-
Despite Falling Revenues, Walmart Increases Pay for Top Execs
Sometimes the effects of our social and income inequality are easy to see, but hard to measure.But not in this case: despite falling revenues, and despite only reluctantly paying minimum wage to its workers, Walmart increased the pay for its top executives. The people who do the labor get little. The people who make the decisions that can cause falling revenues get more (and more and…) Could it be any clearer what is going on? A flatulence of money.
This is what Thomas Piketty’s theories look like in practice.
Some Background from a Real Economist
Economist Thomas Piketty’s new bestseller, Capital in the Twenty-First Century
makes clear there has been a significant increase in income inequality in America. Our inequality rate is higher than it ever has been in our own history, is growing, and is higher than in countries in Western Europe and Canada.
In the United States, the top one percent own 35 percent of all capital, and the top ten percent of wealth holders own roughly 70 percent. The bottom 50 percent have roughly five percent. Note also that until slavery was ended in the United States, human beings were also considered capital.
The inequality is driven by two complementary forces.
By owning more and more of every thing (capital), rich people have a mechanism to keep getting richer, because the rate of return on investment is a higher percentage than the rate of economic growth. This is expressed in Piketty’s now-famous equation R > G. The author claims the top of layer of wealth distribution is rising at 6-7 percent a year, more than three times faster than the size of the economy.
At the same time, wages for middle and lower income people are sinking, driven by factors largely in control of the wealthy, such as technology employed to eliminate human jobs, unions being crushed and decline in the inflation-adjusted minimum wage more and more Americans now depend on for their survival.
Back to Walmart
A key question for detectives trying to figure out who may have committed a crime is to ask cui bono, “Who benefits?” Who stands to profit from a murder, from a crime? That’s often your perp.
In Walmart’s case, it is not its stockholders who profited. Indeed, this has not been a money year for Walmart shareholders. Despite an overall good twelve months for the stock market in general, Walmart stock bumbled due to lower sales growth.
No joy for Walmart’s customers, or its own employees. Walmart cited cuts in federal food stamps as one reason for its weak sales increase. Since they are paid only minimum wage (and Walmart fights vigorously against any increases) and only are given 39 hours a week or less so as not to qualify for full-time benefits, a fair number of Walmart’s own workers receive food stamps.
Good news though for Walmart’s top executives. The company employed some accounting tricks to “adjust” on paper actual revenues to make them appear higher than in reality. On the strength of that “adjusted” performance, William Simon, CEO of Walmart’s United States unit, received total compensation of $13 million last year. Of that, $1.5 million was a “performance bonus,” paid out actually for declining revenues. In fact, six of Walmart’s top executives received a total of $8.42 million in cash incentive payments for 2014 even as revenues fell and the company closed stores. The former employees of those stores, needless to say, did not receive any performance pay bonuses as they fell deeper into poverty.
Fair Play?
Walmart’s executives receiving these bonuses are the equivalent of a sports team getting paid extra because they lost. And we know that only happens when a game is rigged, right? How much more clarity into how the New Economy works do you need? More? Well, just wait for Walmart’s next earnings report and you see who is shaving points for their own benefit.
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
Recent Comments
Leave A Comment
Buy Peter’s Books on Amazon!
meloveconsullongtime said...
1But again, it’s worse than how Picketty depicts it. The dollars Wal Mart’s executives are shifting around – shifting to themselves as fast as they can – isn’t real capital, it’s just an abstract medium, but no longer a medium of exchange, it’s a medium of theft.
The impending failure of Wal Mart is intentional. The top executives know what Wal Mart does is unsustainable – just like the rest of America’s hyper-financialised economy – it’s a ponzi scheme and it’s almost over. So is China’s “economic miracle”, and the Chinese Communist elites know that too, so presently they’re working very hard to steal whatever is left to steal and then offshore their gains, and in many cases also offshoring themselves, leaving the country before the SHTF. China’s impending economic collapse will be a lot worse than America’s.
So Wal-Mart execs (et al) are intentionally burning out their enterprise so that they can use their abstract dollars – before the dollar collapses – to buy REAL capital, land and resources. And guess what? That’s why the Empire is so determined to seize Ukraine, because there’s not much left to steal in America.
05/14/14 1:11 PM | Comment Link
wemeantwell said...
2Now this is very interesting. One thing I am learning about is how vulture investors buy out a floundering company, have it take on massive debt, use that to pay themselves massive consulting fees, then have the company default on the loans while they keep the money and move on to the next target. Since companies are “people” in our world, the vultures are not liable. In fact, they are often tax-break taking heroes for “trying to save” the floundering company they destroyed. Your theory on Walmart is identical. I am now more scared than I was ten minutes ago.
05/14/14 1:23 PM | Comment Link
meloveconsullongtime said...
3Yes Peter, and let me scare you more: What you’re seeing in progress is a convergence between the Chinese Communist and American proprietary (or rentier) classes’ means of seizing property – which is entirely different and OPPOSED TO “wealth creation”. Even China, which still does have a strong industrial base (but not for much longer!), has an economy based more on seizure of property and hyper-financialisation than on industry.
But first, be fair to some of the Chinese entrepreneurs of the past few decades, it’s true that they did a lot to jump-start China’s post-Mao economy, when it began around 1978. And then starting around the 1990s, China did benefit a lot from outsourcing of American industry to cheap Chinese labour. But those things are no longer what constitutes most of China’s “GDP” today.
