This should be a great boost for the field of robotics.
15 is enough to incentivize the cost of conversion to robots to replace people in lower end jobs. less than that makes it a marginal investment and discourages it.
Hope@ZeroKelvin
September 11, 2015 10:54 am
@Admin: The loss of Walmart and most businesses is a feature not a bug of the “living wage” crowd.
First off, the libprogs have a major hard-on for Walmart.
They hate it to a depth unplummable by any line. No matter how many jobs/businesses are closed in Walmart’s vendor conduit if Walmart goes down, they do not care. No matter how large a void is left in a community when the Walmart leaves (because the mom/pop stores are gone), they do not care. No matter how much less taxes are then paid by Walmart and their vendors to their beloved fed.gov, they do not care. Blind hatred and careless disregard for the consequences of their policies, is the hallmark of the libprog mindset.
Secondly, if enough businesses fail, then why gosh almightly, the fed.gov can just step in and NATIONALIZE THEM. (See: GM. The model is already in place.)
That is model has failed historically, and in Venezuela is failing right now, matters not. According to the Lefties, the reason for the failure is : 1) It wasn’t done properly/hard enough/thoroughly enough, 2) The evil conservatives/Republicians/Koch brothers got in the way, 3) The (common) people didn’t work hard enough to make it happen.
Rational people that live in the real world know very well why this shit doesn’t work, but, sigh, no one seems to be listening to them.
Go long on all the items on this list – “100 items to Disappear Fist”.
Many of these minimum wage people aren’t even worth minimum wage.
Anonymous
September 11, 2015 11:51 am
I’m not a doomer, but more or less live as if I were: bird in the hand and all that. As for the fifteen buck an hour minimum wage, well, small businesses wouldn’t fare worse because they’d likely cease to exist. For me, W’mart is one step away from the gov “distribution center” that it may well become if things worsen, and it’s a model that doesn’t do much for me. In my new spirit of camaraderie, I’ll simply state that I hate the fuckin’ place and would rather pay a bit more in the spirit of community solidarity, because if and when TSHTF in my rural (South American) community, I believe my local vendor of consumables who knows me well will not forget me and will cut me slack, as is often done. If I need some cash right away, he fronts it to me interest free, just as I can run a two-month balance with the same conditions.
I’m a great believer in waterproof matches, but instead of stocking up on them, I learned to make them (http://www.ehow.com/how_6313358_make-homemade-match.html). Now I can be the Ivar Krueger of my village, trade matches for eggs!
Iconoclast421
September 11, 2015 12:21 pm
Well all it would take is a flat price increase of 15% or (some such amount, I didnt do the math) and walmarts profits would be maintained. Plus, they would eliminate at least 20% of their workforce. There is plenty of room for robots in the walmart ecosystem! They would still be a competitive company. As long as every company faced the same struggle, they wouldnt lost much if anything in relation to their competitors. The real point is that a $15 minimum wage wouldnt do anything positive for jobs or the economy, which tends to make me believe this is exactly what is going to end up happening. More wages, but less jobs, and real incomes fall even further.
Iconoclast421
September 11, 2015 12:27 pm
To expand further on the robot thing I believe half of all big box store restocking jobs will be replaced by robots in as little as ten years. We’re going to have robots sliding around on rails stocking the shelves. They will have cameras so they can avoid getting too close to shoppers. But even more interesting will be when virtual shopping finally takes off. Many companies have tried it, with little success. But eventually, maybe when real VR solutions hit the market, virtual grocery will finally take off. Then you dont really have shelves at all. Your orders get pulled directly from the warehouse. Either you come pick it up or have it delivered. I see all of this as inevitable within 10 years and its going to cost a great many jobs.
NickelthroweR
September 11, 2015 12:34 pm
Greetings,
I actually did the math for this once in an argument with a friend that had posted some crap about how Walmart must raise its minimum wage to $15/hr. As it turns out, doing this would cost Walmart 1/2 of its net profits and drive its P/E over 60.
