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PeakTrader:

The WinCo-WalMart article says:

“What really might scare the world’s largest retailer is how WinCo treats its employees. In sharp contrast to WalMart, which regularly comes under fire for practices like understaffing stores to keep costs down and hiring tons of temporary workers as a means to avoid paying full-time worker benefits, WinCo has a reputation for doing right by employees.

It provides health benefits to all staffers who work at least 24 hours per week. The company also has a pension, with employees getting an amount equal to 20% of their annual salary put in a plan that’s paid for by WinCo…more than 400 nonexecutive workers (cashiers, produce clerks, and such) currently have pensions worth over $1 million apiece.”

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It’s not just about shareholders and top management:

“A great company serves three constituencies: customers, employees and shareholders. Balance all three and society is better off. It would have a very powerful impact on the economy. If companies just started investing more (in workers)…that’s more money circulating in the economy. It makes the middle class stronger.”

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WalMart vs CostCo:

“Hundreds of dissatisfied workers at major American companies like Wal-Mart (WMT), McDonald’s (MCD) and Wendy’s (WEN) have joined protests nationwide in the past year demanding higher wages and better benefits.

One company that hasn’t had to deal with such strikes is Costco (COST).

The no-frills warehouse chain pays its hourly workers an average of just over $20 an hour, compared to just under $13 at competitor Wal-Mart.

Sales at Costco have grown an average of 13% annually since 2009, while profits have risen 15%. Its stock price has more than doubled since 2009.

During the same period, discount retailer Wal-Mart’s sales grew an average of 4.5% each year, profits rose 7%, and its stock price increased 70%.

Costco seems to be investing some of those profits back into its employees.

Cesar Martinez, a 37-year-old fork lift operator, has worked at a Costco in North Carolina for 19 years. He makes $22.82 an hour, gets health benefits and a pension plan. He manages to save, and doesn’t worry about hospital bills for his daughter, who suffers from asthma.

“That’s the reason why I’ve been here for so long,” he said. “The company gives you a decent wage and treats you with respect and takes care of you. That’s why we all give 100%.”

Research shows that it pays to pay employees well, because satisfied workers are more productive and motivated, according to MIT Sloan School of Management professor Zeynep Ton, who focuses on operations management.

“How many times have you gone to a store, and the shelves are empty or the checkout line is too long, or employees are rude?,” she said. “At Costco, you see a huge line that disappears in minutes.”

The productivity translates into sales, she said.

According to Ton’s research, sales per employee at Costco were almost double those at Sam’s Club, its direct warehouse competitor owned by Wal-Mart.

The median pay for fast food workers nationwide is $9.05 an hour, or about $18,800 a year.

While the fast food and retail industry is making record profits, its workers are forced to rely on public assistance just to afford the basics.”

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If you can get away with paying workers less, why not, right?

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The more desperate people need a job, the better, yes?

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I suspect, without a minimum wage, some people will work for, and try to live on, $5 an hour.

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Morganovich, where do you think those increasingly bigger profits and salaries came from, while the real minimum wage declined?

Maybe, the rich sacrificed by spending less and saving more, while top management worked harder and smarter?

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Productivity and Real Wage chart:

http://thecurrentmoment.files.wordpress.com/2011/08/productivity-and-real-wages.jpg

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BLS:

During the 1947–73 period, the annual change in productivity averaged 2.8 percent, while real hourly compensation growth averaged 2.6 percent.

Over the 1973–79 period, the averages were 1.1 and 0.9 percent, respectively.

Real hourly compensation growth failed to keep pace with accelerating productivity growth over the past three decades, and the gap between productivity growth and compensation growth widened.

Over the 2000–09 period, growth in productivity averaged 2.5 percent; growth in real compensation averaged 1.1 percent over the same period.

Chart:

http://www.bls.gov/opub/ted/2011/ted_20110224.htm

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Morganovich, your statement only proves you view the economy as static and simple.

And, of course, there are capital expenditures. That doesn’t justify more profit and income for investors and top management at the expense of lower wages, particularly when there’s a saving glut.

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It’s possible, the (positive) income effect, along with the (positive) multiplier effect, may be stronger than the (negative) employment effect (even when excluding unemployment benefits) raising the minimum wage up to $15 an hour, to generate stronger economic growth, given the economic shifts over the past 30 years.

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Prices will rise less than wages or real wages will increase substantially (for reasons I stated before), and there will be a shift from oversaving to underconsumption (see Paradox of Thrift).

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Larry, right.

Morganovich is in complete denial about the data showing much faster per capita real growth in the 20th century than in the 19th century.

He’s right and economics is wrong.

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Ignorant people, like Givemefreedom, who pathetically resort to name calling, don’t realize when they disagree with me, they disagree with mainstream economics, i.e. the Scientific Method of NeoClassical Economics, along with the labor economics literature.

They’ve consistently shown their extent of economics is equal to about one class in econ 101. In the real world, there are hundreds of major forces pushing and pulling a large economy rather than the existence of just one dimension, e.g. the supply-demand model they cling to and don’t even fully understand.

Obviously, they don’t have a clue how those factors interrelate and interact, because if you put their beliefs into an equation, the variables would contradict themselves and contradict other sound models. So, they have to keep it simple, and yet completely wrong.

Also, they’re in denial when everything fits together perfectly, because their ignorance tells them it just a big mess beyond their comprehension. So, they remain in denial and disbelief.

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Bob, as always, you don’t know what you’re talking about.

You can thank economists not only for much faster per capita real growth in the 20th century (over 30% faster per year on average), compared to the 19th century, you can thank them for much greater stability too.

The Roman Empire actually had a government, and after the Roman Empire there was a thousand years of economic stagnation, called the Dark Ages.

You know as much about economics as reality, which is about nothing.

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http://www.aei-ideas.org/2013/08/challenging-the-status-quo-fierce-market-competition-is-the-consumers-best-friend-and-the-best-regulator/#comments

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