Wednesday, June 22, 2011

The most foolish and illogical New York Times editorial ever?

That would be a bold claim but I think I can substantiate it. Nelson Lichtenstein is outraged over the Supreme Courts rejection of the class action lawsuit lumping 1.6 million women into one enormous suit. According to Mr. Lichtenstein, Wal-Mart is just a step down from a North Korean prison camp and his editorial, Wal-Mart’s Authoritarian Culture (you know, unlike all of the other corporations out there that don’t have authoritarians hierarchies) demonstrates an amazing lack of understanding about even basic economic concepts.

Apparently the very corporate policies that have made Wal-Mart successful and provided hundreds of millions of consumers with the low cost consumer goods that they demand are somehow inherently discriminatory to women. The solution Mr. Lichtenstein proposes will shock you!

Warning. Hyperbole ahead.

There are tens of thousands of experienced Wal-Mart women who would like to be promoted to the first managerial rung, salaried assistant store manager. But Wal-Mart makes it impossible for many of them to take that post, because its ruthless management style structures the job itself as one that most women, and especially those with young children or a relative to care for, would find difficult to accept.

Why? Because, for all the change that has swept over the company, at the store level there is still a fair amount of the old communal sociability. Recognizing that workers steeped in that culture make poor candidates for assistant managers, who are the front lines in enforcing labor discipline, Wal-Mart insists that almost all workers promoted to the managerial ranks move to a new store, often hundreds of miles away.

For young men in a hurry, that’s an inconvenience; for middle-aged women caring for families, this corporate reassignment policy amounts to sex discrimination. True, Wal-Mart is hardly alone in demanding that rising managers sacrifice family life, but few companies make relocation such a fixed policy, and few have employment rolls even a third the size.


Egad, the horror of common sense! Promoting someone to manage people who were their peers few days ago is problematic, so they move promising future managers to stores where there are actual openings. What sort of crazy talk is that?! Doesn’t Wal-Mart know that making promotions as easy and convenient as possible is their primary corporate priority?

Moving for promotions is typical in much of corporate America and especially so in retail. There are hordes of nomads who relocate year after year as part of new store set-up teams. They move to a town where a new Wal-Mart/Home Depot/Lowes etc is opening, spend a year or so setting up the store for its grand opening and then relocate to open the next store. That is just reality, a place unfamiliar to most of the authors invited to pontificate on the hallowed pages of the New York Times. Wait, there is more!

The obstacles to women’s advancement do not stop there. The workweek for salaried managers is around 50 hours or more, which can surge to 80 or 90 hours a week during holiday seasons. Not unexpectedly, some managers think women with family responsibilities would balk at such demands, and it is hardly to the discredit of thousands of Wal-Mart women that they may be right.

Maybe, just maybe, there are real trade offs that people have to make in balancing career and family. Wal-Mart offers jobs with particular requirements. One of those requirements is that Wal-Mart managers work tons of hours. That is pretty typical in retail where the small number of managers are almost always salaried and work long hours. My first job out of college was in retail store management and my work week was five “regular” days where I worked 11 hours and one “half day” where I worked six hours. A typical week saw me working more than 55 hours for an annual salary of about $21,000 or the equivalent of around $7.34/hour. I made less per hour in management than many of the regular workers in the store, including cashiers. That is simply the reality of the retail world. Don’t fret though, Mr. Lichtenstein has a radical solution: unionize!

There used to be a remedy for this sort of managerial authoritarianism: it was called a union, which bargained over not only wages and pensions but also the kind of qualitative issues, including promotion and transfer policies, that have proved so vexing for non-unionized employees at Wal-Mart and other big retailers.

There “used to be” something called a union? I think we still have them although they are rapidly falling out of favor in the private sector. So according to this fella, the solution to Wal-Mart’s “managerial authoritarianism” is to unionize Wal-Mart employees, the fantasy of every leftist in America. What will that accomplish? Typically unions don’t cover management, so that does very little to alleviate concerns over working hours and required relocations. Plus unionizing Wal-Mart workers will invariably lead to higher costs. Guess who is going to pay those higher costs? If you answered “the consumer”, i.e. “the little guy” you are correct! It probably goes without saying but given that we are dealing with the New York Times here even the most obvious, common sense statements bear repeating: The “rich” are not the primary consumers of Wal-Mart’s products. They can afford to shop wherever they like. It is middle and lower class Americans who are able to buy products at the lower prices offered by Wal-Mart because of Wal-Mart’s culture of purchasing in massive quantities and corporate austerity. Those are the very consumers who would be hurt by unionizing Wal-Mart. Raising the cost of wages doesn’t happen in a vacuum. Those costs are built into the price of goods and services. Raise wages and you inevitably raise the prices paid by consumers. This is precisely why minimum wage laws are illogical. The only way this would conceivably work is to couple price controls with wage controls and we all know how well that worked in the Soviet Union.

Wal-Mart, for all of its flaws, is first and foremost a corporation run by a board of directors appointed by its shareholders. Just like every other corporation in the world including the New York Times. Like every corporation, it is driven by profit. Wal-Mart also happens to be the largest company in America, a company that provides both great prices on consumer products to consumers across America as well as jobs to literally millions of people. Unionizing Wal-Mart, which will never happen thank goodness, would lead to “higher” wages for low skill workers and higher prices for hundreds of millions of low to mid income Americans. If you don’t like Wal-Mart’s policies, don’t shop there. Pay higher prices somewhere else or make your own stuff. Just don’t make the rest of us pay higher prices because you have a beef with the largest private job creator in America
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