My argument to my very liberal friend was that it was not the governments job to decide the amount of money that we earn and that the same government that can force a private business to give away its profits is the same government that can take away all of those extra earning that you make.
Administrator
Author
September 11, 2015 1:39 pm
Wal-Mart Wage Hike Debacle Continues As Suppliers Forced To Layoff Employees Amid New Fees
Submitted by Tyler Durden on 09/11/2015 11:50 -0400
Earlier this year, in “What Happens After A Mega Corporation Raises Its Workers’ Wages,” we detailed the plight of Wal-Mart’s supply chain in the wake of the retailer’s decision to raise the pay floor for its lowest-paid employees. Here’s a recap:
When mega-corporations such as WalMart and McDonalds, whose specialties are commoditized products and services and who have razor thin margins, yet which try to give an appearance of doing the right thing, by raising minimum wages, they start flexing their muscles, and in the process trample all over the companies that comprise their own cost overhead: their suppliers and vendors. Take the case of WalMart: the world’s biggest retailer “is increasing the pressure on suppliers to cut the cost of their products, in an effort to regain the mantle of low-price leader and turn around its sluggish U.S. sales.”
What WalMart is doing is borderline illegal: it is explicitly telling its vendors “this is what you will do with your excess cash.” Of course, we say borderline because WMT’s action is perfectly legal in the confines of the pure law. However, in the context of an economy that is sputtering, WMT’s vendors have no choice but to comply or risk losing what is certainly their largest revenue stream and risk bankruptcy.
The irony is that while WMT (or MCD or GAP or Target) boosts the living standards of its employees by the smallest of fractions, it cripples the cost and wage structure of the entire ecosystem of vendors that feed into it, and what takes place is a veritable avalanche effect where a few cent increase for the lowest paid megacorp employees results in a tidal wave of layoffs for said megacorp’s vendors.
As those who frequent these pages are no doubt aware, quite a bit has happened in Wal-Mart world since we penned those words. First there were “plumbing” problems which, for at least five locations, were so intractable as to necessitate store closures. Then came the mid-level management rumblings as the rest of Wal-Mart’s employees suddenly realized that an across-the-board wage hike for the lowest-paid workers meant the wage hierarchy was suddenly and irreversibly distorted. Shortly thereafter, a memo circulated at an Arkansas recruiting firm indicated a raft of layoffs could be in store for the Bentonville home office. Finally, unable to make up the $1 billion cost of the wage hikes and unable to pass that cost on to customers without surrendering the “low price leader” crown, Wal-Mart began cutting hours.
Now, we get still more evidence that the world’s largest physical retailer is attempting to make up for the cost of hiking wages by pressuring its suppliers only this time, the supply chain is pushing back. Here’s Bloomberg with more:
After years of meeting demands for ever cheaper prices, many Wal-Mart Stores Inc. suppliers are saying no to new margin-squeezing storage fees and a payment schedule that could delay for months how quickly some are paid.
The world’s largest retailer says the changes, laid out for vendors starting in June, reflect a push to simplify its relationships with suppliers, put them all on the same footing and reduce costs so it can offer customers the lowest prices. But some vendors see the new policy as an attempt by Wal-Mart to fatten its margins and offset wage hikes for store workers earlier this year.
And whereas before, Wal-Mart was “merely” asking suppliers to do everything possible to lower prices (i.e. dictating how vendors will use FCF), this time, Wal-Mart is actually adding new fees:
Vendors were already feeling added pressure from Wal-Mart to cut costs after the retailer told them earlier this year to dial back on marketing and promotions and use the savings to lower their prices, he said.
Traditionally Wal-Mart has largely avoided the extra fees some other retailers charge, so the policy change was a surprise, said Leon Nicholas, a senior vice president at Kantar Retail, which advises dozens of Wal-Mart suppliers.
“What is so shocking this round is that they are being aggressive not in asking suppliers to take costs out of the system so the supplier can lower prices, but instead adding cost into the system,” Nicholas said. “It looks as though they are trying to have it both ways and trying to pad their own margins where they are facing cost pressure.”
