Bad news out of Bentonville. On Thursday, Walmart, the American retail behemoth, announced that it had slumped through another quarter. Sales were sluggish, and a Walmart executive said the company was downgrading expectations for the rest of 2013. The reason? "The customer doesn't quite have the discretionary income, or they're hesitant to spend what they do have," said Charles Holley, Walmart's chief financial officer.
There is a cutting irony at play here. Yes, one effect of the great recession was to put many people out of work, or to relegate them to part-time status. And yes, the expiration of the payroll tax cut earlier this year took money out of the pockets of millions of Americans. Yet wages for working Americans flatlined long before the financial crisis, and Walmart is one reason for that. Because of its size and buying power, Walmart sets the standard for much of the big-box retail industry and the retailer is infamous for paying low wages. The company says the average wage for a full-time Walmart worker in the U.S. is $12.78 an hour, but the business research firm IBISWorld pegs it at closer to $9. In addition, it generally allots its "associates" less than 40 hours of work a week. In Washington, D.C., Walmart has threatened to cancel plans to build three new stores and possibly close three more stores due to open if the city passes an ordinance mandating that the retailer pay a "living wage" of $12.50 an hour.
In other words, the type of person who shops at Walmart today has less money to shop at Walmart -- because of, among other things, Walmart.
Today, Barbara Garson, author of the book Down the Up Escalator: How the 99% Live in the Great Recession, writes about how the tactics Walmart has used for years to cut costs and goose profits -- cutting employees' hours and keeping wages down -- are spreading as the U.S. economy limps back to health. It's nothing for the executives in the corner offices to fret about: after all, Walmart CEO Mike Duke earned $20.7 million in 2012, a sum so large it would take a Walmart employee earning $12 an hour 785 years to match Duke's compensation. So it goes in post-recession America. Andy Kroll
Abracadabra: You're a Part-Timer
How Corporate America Used the Great Recession to Turn Good Jobs Into Bad Ones
By Barbara Garson
Watch closely: I'm about to demystify the sleight-of-hand by which good jobs were transformed into bad jobs, full-time workers with benefits into freelancers with nothing, during the dark days of the Great Recession.- Advertisement -
First, be aware of what a weird economic downturn and recovery this has been. From the end of an "average" American recession, it ordinarily takes slightly less than a year to reach or surpass the previous employment peak. But in June 2013 -- four full years after the official end of the Great Recession -- we had recovered only 6.6 million jobs, or just three-quarters of the 8.7 million jobs we lost.
Here's the truly mysterious aspect of this "recovery": 21% of the jobs lost during the Great Recession were low wage, meaning they paid $13.83 an hour or less. But 58% of the jobs regained fall into that category. A common explanation for that startling statistic is that the bad jobs are coming back first and the good jobs will follow.
But let me suggest another explanation: the good jobs are here among us right now -- it's just their wages, their benefits, and the long-term security that have vanished.
Consider the experiences of two workers I initially interviewed for my book Down the Up Escalator: How the 99% Live in the Great Recession and you'll see just how some companies used the recession to accomplish this magician's disappearing trick.
Ina Bromberg genuinely likes to outfit people. Trim and well dressed herself, Ina sells petites at the Madison Avenue flagship store of a designer brand boutique with several hundred outlets. Even I had heard of the label. I had to ask what its exact place in the fashion hierarchy was, though. "We fall into a niche below Barney's-Bergdorf-Chanel," she explained.- Advertisement -
In the course of a 20-year career, Ina, now in her sixties, had been the company's top-earning national sales associate more than once. Her loyal clients return each season saying, "You know what I like. What have you got for me?"
When I first met her during the Great Recession, however, her hours had been cut back. "They've moved the entire sales staff onto flexible schedules," she explained. "On Thursday, we are told what our schedule will be for the following week. When they told me my new hours that first week, it was down to ten. I said, "Why don't you just lay me off? I can collect unemployment.' And [my boss] said, "No, no, it won't be this way every week.'"
"Maybe this is their way of sharing the work in order to keep the experienced people till the recession is over," I suggested. That used to be standard practice during a downturn.