No, what’s been going on for the past decade or so, has been more like this one little example: In the last Chinese city I lived in, a charming one on the South Coast, the old street near my apartment was all tenanted by small businesses, including an inexpensive little restaurant run by Taiwanese immigrants (my favourite), a Uighur noodle shop, some little retail shops, all small entrepreneurs. Also nearby was a quiet little cafe/bar habituated by local artists and writers. It was one of the last MAJOR and WEALTHY and highly cultured, mainland Chinese cities retaining much of China’s old, pre-Communist culture, which had been revived in recent decades. Not glitzy like Shanghai, and all the more beautiful for that. (BTW it had a close connection with the c.1920s poet Lu Xun, a great lover of civil liberty.)
Four years after I left China, I returned to that city. The street I described above had been razed, all the little shops were destroyed – and so was the artists’ cafe – and replaced by high rise shit which NO ONE USED! Big empty buildings, whose only reason for existence was to make paper profits for the Communist Party bosses who had the power to seize them for “economic development!” – just paper assets with which to secure corrupt bank loans and share kickbacks with construction companies (also run by Party bosses). Total destruction, because in a few years those high rise buildings will start to rot from disuse. Meanwhile the Party Bosses will launder their profits and send the money out of the country, and they’ll immigrate too if they can. Have you ever wondered why so many Chinese go shopping at luxury stores in London, and where they got their money? It was NOT through INDUSTRY! It was through financial theft and destruction of real wealth.
The final night before I left China – and have never returned – I walked through that same city, past a Tang Dynasty Buddhist Temple I used to love. Yep, a 7th century Buddhist Temple! Out of its gate came barreling a dump-truck, hauling away some debris from demolished Temple structures so that local Party bosses could build ugly new shit on the Temple grounds, to enrich themselves before they leave the country they betrayed. The fast moving dump truck would have run me over and killed me if I hadn’t been alert to what was going on – which is a cue for Americans to be alert to what’s going on in their own country, too.
http://www.youtube.com/watch?v=Ev2yO-OHc58
05/14/14 2:22 PM | Comment Link
meloveconsullongtime said...
4PS, back to the problems of AMERICA’s working class – or what little is left of it now that there’s almost no more work for it other than groveling servitude to the rentiers – which is worse than servitude to industrialists, because at least industrialists actually produce things of real value, but rentiers and financiers do nothing but steal and destroy:
After I wrote my above comment, I thought wryly, “Heh, this makes me sound almost like a Lefty!” And so I would be, IF the Left in all Western countries hadn’t sold out the interests of the working class to the ephemeral idols of “Race, Gender and Sexual Orientation”.
I mean, when the Left cares more about “identity politics” than about hard core working class interests, they’re doing EXACTLY what the working class’s REAL enemies WANT them to do! “Identity politics” is a distraction from the real source of enslavement. Focusing on race etc is exactly what the rentier overlords WANT the 99.9999 percent to do!
In light of which, and for illustration, here’s my favourite scene from my favourite pro-union movie, “Matewan”:
http://www.youtube.com/watch?v=qwEMIvDEFy4
05/14/14 2:54 PM | Comment Link
pitchfork said...
5melove.. you astound me. I wish I had a quarter of your experiences and insight.
As to the post at hand… we’re on the verge of Piketty’s prediction. I can feel it. Day by day.
05/14/14 3:20 PM | Comment Link
Rich Bauer said...
6The difference between a Walmart executive and a cat – a cat cares about the weak:
http://www.nydailynews.com/news/national/cat-saves-boy-vicious-dog-attack-article-1.1791876
05/14/14 5:44 PM | Comment Link
pitchfork said...
7What’s the difference between a Walmart executive and a bucket of shit?
I bet you know the answer.
05/14/14 8:33 PM | Comment Link
wemeantwell said...
8Bucket smells better, is more ethical, is nicer to cats and babies and wouldn’t disconnect its mother from life support to save 25 cents?
05/14/14 8:50 PM | Comment Link
meloveconsullongtime said...
9Pitchfork asked:
“What’s the difference between a Walmart executive and a bucket of shit?”
My answer, as an artist (well, I’m a cartoonist!)
…is THIS:
http://www.youtube.com/watch?v=_peUxE_BKcU
05/14/14 9:35 PM | Comment Link
jo6pac said...
10meloveconsullongtime said… 4
Thanks for the clip
05/14/14 9:40 PM | Comment Link
pitchfork said...
11Ding Ding Ding! We have a WINNER! Bucket is correct!
Peter, I didn’t know about those other attributes.
Whudda thunk.!
and melove.. that clip is ..well..let’s just call it… bizarre.
05/15/14 2:04 AM | Comment Link
meloveconsullongtime said...
12Pitchfork, I’ve got your number. Always have.
05/15/14 4:59 AM | Comment Link
meloveconsullongtime said...
13I mean, Pitchfork, kabuki theatre looks really fucking stupid when the actor drops his mask for just a split second.
05/15/14 5:09 AM | Comment Link
pitchfork said...
14meloveconsullongtime said…
“Pitchfork, I’ve got your number. Always have.”
Well then, in that case check this weeks lottery for me. Then spit in the other hand for me too. 🙂
“I mean, Pitchfork, kabuki theatre looks really fucking stupid when the actor drops his mask for just a split second.”
(melov..I admit I’m not the sharpest knife in the drawer, but could you at least give me a couple of clues?)
05/15/14 2:15 PM | Comment Link
pitchfork said...
15“Pitchfork, I’ve got your number. Always have.”
Well then..why don’t you call? Just tell my wife you’re from the NSA. She’ll hand me the phone and say..”See..told ya.”
🙂
05/15/14 2:25 PM | Comment Link
pitchfork said...
16Dear Walmart executives..
FUCK YOU.
http://www.salon.com/2014/05/08/my_personal_wal_mart_nightmare_you_wont_believe_what_life_is_like_working_there/
note to self …file under
Scumbags I would skin alive.
05/15/14 3:30 PM | Comment Link