As for suppliers who don’t comply, well, they’ll be “punished”:
Wal-Mart could punish suppliers that don’t agree to all or some of the new terms by cutting back shelf space for a product, giving it less favorable placement in the store or dropping a supplier all together.
Just as we predicted back in April, the end result of Wal-Mart’s push to score public opinion points by making the meager wages of its lowest paid workers look a little less meager will be the elimination of jobs along the supply chain:
A smaller supplier, notified of the fees late last month and given two weeks to accept, said it won’t be able to make a profit on its Wal-Mart business under those terms unless it fires workers or cuts wages and benefits.
So there, once again, is economics 101 at work and as we noted late last month, it should have been abundantly clear from the start that if ever there were an employer that could ill-afford a $1 billion across-the-board pay raise without immediately making up the difference by either firing some employees, cutting hours, or squeezing the supply chain it’s Wal-Mart, because after all, they’re the “low price leader”, and you don’t hold on to that title by passing labor costs on to customers.
In the end, suppliers may be trying to push back, but they’re unlikely to cut their noses of to spite their faces by creating a contentious relationship with the company that’s responsible for their largest revenue stream which is why ultimately, it’s vendors’ employees who will suffer so that Wal-Mart’s cashiers can make $9/hour instead of $8. We’ll close with the following lament from Leon Nicholas (quoted above):
“You can push and push, but at the end of the day you know where the power lies.”
Administrator
Author
September 11, 2015 1:41 pm
Who needs a stinking $15 per hour order taker?
[img[/img]
TJF
September 11, 2015 3:02 pm
I’d bet that those robot order takers reduce the error rate and are just as fast if not faster. When I look at the picture I keep hearing, “Do you want fries with that?” but spoken in a robot voice.
nkit
September 11, 2015 3:21 pm
Henry Hazlitt said it well in his excellent book “Economics in One Lesson”:
“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”
The minimum wage law is a perfect example of misguided policy that has negative long term effects not only for other groups, but for the very group that it is intended to help, much like welfare and so many other “progressive” altruistic programs. Raising wages by government fiat is perhaps the worst way of raising wages. Labor can not be paid more than it produces. The way to raise wages is to raise marginal labor productivity. Real wages do not come out of government decrees. Hazlitt was very much aware of this, and very much against the fallacies of minimum wage laws.
yahsure
September 11, 2015 3:41 pm
I guess all the social services these broke people need and get since they make so little don’t get brought into the equation. It’s ok if people make enough money to survive on,But we have a society where costs keep going up. Inflation.
Anonymous
September 11, 2015 5:08 pm
What we need isn’t higher minimum wages.
What we need in more higher paying jobs that minimum wage workers can work their way into as they gain experience.
Minimum wage jobs shouldn’t be a career, but often they end up that way because there is nothing else available to the class of worker that starts off there.
TE
September 11, 2015 5:25 pm
Walmart squeezed the majority of their American suppliers out of business and transferred it to China in the ’90s and early ’00s.
With Wally being around 7-9% of the Chinese economy, wonder how having to find new profits has effected the Chinese slowdown.
Don’t worry though, the Trans Pacific Partnership is right now trying to find even cheaper slaves in states that care even less about their environment than China does.
A conspiracy theorist might wonder if O’care, $15 an hour, and the upcoming EPA debacle, not to mention the freaking banks, are being used to intentionally shut down our productive, private, middle class.
Everyone else will believe it was unforeseen, accidental, or the way it has to be. None of that is true, yet is completely accepted as truth by the vast, vast majority.
Fubar anyone?
nkit
September 11, 2015 5:36 pm
@ Anon…
They often end up there because the demand curve for labor is based upon marginal productivity. They are marginally productive workers that decreed wage hikes only serve to keep them in those kind of jobs.
