The consensus in social media was Walmart’s substantial stock decline on Wednesday – in advance of lower earnings projections – couldn’t have happened to a better group of jerks.
The jerks are the five individuals and groups who together own half of outstanding Walmart stock – the Walton family.
When people talk about re-distributing wealth, in part, they mean taking it from the Waltons, even though it was not just members of the one percent that got hit as Walmart stock is part of many portfolios owned by small investors and retirement funds.
The $14.7 billion valuation loss came after the CEO Doug McMillon briefed a group of financial analysts that earnings would decline sharply between now and 2018 because of a substantial investment in human resources which includes employee training, raising the average wage to $10 per hour, and adding more middle managers to improve the customer experience. The company also plans a significant investment in technology to be more competitive in e-commerce.
That Walmart would point to their February decision to raise the wage of its associates as a contributing cause of the lower earnings projection was called out by union members.
“Walmart should be ashamed for trying to blame its failures on the so-called wage increases. The truth is that hard-working Walmart employees all across the country began seeing their hours cut soon after the new wages were announced,” said Jess Levin, a spokesperson for the United Food and Commercial Workers International Union.
It’s a fools game for unions to use Walmart as a proxy argument for the need for union representation, something that should stand on its own merits. The discussion about wages and needs of low income workers is not about wages. It is more about valuing work in our society. Whatever one thinks of the pay and benefits at Walmart, they provide jobs – more than 2.2 million of them globally.
A complicating factor is 260 million people per week shop at Walmart globally. The average U.S. Walmart shopper is a white, 50-year-old female with an average household income of $53,125. Walmart is a mainstay of an economic system where people rely on low prices as wages have been stagnant.
At the same time Walmart’s stock value declined, some view it as a buying opportunity. On whatever rocky shoals the company finds itself, the fact remains that as a mature business four percent of the global population shops there every week. It isn’t going anywhere. The Waltons’ stake seems likely to rise in value again, and there is no serious activity underway to take anything from the Waltons.
Walmart is a target because it is the largest private employer in the U.S. Fairly or not, the company is used as a proxy for what’s wrong in our economic system. Focusing attention on Walmart is a diversion from what should be our target. It has less to do with Wall Street and everything to do with valuing work people do everyday with low or non-existent pay.
As long as we complain about Walmart and fail to take action to respect workers, the Waltons will be fine, and the rest of us no better than we were before they rose to the one percent.