WALMART.... THE EVIL EMPIRE

     America espouses the American Dream… as long as it remains a dream.  It seems the moment the American Dream is attained Americans turn on the individual(s) who attained it.  Is it because those who succeed underline our failure?  It seems the more successful one becomes the more vitriol seems to be aimed their way.  No other American enterprise has become the target of such hostility like Walmart.

     We hold Walmart up as the example of everything which is wrong with corporate America.  It is not Walmart which is the problem.  It is us.  The American public could close Walmart down completely.  All Americans would have to do is shop elsewhere.  Walmart produced worldwide revenue of more than 469 billion dollars in 2012.  Walmart produced revenue of approximately 318 billion in the United States in 2012.  Americans could completely erase the 318 billion of American dollars earned by Walmart by simply shopping elsewhere.  Yet we don’t do that.  We are more interested in saving thirty cents on a family pack of toilet paper.  Walmart’s 2012 profits were 17 billion dollars.  Their greed turned a profit of 17 billion.  Our greed saved us thirty cents on a pack of toilet paper.  We both are greedy.  Walmart is just smarter about it, as they should be. 

     This is what the general American population does not understand.  Walmart is neither a charitable program nor a government program.  Walmart is a business!  Sam Walton started his business to make money.  If he could have done this without hiring employees he would have done so.  Employees are always the most problematic aspect of business.  Every business owner understands this.  The general public, employees, do not grasp this concept.  Sam Walton decided he could grab a larger share of the buying public by lowering the prices of his product.  To accomplish this objective he had to reduce his costs in every aspect of his business, including employees.  This is called smart business!  If you don’t like the way Walmart conducts its business don’t work there and don’t shop there!

     The American public is not being drafted and forced to shop at Walmart.  They are voluntarily entering the stores and spending their money.  Americans are supporting the evil they so vehemently complain about.  No one has to work at Walmart.  Yet over 2,000,000 people worldwide choose to work at Walmart.  The problem is not Walmart, it is us. 

      Walmart is one of thousands of employers in America.  If you don’t like Walmarts wages or benefits don’t work at Walmart.  Without employees Walmart would cease to exist.  Americans are the battered wife who keeps returning to her violent spouse and then complains she is beaten.  The simple solution is not returning to the spouse or Walmart.  Yet we can’t seem to grasp this simple concept. 

     The Civil Rights participants of the 60’s integrated the lunch counters of the Walmart of its time, Woolworths, with sit-in protests.  Some 50+ years later we seem to lack the conviction of our brave ancestors.  Worldwide condemnation was brought to bear on the government of Syria by individuals who utilized technology to bring attention to their cause and had the courage to face the gas and bullets of their antagonist.  Yet Americans sit on their ass, play Candy Crush and vote for the next Top Voice.   We are the masses and posses the power of numbers but lack courage.  We outnumber the wealthy 100,000 to 1 yet remain frozen on our couch and complain nothing that can be done.  Imagine if the African-American eight percent of the population had viewed their struggle in the same manner.  They had a dream and made it come true (voting and integration, specifically).  Today’s America had rather dream … and complain.

     If you believe you have been wronged then do something about it. Develop a plan, start an organization, and organize a movement but that doesn’t happen.  That is why we are an unhappy employee.  We lack the courage, conviction and discipline required to own a business… much less succeed.  We are a workers because we have worker qualities.  We cannot make the difficult decisions in our lives which would allow us the opportunity to be an owner.  Life is kicking our ass!  So we complain about the who do posses the skills to succeed and employ us.   We complain about how stupid they are.  They are stupid enough to hire us to do the work while they reap the rewards… so how stupid are they?

     Lets take a closer look at Walmart.  What have they done that is so bad?  First they have employed approximately 2.2 million people, more than 1.3 million Americans (approximately 1% of the US population).  That is better than being unemployed isn’t it?  Thank you, Walmart.

     In 2012 Walmart’s profits were 17 billion dollars.  That’s very good…. in fact it is great!   Yet they are far from the top profit producer.  Many companies produced more profit than Walmart.  They are below:

Exxon Mobil     44.9 billion

Apple               41.7 billion

Chevron           26.2 billion

JP Morgan        21.3 billion

Wells Fargo      18.9 billion

Fannie Mae       17.2 billion

Microsoft         17.0 billion

     Walmart’s profits allowed them to open more stores which employ more people.  That’s good.  Yet many Americans complain about the 17 billion dollars of profit, stating this is extreme.  Actually it isn’t.  In fact, it is paltry if viewed from the basic business model.  The general business consensus is a business needs to make 10-20% profit to survive.   In 2012, Walmart produced 469.2 billion dollars in revenue.  They produced a profit of 17 billion dollars.  Walmart’s profit percentage (margin) was 3.6%!!!   Below are other known industries and their corresponding profit percentage:

General Electric           9.3%            IBM                               15.9%

PepsiCo                      9.5%            Johnson & Johnson        16.1%

Exxon Mobil              10.0%            Ebay                              18.4%

Starbucks                   10.5%           Coca Cola                      18.8%

Chevron                     11.2%            McDonalds                    19.6%

Yum Brands               11.8%            Visa                               20.6%

