What does Wal-Mart's food drive say about America?

Companies and investors have never had it better. Average Americans, meanwhile, have rarely had it worse.

By MSN Money Partner Nov 19, 2013 4:55PM
Shoppers put bags in a car at a Walmart store in Valley Stream, NY, on March 29, 2011 (© Spencer Platt/Getty Images)By Henry Blodget, Business Insider

Monday, it was revealed that employees at a Cleveland Wal-Mart (WMT) are holding a holiday food drive for other Wal-Mart employees.

This situation says everything about what's wrong with the U.S. economy right now.


Wal-Mart is one of the richest companies in the world. Wal-Mart has a market value of $260 billion and made $17 billion in profit last year.


But Wal-Mart does not pay its employees enough to buy food for the holidays.


America's corporations and investors have never had it better. The stock market is setting new highs, and corporate profits and profit margins are higher than they have ever been. Average Americans, meanwhile, have rarely had it worse. Wages as a percent of the economy are at an all-time low, and fewer people are working as a percent of the population than at any time in the past 30 years.


In addition to violating just about every conceivable ideal of community fairness and decency, this state of affairs is hurting the economy. Average Americans account for most of the spending in the country. And thanks to the refusal of rich companies like Wal-Mart to share more of their wealth with the people who create it, average Americans are broke.


When people are broke, they can't buy things. When people can't buy things, companies can't grow. And when companies can't grow, they cut costs (fire more people). And, in so doing, they make more people broke.


In the past 30 years, American business has become ever-more obsessed with "shareholder value," a concept that unfortunately has come to be defined as short-term profit maximization. And as a result, America's corporations have lost sight of the other kinds of value that great companies can create. 


Great companies do not simply "maximize profits," as so many of America's companies are now doing.


Rather, great companies create value for all three of their major constituencies: customers, shareholders, and employees.


It's time companies like Wal-Mart began doing that, instead of "maximizing profits" and treating the people who produce those profits like costs to be minimized.


In a healthy economy at healthy companies, customers should get good products and prices, shareholders should get a good return, and employees should earn a good living. But right now in America, customers are getting good products and prices, shareholders are getting absolutely fantastic returns, and employees are getting screwed.


That's not just greedy and unfair, it's also hurting the economy.


Let's go to the charts. . . 


1) Corporate profit margins are at an all-time high. Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from "too much regulation" and "too many taxes." Maybe little companies are, but big ones certainly aren't. What they're suffering from is a myopic obsession with short-term profits at the expense of long-term value creation).
























Images courtesy of Business Insider, St. Louis Fed


2) Wages as a percent of the economy are at an all-time low. Why are corporate profits so high? One reason is that companies are paying employees less than they ever have as a share of GDP. And that, in turn, is one reason the economy is so weak: Those "wages" represent spending power for consumers. And consumer spending is "revenue" for other companies. So the profit obsession is actually starving the rest of the economy of revenue growth.
























3) Fewer Americans are working than at any time in the past three decades. The other reason corporations are so profitable is that they don't employ as many Americans as they used to. As a result, the employment-to-population ratio has collapsed. We're back at 1980s levels now.
























 In short, our current "profit maximization" philosophy is creating a country of a few million overlords and 300+ million serfs.


That's not what has made America a great country. It's also not what most people think America is supposed to be about.


So we might want to rethink that.


Specifically, we might want the goal of our corporations be to create long-term value for all of their constituencies (customers, employees, and shareholders), not just short-term profit for their shareholders.


More from Business Insider
Tags: WMT
321Comments
Nov 19, 2013 7:51PM
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The folks that works there aren't paid enough to live on.  They qualify for food stamps and other government support programs.  The government makes up the difference.  It's the taxpayers that pay for the government programs.  Therefore, we are paying a portion of the wages of these workers so  Wal-Mart can make billions in profit.  We as taxpayers are subsidizing Wal-Mart.  Corporate welfare.
Nov 19, 2013 5:51PM
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The United States of America should revolt.