Llpoh
September 12, 2015 1:20 am
Walmart sales are around $500 billion. So they need a 10% price increase to offset the increased wages. No problemo – I am sure that will be easy to accomplish.
starfcker
September 12, 2015 5:17 pm
If a 15 dollar minimum wage would actually finish off walmart, I’d be out there campaigning for it . Fuck wal mart
Multiple assumptions wrong with this graphic… including # of US full time employees, current avg wage, etc.
http://money.cnn.com/2015/02/19/news/companies/walmart-wages/
It’s bad, but not as bad as the graphic implies.
This should be a great boost for the field of robotics.
15 is enough to incentivize the cost of conversion to robots to replace people in lower end jobs. less than that makes it a marginal investment and discourages it.
@Admin: The loss of Walmart and most businesses is a feature not a bug of the “living wage” crowd.
First off, the libprogs have a major hard-on for Walmart.
They hate it to a depth unplummable by any line. No matter how many jobs/businesses are closed in Walmart’s vendor conduit if Walmart goes down, they do not care. No matter how large a void is left in a community when the Walmart leaves (because the mom/pop stores are gone), they do not care. No matter how much less taxes are then paid by Walmart and their vendors to their beloved fed.gov, they do not care. Blind hatred and careless disregard for the consequences of their policies, is the hallmark of the libprog mindset.
Secondly, if enough businesses fail, then why gosh almightly, the fed.gov can just step in and NATIONALIZE THEM. (See: GM. The model is already in place.)
That is model has failed historically, and in Venezuela is failing right now, matters not. According to the Lefties, the reason for the failure is : 1) It wasn’t done properly/hard enough/thoroughly enough, 2) The evil conservatives/Republicians/Koch brothers got in the way, 3) The (common) people didn’t work hard enough to make it happen.
Rational people that live in the real world know very well why this shit doesn’t work, but, sigh, no one seems to be listening to them.
Go long on all the items on this list – “100 items to Disappear Fist”.
http://www.thepowerhour.com/news/items_disappearfirst.htm
Time is short, get cracking.
Many of these minimum wage people aren’t even worth minimum wage.
I’m not a doomer, but more or less live as if I were: bird in the hand and all that. As for the fifteen buck an hour minimum wage, well, small businesses wouldn’t fare worse because they’d likely cease to exist. For me, W’mart is one step away from the gov “distribution center” that it may well become if things worsen, and it’s a model that doesn’t do much for me. In my new spirit of camaraderie, I’ll simply state that I hate the fuckin’ place and would rather pay a bit more in the spirit of community solidarity, because if and when TSHTF in my rural (South American) community, I believe my local vendor of consumables who knows me well will not forget me and will cut me slack, as is often done. If I need some cash right away, he fronts it to me interest free, just as I can run a two-month balance with the same conditions.
I’m a great believer in waterproof matches, but instead of stocking up on them, I learned to make them (http://www.ehow.com/how_6313358_make-homemade-match.html). Now I can be the Ivar Krueger of my village, trade matches for eggs!
Well all it would take is a flat price increase of 15% or (some such amount, I didnt do the math) and walmarts profits would be maintained. Plus, they would eliminate at least 20% of their workforce. There is plenty of room for robots in the walmart ecosystem! They would still be a competitive company. As long as every company faced the same struggle, they wouldnt lost much if anything in relation to their competitors. The real point is that a $15 minimum wage wouldnt do anything positive for jobs or the economy, which tends to make me believe this is exactly what is going to end up happening. More wages, but less jobs, and real incomes fall even further.
To expand further on the robot thing I believe half of all big box store restocking jobs will be replaced by robots in as little as ten years. We’re going to have robots sliding around on rails stocking the shelves. They will have cameras so they can avoid getting too close to shoppers. But even more interesting will be when virtual shopping finally takes off. Many companies have tried it, with little success. But eventually, maybe when real VR solutions hit the market, virtual grocery will finally take off. Then you dont really have shelves at all. Your orders get pulled directly from the warehouse. Either you come pick it up or have it delivered. I see all of this as inevitable within 10 years and its going to cost a great many jobs.
