12:01 AM, Feb 21, 2015 • By IRWIN M. STELZER
Markets work. That’s the message from Walmart’s decision to raise its starting wage for 500,000 of its 1.3 million US employees to $10 per hour starting next year. That’s 37% above the statutory minimum of $7.25. No, the notably cost-conscious company, the largest private-sector employer in America, the world’s largest retailer, and a company that has prospered by making stuff available at prices that lower- and middle-income Americans can afford -- microwave ovens go for $44 -- didn’t suddenly turn wildly philanthropic. Or decide to bow to pressure from President Obama, who recently attacked office-supply company Staples for what he deemed indefensibly low wages in the face of its high profits, or from trade union organizers. Instead Walmart responded to pressure in two markets.
The first is the retail market in which it competes for customers. Until low gasoline prices fattened the wallets of its customers in the fourth quarter of last year and drove customer traffic up for the first time in two years, Walmart was struggling to retain the loyalty of its customers. In part, but only in part, this was because those customers had not benefitted significantly form the economic recovery.
The second market in which Walmart found itself at an increasing competitive disadvantage is the labor market, a disadvantage that affected its ability to compete for customers. The company found itself employing increasingly unresponsive and at times surly sales staff and poor in-store managers. Waiting times to get to cashiers became intolerable, food past its sell-by date was left on display, stores became dingy and unattractive, and staff were not deployed efficiently, leaving stores under-staffed at peak times. The better employees, from starting-level workers to store managers, were being lured away from Walmart by other retailers such as Starbucks, Gap, and Ikea as a recovering labor market drove the unemployment rate down from 10% in October 2009 to 5.7% last month. Hiring by businesses is at its fastest pace since 2000, and the job-vacancy rate at its highest level since 2001 as employers find themselves unable to find suitable workers to fill out their staffs.
It is true that by the end of this year nine states will have legal minima of $9 or more per hour, well above the federal minimum of $7.25 per hour. But because those statutory levels affect not only Walmart but all its competitors in those states, state action does not account for Walmart’s move, the company having broken with the National Federation of Retailer’s opposition to an increase in the federal minimum. The company feels that if all its competitors are forced to join it in meeting a higher minimum, its costs relative to those of its rivals will not increase, or its market share decline.
Nor can higher statutory levels in several states account for other changes announced by CEO Doug McMillon, completing his first year in the job. The company will improve scheduling so that workers -- “associates” as management prefers to call them -- wanting to work more hours will have a better chance of getting the call, while those wanting more flexibility will be accommodated. The path from entry level wages to a $15 per hour level is made clearer, and 75% of its managers started out as hourly employees. Some make as little as $35,000 per year, others -- not many, but some -- over $100,000.
Don’t misunderstand. Walmart remains a hard-nosed retailer that knows it has to keep costs down in order to keep customer traffic up. The cost of the new wage structure and of health-care coverage for domestic partners and vision problems, is partially offset by cuts in health-care benefits for 30,000 of its part-time employees, who can now avail themselves of subsidized insurance by registering under Obamacare. And average pay at Walmart still lags that of other retailers in some cases. Still, the cost of all of these changes comes to a tidy $1 billion per annum, less any improvement in sales and productivity that might come from what Mr. McMillon calls “associates … that are highly engaged about the business.” That’s not a great deal for a company with sales of $473 billion last year, and a shareholder pay-out of $12.8 billion, but neither is it petty cash.
Majority don't trust Fed to fix it.1:01 PM, Aug 25, 2014 • By MICHAEL WARREN
Things are getting more expensive, and the American people know it. A new poll from Rasmussen Reports found three-quarters of Americans say they are concerned about inflation, with 81 percent saying they are paying more for groceries and 71 percent saying they expect to pay even more for groceries a year from now. Here's more:
Go bold with gold.Jul 21, 2014, Vol. 19, No. 42 • By JUDY SHELTON
Republicans are searching for big, bold ideas that will inspire voters to embrace a conservative agenda. To unite its disparate segments, the GOP needs to uphold our nation’s founding principles—a key requirement for Tea Party adherents—while fostering the aspirations of those who believe the United States should play a strong leadership role in the world. A prime opportunity presents itself in the most compelling problem America faces: the need to restore confidence in its economic future.