 

A second American Revolution is coming, and it targets our elected officials, Wall Street and the 1%.

 

Enough said.

Nov 19, 2013 5:36PM
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This is a disgrace for Walmart.. This company netted over 15 billion in profit and has the nerve to run a food drive for employee!!!.  They should A. Take care of their own, and not make it public, B. Pay living wage for people to support families on.  Wal Mart is not a fast food joint with teen part timers, they hire full time and should pay accordingly.


Nov 19, 2013 7:53PM
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John D. Rockefeller, Andrew Carnegie & JP Morgan would be proud! Squeeze your workers, cut your costs & maximize your profits! Today's corporate moguls make these past tycoons look like amateurs.
Nov 19, 2013 6:17PM
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I read so many comments after other articles where people say that if you don't have a job or aren't earning enough, it's your own fault because you're lazy and/or stupid. But these facts...1) Corporate profit margins are at an all-time high, 2) Wages as a percent of the economy are at an all-time low, and 3) Fewer Americans are working than at any time in the past three decades are the crux of the problem. Even if most people got out there and busted their tails, the odds of succeeding are at their worst in many years so those that would criticize should just shut it and put some energy into trying to make the world a better place.
Nov 19, 2013 7:57PM
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I  am not a fan of Walmart but people need to realize that this is going on at many, many companies.  I worked at a rapidly growing hospital and every year boxes were set up around the hospital to collect nonperishable food for employees who "were having hard times financially." Nothing was said that many of these people were making minimum wages while several in the healthcare system were making six and seven digit salaries.

 

Not only are the working people being treated worse than second class citizens, but so are our military.  Whose wages and benefits are on the line to be cut?  Our frontline heroes and families.

 

Not only do big companies have it backwards, so does our country. The behaviour of our elected officials and big business is so shameful that I cannot imagine how they can go to sleep at night.

 

Without the hardworking, heroic people on the front lines of business and the military, there would not be million and bilionaires; the market would not be breaking records.More importantly, this country would not be the wonderful place that it is. We would not have a safe place to live and the freedom that we take for granted.

 

Nothing will improve until those people in high places see that they have things backwards, greed is not the way to happiness.

Nov 19, 2013 6:31PM
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These 3 charts are exactly why this economy is going nowhere! All the money the fed has been pumping into the economy is just rebuilding bank balance sheets. The average consumer has not seen a real increase in disposable income in decades, and purchasing power has decreased. No money, no inflation, no demand. Simple economics.
Nov 19, 2013 5:35PM
Nov 19, 2013 7:44PM
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It say the United states of America no longer has a labor movement of any kind. Any one with any sense at all knows that when a nation has no labor movement it will be a third world country. I say this because as wages, benefits and hours are cleverly whittled down year after year so goes the demand for goods and services. The only jobs left for the 99 percent will be to polish the boots of the top one percent.
Nov 19, 2013 6:37PM
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Are we ready? 5% of the population isn't a huge number. YOU know who I'm talking about... all the Ivy League, Big 10, Inheritor, Glass Ceiling, Administrative, Finance, Paper Pushing, Button Pressing, Federal Reserve-reliant PARIAH choking life out of America for-profit. JPMorgan Chase readies to sign a $13 BILLION settlement for mortgage fraud, but some poor soul who stole $8 from a cash register for food gets-- life. Twitter-- a virtual nothing that makes no profits off services just ads... get IPO'd. Goldman Sachs- another nothing that TAKES from the economy is now part of the Dow INDUSTRIAL. Dysfunctional Congress. Puppet Supreme Court. Useless President. Time to retake America from the "learned" and restore the greatest nation on Earth and prosperity for all by employing and fairly paying family-sustaining wages to us STUPID people. Is there ANYBODY who thinks "QE" was good for America that didn't steal a fortune from it? We are $700 TRILLION in the hole to derivatives. Yea... TRILLION. More than all the money in the world by a long shot.  
Nov 19, 2013 9:04PM
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Who do you think helps creates the Walmart machine?  Sure they have no integrity, but what about the towns/cities that gift them to come build in their town? What about all you losers who shop there? Stay the hell out of Walmart and quit bit-chin. 
Nov 20, 2013 9:55PM
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I worked for Wal-Mart for 15 yrs. finally got $10.00 an hr.  Got hurt on the job and was let go. That is how they treat there employees who are hard working and dedicated. I was not the only one that got treated that way. There are alot of  stores in the south  that did this. Management set employees up to get rid of them. We were told at my store if you get hurt on the job you can kiss your job goodbye, by our manager.
Nov 19, 2013 7:28PM
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If you are still wondering why the economy still sucks... here is your answer. Straight forward and easy to understand. 