Greetings,
I actually did the math for this once in an argument with a friend that had posted some crap about how Walmart must raise its minimum wage to $15/hr. As it turns out, doing this would cost Walmart 1/2 of its net profits and drive its P/E over 60.
My argument to my very liberal friend was that it was not the governments job to decide the amount of money that we earn and that the same government that can force a private business to give away its profits is the same government that can take away all of those extra earning that you make.
Wal-Mart Wage Hike Debacle Continues As Suppliers Forced To Layoff Employees Amid New Fees
Submitted by Tyler Durden on 09/11/2015 11:50 -0400
Earlier this year, in “What Happens After A Mega Corporation Raises Its Workers’ Wages,” we detailed the plight of Wal-Mart’s supply chain in the wake of the retailer’s decision to raise the pay floor for its lowest-paid employees. Here’s a recap:
When mega-corporations such as WalMart and McDonalds, whose specialties are commoditized products and services and who have razor thin margins, yet which try to give an appearance of doing the right thing, by raising minimum wages, they start flexing their muscles, and in the process trample all over the companies that comprise their own cost overhead: their suppliers and vendors. Take the case of WalMart: the world’s biggest retailer “is increasing the pressure on suppliers to cut the cost of their products, in an effort to regain the mantle of low-price leader and turn around its sluggish U.S. sales.”
What WalMart is doing is borderline illegal: it is explicitly telling its vendors “this is what you will do with your excess cash.” Of course, we say borderline because WMT’s action is perfectly legal in the confines of the pure law. However, in the context of an economy that is sputtering, WMT’s vendors have no choice but to comply or risk losing what is certainly their largest revenue stream and risk bankruptcy.
The irony is that while WMT (or MCD or GAP or Target) boosts the living standards of its employees by the smallest of fractions, it cripples the cost and wage structure of the entire ecosystem of vendors that feed into it, and what takes place is a veritable avalanche effect where a few cent increase for the lowest paid megacorp employees results in a tidal wave of layoffs for said megacorp’s vendors.
As those who frequent these pages are no doubt aware, quite a bit has happened in Wal-Mart world since we penned those words. First there were “plumbing” problems which, for at least five locations, were so intractable as to necessitate store closures. Then came the mid-level management rumblings as the rest of Wal-Mart’s employees suddenly realized that an across-the-board wage hike for the lowest-paid workers meant the wage hierarchy was suddenly and irreversibly distorted. Shortly thereafter, a memo circulated at an Arkansas recruiting firm indicated a raft of layoffs could be in store for the Bentonville home office. Finally, unable to make up the $1 billion cost of the wage hikes and unable to pass that cost on to customers without surrendering the “low price leader” crown, Wal-Mart began cutting hours.
Now, we get still more evidence that the world’s largest physical retailer is attempting to make up for the cost of hiking wages by pressuring its suppliers only this time, the supply chain is pushing back. Here’s Bloomberg with more:
After years of meeting demands for ever cheaper prices, many Wal-Mart Stores Inc. suppliers are saying no to new margin-squeezing storage fees and a payment schedule that could delay for months how quickly some are paid.
The world’s largest retailer says the changes, laid out for vendors starting in June, reflect a push to simplify its relationships with suppliers, put them all on the same footing and reduce costs so it can offer customers the lowest prices. But some vendors see the new policy as an attempt by Wal-Mart to fatten its margins and offset wage hikes for store workers earlier this year.
And whereas before, Wal-Mart was “merely” asking suppliers to do everything possible to lower prices (i.e. dictating how vendors will use FCF), this time, Wal-Mart is actually adding new fees:
Vendors were already feeling added pressure from Wal-Mart to cut costs after the retailer told them earlier this year to dial back on marketing and promotions and use the savings to lower their prices, he said.
Traditionally Wal-Mart has largely avoided the extra fees some other retailers charge, so the policy change was a surprise, said Leon Nicholas, a senior vice president at Kantar Retail, which advises dozens of Wal-Mart suppliers.
