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Political Animal

Human Capital

By Brian Morton | Posted 7/27/2005

Every time friends tell me they’re headed for Wal-Mart—friends who work at jobs where they tally their salary not by the year but by the hour—I have to bite my tongue to keep from asking them, “Why?”

The world’s biggest retailer is in a constant race to the bottom, moving production facilities and changing buyers from one moment to the next, trying to find the cheapest wages, the least amount of health care, the most it can eke out of every and any company, city, and nation. All in order to squeeze a few more pennies out of the costs of an item, so Wal-Mart can sell it that much cheaper.

Sure, my friends are getting a deal for that DVD, that sweater, those sneakers—but at what cost? As Americans move more jobs offshore to build stock prices and enrich the bottom line, what are we losing and why?

Not too long ago, late in the Bush I administration, a company’s announcement of massive layoffs would earn it higher stock prices. Wall Street loves layoffs—it tells investors that a company is ditching those ugly costs called “employees,” with their uncomfortable health-care needs and pension plans and possible unionization. Sure, the unemployment rate flirted with the 7 percent mark in late 1992, but stock traders were in their glory.

We’re looking at times like that again, even if the unemployment rate isn’t at the same scary level it was 13 years ago. Hewlett-Packard made Wall Street cheer when it announced layoffs of 14,500 workers July 19. A couple of days later, on July 22, Kimberly-Clark gave notice that it was pink-slipping 10 percent of its work force, some 6,000 jobs. On the whole, during the month of June, U.S. companies made plans to shed some 111,000 jobs—the largest number of layoffs in 17 months.

Carly Fiorina, the failed head of Hewlett-Packard, was shown the door in February after almost six years at the helm of the company, and given a reported $21 million severance package. The man brought in to fix Fiorina’s screwups, Mark Hurd, is being given a reported $19 million in total compensation—and his solution to the company’s problems is to ax the aforementioned 14,500 jobs.

On June 5, the New York Times’ David Cay Johnston reported that people “with homes, investments and other assets worth more than $10 million comprised 338,400 households in 2001, the last year for which data are available. The number has grown more than 400 percent since 1980, after adjusting for inflation, while the total number of households has grown only 27 percent.”

Johnston, reporting on the explosion of distance between the rich and the “hyper-rich,” pointed out that “the 400 taxpayers with the highest incomes—a minimum of $87 million in 2000, the last year for which the government will release such data—now pay income, Medicare, and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.”

In other words, the wealthiest of the wealthy in America are paying into the system the same amount as someone who might be a midlevel manager at Hewlett-Packard or Kimberly-Clark, but are reaping rewards far beyond their contribution to society. And when those hyper-rich are tossed out the door, they are given rewards astronomically larger than those midlevel managers receive with their pink slips.

It was enlightening to read an article the Times published July 17 on the management and operation of Costco, one of Wal-Mart’s biggest rivals. The head of Costco, Jim Sinegal, who is reported to be worth $150 million due to his stock holdings, makes $350,000 a year (along with a $200,000 bonus last year).

While states like Maryland fight (and fail, thanks to our governor, who will whore himself for corporate money like a stripper to a C-note) to make big companies like Wal-Mart pay their fair share of health care for their workers, Costco’s employees pay 8 percent of their health-care costs, as opposed to the average 25 percent paid by most retail workers. This pisses Wall Street off. An analyst quoted by the Times says that Sinegal may be right that “a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden.”

Stock-market analysts frown with dismay when they see Costco selling high-ticket items for lower costs, paying their employees far more money, and paying more of their workers’ health insurance. But this is a Republican-run America, where the ideal is closer to 1905 than 2005—a country where unions are emasculated or nonexistent, robber barons make giant sums of money whether or not their companies show a profit or loss, and middle- and lower-class workers are forced to scrimp by shopping in stores that drive out local businesses, cut wages, and work political systems for every tiny advantage they can get—all so some member of a mega-rich family from Arkansas can die with a more obscene sum of money in the bank than the last.

In 2005, even shopping is a political act. Remember that the next time some artificially cheery greeter tells you, “Hi, welcome to Wal-Mart.”

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