Nov 20, 2013 9:23PM
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By every admission, the USA has a service economy.  Manufacturing has been off-shored to maximize profits.   Since the service sector is pretty much the bulk of our available jobs, then we better become accustomed to paying these employees enough to live and provide for their families.   Otherwise, I don't know who is going to do the buying and consuming in the coming years.  It's a shame that we have allowed the American royalists to live their lives in luxury while the masses have to scramble to buy the bare necessities for life.  
Nov 20, 2013 8:39PM
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This is what occupy Wall street was all about. But they were called cry babies
Nov 19, 2013 6:31PM
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Dante Alighieri would have designed a special circle in hell for greedy corporations that exploit underpaid workers at home and abroad. Wallmart management would be in the deeper circle of hell. :(

 

 

Nov 19, 2013 5:48PM
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I'm waiting for the GOP-Tea Party comments. This is exactly the scenario outcome they preach at every turn. "Screw the guy on the bottom. I'm not paying for that, and I surely won't help another less fortunate person (especially one of color), because they're all low-life crack-heads. If they want more money, then they should get a better job." BS like that. This isn't just Wal-Mart, its a direct result of the continuation of more defined rights and protections for corporations and the whittling of the same for actual living people. (Don't forget Romney said Corporations are people too, unfortunately, in the eyes of the courts, what he said was true!)  This has been the direction we've been heading in ever since Reagan was in office. IMHO, this is the tip of the ice-berg; and until more people say "ENOUGH!", it will only grow. Why vote for someone who is a puppet for the Koch brothers or Wall Street or special interest?  You only move yourself that much closer to the other side of that food drive when you do. Think about it!  We could use another Woody Guthrie and Roy Rogers now. I am the 99%.
Nov 20, 2013 8:49PM
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can anyone else not see that our country is slowly moving toward the socialism and communism that we stood so firmly against in WWII and the Cold War?!?! Not to mention that besides wal-mart and all the other greedy companies out there, our crooked special interest government has apparently forgotten the values that this nation was founded upon! why did we have a revolution against England??? and why do i have a feeling that this needs to happen again???
Nov 20, 2013 9:48PM
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Seems the richer these companies are the greedier they become. They care nothing about the average citizen who is hurting now other than to squeeze their last dime out of them. They have no shame and they have no sympathy to the people they are harming with their low-wages.
Nov 19, 2013 7:41PM
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We did food drives for our staff, we also did many other things to help out the staff.  I worked at a nursing home and we paid more than the prevailing wage to staff.  However, depending on the individuals home situation (single parent, student loans, previous bad debt) many staff had a tough time making ends meet.  We also did many other things to help staff, such as back to school packs with everything their kids needed for school; a turkey/ham give away around the holidays; and mitten & hat tree.  Does the fact that we did something to help staff, all staff no matter their pay, does not mean the business did not pay enough wages.  It means that we cared enough to help when we could.  Oh, and many of the efforts were matched by other staff who could help, because when they needed it they were helped.  Sometimes, people just like to help others.  Employers' also


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