to Walmart, begins to negatively affect their business. The carbon tax to me has a very interesting dynamic to it, people understandably don't want to have to pay it, but I find it interesting that for the same services to be taxed most people don't mind paying the extra 20-40% when the price of oil goes up and we have a "boom". Because they have jobs at that time? What about the people who work in jobs outside of oil and gas or that aren't laid off when the economy tanks? It's fair that they need to pay more during a boom when it doesn't benefit them? But then when anyone else needs to pay something for that doesn't benefit themselves it's viewed as some sort of atrocity? When oil booms and the price of everything goes up, the middle/lower class has a hard time keeping up, but now that everyone is hurting it's considered an outrage when anyone tries to help those same people because the timing isn't right.

[iggy_oi]

Originally Posted by OMG!WTF!

Ummm I'm going to go with the one that nets the most profit. I would imagine that the one that has turned WalMart into the gigantic retailer it is today is the best for WalMart. It might change. And that does not mean it is also the best option for other retailers. All these businesses are different. You can't say one paradigm is the vest for every business.

Their revenues were beginning to decline, obviously they went way too far to that extreme.

[Hack&Lube]

I've noticed Wal-Marts in Calgary putting back in place the automated check-outs. I talked to a manager years ago and he said they took them out because of theft concerns.

I think now they see that the losses (which can be written off) are worth less than paying employees to man tills.

You can see this happening at McDonalds now also, most of them replacing their lines of registers with only two and having people self-serve on the touchscreen kiosks that are popping up in most of them.

Automation will slowly replace low-level jobs outright.

[peter12]

Originally Posted by Hack&Lube

I've noticed Wal-Marts in Calgary putting back in place the automated check-outs. I talked to a manager years ago and he said they took them out because of theft concerns.

I think now they see that the losses (which can be written off) are worth less than paying employees to man tills.

You can see this happening at McDonalds now also, most of them replacing their lines of registers with only two and having people self-serve on the touchscreen kiosks that are popping up in most of them.

Automation will slowly replace low-level jobs outright.

Maybe. Maybe. It all depends on how much customers like using them. I think the McDonald's kiosk experiment has been a complete disaster, and if you go to Walmart, there are still tons of people using the regular tills.

Personally, after an initial experimentation with the automated tills, I switched back to interacting with an employee.

So many things can go wrong that a till cannot help you with.

[CaptainCrunch]

so the carbon tax in your mind has exactly zero to do with emissions and green technology and everything to do with redistribution of wealth.

Right now to give an example. when I get my check, I lose about I think 40%. Now we put in a carbon tax, which will in effect be a consumption tax, but in this case a poorly thought out consumption tax because it will not only effect straight emissions based things in my life like gas for my car and heating, but it will increase essential things like food, entertainment things that are locally provided like movies and anything that I but at a mall will possibly be double hit (The mall pays increased pricing for their heat and electricity), the store plays increased leasing, plus costs of goods.

So lets say with the groceries, my food bill goes up by 10% a week. Just throwing it out there because we don't know what the increase is. So if I spend $100.00 per week, my grocery bill bumps up by $10.00 per week or $40.00 per months, but to make that up for that increase, I would need a $440.00 a year after tax increase in my pay or what about $700.00 per year. pre tax, and that's just on groceries alone. On top of that I have to actively reduce spending in other areas. Sure the government says there are rebates, but they're not actual rebates because the rebate isn't actually based on what my real increases are, they're a hypothetical guess, and we've seen in the past that governments get these completely wrong.

Now on top of that, this carbon tax which is in reality nothing to do with emissions and everything to do with re-distribution or robbing me to pay Paul, will combine with the increase in wages because frankly with such a large increase in minimum wage it will cause a for real ripple upwards of all low skill or semi-skilled jobs, which will . . . .you guess it, increase the costs of all consumer goods again.

So I have to wonder if my bosses are going to just willingly give me a 10 or 20% increase in my pay, especially since their costs are going to go up and they'll have to hand it off to our clients.

This strategy makes little to no sense because your bumping peoples pay (great) but at the same time your going to bump the costs of every consumer good essential or non essential out there, which means that the people at the low end of the ladder who just benefited from wealth distribution are either going to end up exactly where they were pre WD or be a bit further behind.

At the same time on the hiring front, because these companies are paying more for labor they are as stated above either going to automate, reduce hours or reduce services and production to stay afloat, especially when you add on the carbon tax in conjunction with the minimum wage increase. Or they are going to become stringent in their hiring practices, which means that the person that used to get a chance at the start of a career with minimum wage and get on the job training is now not going to get that opportunity.

Its nice to keep saying that if we redistribute wealth and bump minimum wage up huge that these people are going to suddenly propel into a higher spending position, but the truth is that nothing is in a vacuum and their spending ability isn't going to increase, its probably going to worsen or at best stay the same. But at the same time, the people that don't benefit from wealth distribution are going to reduce their spending, and probably slide down in terms of where they sit in society.

[CaptainCrunch]

Originally Posted by peter12

Maybe. Maybe. It all depends on how much customers like using them. I think the McDonald's kiosk experiment has been a complete disaster, and if you go to Walmart, there are still tons of people using the regular tills.

Personally, after an initial experimentation with the automated tills, I switched back to interacting with an employee.

So many things can go wrong that a till cannot help you with.

Safeways is the big one for me, I've noticed that they've sharply reduced the number of cashiers working except during peak shopping hours and only keep one or two tills open with actual cashiers, they encourage the rest to use the automated checkouts.

At my safeways, they've sharply reduced the number of full time employees to part time

[peter12]

So a lot of this depends on the probability of technological innovation and job automation making up for worker productivity. So far, signs point to no.

Software is replacing some work, especially in the bottom half, but it is not increasing productivity at all.

[CaptainCrunch]

The bottom line is that I doubt that McDonalds is going to give up on automation. They're still early into figuring it out and they'll make it work, and if they do, then every other fast food gut rot place will follow suit.

McDonalds is the heart beat of its industry and the leader of it.