12:20 PM, Apr 28, 2014 • By MATTHEW SCHOENFELD
Everybody seems to agree that the U.S. Federal Reserve's quantitative-easing program, which involves buying bonds to lower interest rates, plays a role in spurring economic growth. Folks differ on whether the contribution to growth outweighs the risk of inflation.
But what if the Fed's efforts are actually hurting growth, and the feared inflation has already arrived?
Zero interest rates have side effects.Feb 17, 2014, Vol. 19, No. 22 • By CHARLES WOLF
Income inequality in the United States has been increasing for a generation. The share of pretax income received by the top 1 percent of earners rose from 7.8 percent in 1973 to 17.4 percent in 2010. A broader and widely used measure of inequality—the Gini coefficient—indicates that inequality for the entire range of income recipients rather than only the top 1 percent has risen by 26 percent since the early 1970s.
A modest proposal for the new Fed chairman. Jan 27, 2014, Vol. 19, No. 19 • By ANDREW FERGUSON
It's been more than a week now and I’m beginning to suspect she’s not going to call, so here I will offer Janet Yellen the advice I’ve been hoping to give her privately since the Senate confirmed her as the new chairman of the Federal Reserve. My advice is: Think about John Cowperthwaite. By this I mean: Really think about
Bill de Blasio and Wall Street. Nov 25, 2013, Vol. 19, No. 11 • By FRED SIEGEL
First, a matter of numbers and nomenclature: Bill de Blasio, who is being hailed like Eliot Spitzer before him as the new face of American liberalism, won his race to be New York City’s next mayor with a near-record victory margin but also record low turnouts in both the primary and the general elections. There was no “populist” surge as reported in the press. De Blasio won 40 percent of the 22 percent who showed up for the Democratic party primary.
Hosted by Michael Graham.4:50 PM, Sep 19, 2013 • By TWS PODCAST
THE WEEKLY STANDARD podcast with the American Enterprise Institute's James Pethokoukis on the recent actions by the Federal Reserve.
10:53 AM, Sep 19, 2013 • By GEOFFREY NORMAN
Yesterday, the Fed decided that the economy was not yet sufficiently robust for it to "taper." Wall Street celebrated.
Today, the consumer put in his two cents, which is about what he thinks this "recovery" is worth. As Ben Schenkel at Bloomberg writes:
Consumers views of the U.S. economic outlook deteriorated in September to the weakest level in a year as higher borrowing rates started to chip away at progress in the housing market.
12:00 AM, Sep 7, 2013 • By IRWIN M. STELZER
It’s not that anyone here in Washington begrudges Britain, and to some extent Spain, their fledgling recoveries. But President Obama and other proponents of more government spending aren’t delighted that those nations’ austerity programs seem to be paying off in renewed growth rather than in the perpetual recession the Keynesian try-another-stimulus-crowd in the White House has been predicting. Conservatives are saying that the austerity sauce for the British roast beef would be just as tasty on the U.S. hot dog.
It’s policy that counts, not personalities. Aug 12, 2013, Vol. 18, No. 45 • By JUDY SHELTON
At first, it was fun—this parlor game of guessing who the Obama administration will appoint as the next chairman of the Federal Reserve. We all assumed it would be Janet Yellen, because she’s a woman. And then suddenly we had Larry Summers all over the leading financial newspapers receiving multiple endorsements from respected economists. There were sly references to his intellectual prowess and invaluable experience, not to mention (but they always did) his connections with Obama’s closest advisers on economic and financial matters.
No, no, and no.12:31 PM, Jul 31, 2013 • By ETHAN EPSTEIN
Have you heard the news? Janet Yellen is positively clairvoyant!
Yellen, vice chairman of the Federal Reserve and, evidently, a front-runner to replace Ben Bernanke as chairman in several months, “was one of the first members of the Federal Open Market Committee . . . to realize that the [housing market’s troubles] could cause a major recession.” (Alan Blinder, Wall Street Journal, July 29.)
12:00 AM, Jul 20, 2013 • By IRWIN M. STELZER
Data-driven, legacy-driven. Keep those two descriptives in mind and you will know a good deal about the prospects for a dialing back of asset purchases—“tapering”—by Federal Reserve Board chairman Ben Bernanke.
12:00 AM, Apr 27, 2013 • By IRWIN M. STELZER
The U.S. economy grew at an annual rate of 2.5 percent in the first quarter, well ahead of the paltry 0.4 percent in the final quarter of 2012.