In a recent article, Robert Reich told us the tale of two economies.
A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly wage of around $50, in today’s dollars, including health and pension benefits.
Today, America’s largest employer is Walmart, whose average employee earns $8.81 an hour. A third of Walmart’s employees work less than 28 hours per week and don’t qualify for benefits. – Why You Shouldn’t Shop at Walmart on Friday, Robert Reich
The economy of 50 years ago produced mountains of profits for large corporations and sustained an expanding middle class, and all of this was possible with much higher income tax rates compared to today.
Today’s economy also produces mountains of profits for large corporations, but the middle class is shrinking, and we have some of the lowest tax rates on record, but right-wing economists and know-nothing Republicans tell us higher taxes and increased benefits for workers is bad for business.
That brings us to Eliot Spitzer’s Number of the Day:
There seems to be only one business model out there — cut wages, reduce benefits, and drive down hours. Some would say it’s the only way to keep the market happy, but then there’s our number of the day: $19.50 an hour. That’s what a worker at Costco makes after four and a half years, according to Liza Featherstone of Slate, the online magazine. It’s about $7 an hour more than employees with the same seniority at Costco’s competitor, Sam’s Club get paid.
Some Wall Street analysts haven’t been happy about that or about the company’s generous health plan. They claim Costco is giving away cash. Yet, the company does just fine. The value of Costco stock has more than doubled since 2009, outperforming Walmart’s. The company’s founder, James Sinegal, also said those wages get the company a low rate of employee turnover and a whole lot of loyalty.
Costco’s approach got renewed publicity recently when Walmart became mired in strikes over low pay and bad labor relations. Although Walmart is admittedly a much bigger company, the Costco model proves there are many ways to build a big profitable company. Walmart’s way is not the only way to do business.
- Eliot Spitzer
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