“What is so shocking this round is that they are being aggressive not in asking suppliers to take costs out of the system so the supplier can lower prices, but instead adding cost into the system,” Nicholas said. “It looks as though they are trying to have it both ways and trying to pad their own margins where they are facing cost pressure.”
As for suppliers who don’t comply, well, they’ll be “punished”:
Wal-Mart could punish suppliers that don’t agree to all or some of the new terms by cutting back shelf space for a product, giving it less favorable placement in the store or dropping a supplier all together.
Just as we predicted back in April, the end result of Wal-Mart’s push to score public opinion points by making the meager wages of its lowest paid workers look a little less meager will be the elimination of jobs along the supply chain:
A smaller supplier, notified of the fees late last month and given two weeks to accept, said it won’t be able to make a profit on its Wal-Mart business under those terms unless it fires workers or cuts wages and benefits.
So there, once again, is economics 101 at work and as we noted late last month, it should have been abundantly clear from the start that if ever there were an employer that could ill-afford a $1 billion across-the-board pay raise without immediately making up the difference by either firing some employees, cutting hours, or squeezing the supply chain it’s Wal-Mart, because after all, they’re the “low price leader”, and you don’t hold on to that title by passing labor costs on to customers.
In the end, suppliers may be trying to push back, but they’re unlikely to cut their noses of to spite their faces by creating a contentious relationship with the company that’s responsible for their largest revenue stream which is why ultimately, it’s vendors’ employees who will suffer so that Wal-Mart’s cashiers can make $9/hour instead of $8. We’ll close with the following lament from Leon Nicholas (quoted above):
“You can push and push, but at the end of the day you know where the power lies.”
Who needs a stinking $15 per hour order taker?
[img[/img]
I’d bet that those robot order takers reduce the error rate and are just as fast if not faster. When I look at the picture I keep hearing, “Do you want fries with that?” but spoken in a robot voice.
Henry Hazlitt said it well in his excellent book “Economics in One Lesson”:
“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”
The minimum wage law is a perfect example of misguided policy that has negative long term effects not only for other groups, but for the very group that it is intended to help, much like welfare and so many other “progressive” altruistic programs. Raising wages by government fiat is perhaps the worst way of raising wages. Labor can not be paid more than it produces. The way to raise wages is to raise marginal labor productivity. Real wages do not come out of government decrees. Hazlitt was very much aware of this, and very much against the fallacies of minimum wage laws.
I guess all the social services these broke people need and get since they make so little don’t get brought into the equation. It’s ok if people make enough money to survive on,But we have a society where costs keep going up. Inflation.
What we need isn’t higher minimum wages.
What we need in more higher paying jobs that minimum wage workers can work their way into as they gain experience.
Minimum wage jobs shouldn’t be a career, but often they end up that way because there is nothing else available to the class of worker that starts off there.
Walmart squeezed the majority of their American suppliers out of business and transferred it to China in the ’90s and early ’00s.
With Wally being around 7-9% of the Chinese economy, wonder how having to find new profits has effected the Chinese slowdown.
Don’t worry though, the Trans Pacific Partnership is right now trying to find even cheaper slaves in states that care even less about their environment than China does.
A conspiracy theorist might wonder if O’care, $15 an hour, and the upcoming EPA debacle, not to mention the freaking banks, are being used to intentionally shut down our productive, private, middle class.
Everyone else will believe it was unforeseen, accidental, or the way it has to be. None of that is true, yet is completely accepted as truth by the vast, vast majority.
Fubar anyone?
@ Anon…
They often end up there because the demand curve for labor is based upon marginal productivity. They are marginally productive workers that decreed wage hikes only serve to keep them in those kind of jobs.
Walmart sales are around $500 billion. So they need a 10% price increase to offset the increased wages. No problemo – I am sure that will be easy to accomplish.
If a 15 dollar minimum wage would actually finish off walmart, I’d be out there campaigning for it . Fuck wal mart