Procter & Gamble      12.6%            Intel                               20.6%

Fannie Mae                13.5%             Pfizer                            23.9%

Walt Disney                13.5%            Oracle                            26.7%

USAA                        13.5%            Priceline.com                 26.8%

Colgate Palmolive       14.4                Phillip Morris                  28.0%

Monsanto                   14.8%             Mastercard                     37.3%

Reynolds American    15.3%             Yahoo                             78.8%

     As you can see Walmart’s 3.6% profit margin pales in comparison to other well known companies.  Most companies we know such as McDonalds and Coca Cola make approximately six times the profit percentage of Walmart.  Phillip Morris makes approximately eight times, Mastercard ten times, and Yahoo twenty two times the profit percentage of Walmart.  Has Phillip Morris, Mastercard or Yahoo sold you any necessities lately?

     Let me explain this 3.6% profit margin in terms we can all understand.  If you start your own business and wanted to end up with a yearly profit of $36,000 to provide for your family (approximate average household income) you would have to produce total sales of $1,000,000.  That’s right… you would have to sell one million dollars of product to profit $36,000 as Walmart does.  A bank would never lend you a cent if you set up your business model with a 3.6% profit margin.   Let’s look at that another way.  If we assume Walmart is open 365 days of each calendar year… Walmart does not make a profit until December 18^th of the year.  Walmart must produce revenue from January 1^st to December 17^th of each year to simply pay its expenses.  Thirteen days, of a three hundred sixty five day year, are responsible for all the profit generated by Walmart.

     If we assume your family income is $40,000 and after taxes you bring home $30,000 which amounts to $2,500 a month, at the Walmart percentage of profit, your monthly income would yield $90 discretionary income.  That’s right… you would have $90 a month to spend after all bills were paid.  Do you have more than $90 a month to spend after paying all your bills?  If yes, you are doing better than Walmart.  

     But don’t ignore this information, if you want to get Walmarts attention the solution is in the numbers.  A two week boycott of Walmart would be a death blow.  A two week boycott would eliminate Walmarts profits for the year.  It would get their attention.  Can you stop shopping at Walmart for two weeks?  Can you convince your fellow citizens to join you in this cause?  You have the power… will you wield it?

     Let’s take a look at who we would be wielding our power against…

     Sam Walton was born in 1918 in Oklahoma.  He would graduate from the University of Missouri with a Bachelor Degree in Economics in 1940.  Three days after graduation he joined JC Penney as a management trainee.  World War II would find Walton serving as a Captain in the US Army Intelligence Corps.  Upon completion of the World War II Walton took over management of his first variety store at the age of twenty six.  He would improve revenue from $80,000 to $225,000 a month in three years.  His success would gain the notice of his landlord who would later refuse to renew his lease and take over the franchise for his son.  This would lead to the opening of Walton’s first store in Bentonville with $5,000 he had saved in the Army and a $20,000 loan from his father-in-law.  Over the next twelve years Walton would become a franchise owner of fifteen Ben Franklin stores in addition to his singly-owned store.  Sam Walton would open the first Walmart Discount City Store in 1962 in Bentonville, Arkansas.

     Sam Walton is the American dream.  He completed a college education.  He served his country.  He began as a management trainee and worked his way up to owner of a retail store.  It took Sam Walton from 1940 to 1962 to open his first Walmart.  Twenty two years, with a few years off for the war, this man applied himself and worked smart and hard before opening his FIRST Walmart.  By no means was Sam Walton an overnight success.  He worked hard, he worked smart, and he remained focused for more than two decades before realizing his dream of opening his first Walmart.   Fifty one years after the opening the first Walmart and seventy three years after Walton entered the retail business as a management trainee his Walmart stores have become the second largest public corporation in the world with annual revenue of approximately 469 billion dollars.  Why would we hate this man or his creation?  He did something few could have imagined and have ever done.  His creation is neither evil nor ideal but it is, undeniably, an enormous accomplishment which has brought many people financial savings and employment.   It seems the man has climbed to the mountaintop and now we feel compelled to knock him off.  The public has transformed Sam Walton from a man with a vision to an evil corporation minus compassion.  Why?

 LOW PAY

     If you want more pay work elsewhere.  As stated earlier, you are not being forced to work at Walmart.  There are thousands of other choices in this country.  Target, Costco and many others pay more, apply there.  Are we under the impression Walmart is hiring the best and the brightest?  If you are then you have probably never visited a Walmart.  Imagine a McDonalds’ employee in a blue vest.  That is your average Walmart sales associate.  I am not implying they are not good people or hard workers.  I am implying if they could get a job somewhere else they would.  I imagine very few people dream of working at Walmart.  Walmart is an entry level position for those with minimal education and it pays as such.  Walmart is the bottom of the retail food chain.  This is why they are the butt of many jokes.  I am not attempting to demean Walmart I am simply stating the facts.  I frequent Walmart.  I have met some of the kindest employees and I have met some I would not approach while donning a bulletproof vest and brandishing a 9mm.  We are all aware of these facts.  Let’s not pretend.

     Where we all choose to pretend is when it comes to Walmart’s finances.  The idea of a living minimum wage has been discussed by the liberal left.  The notion has been put forth the minimum wage should be raised to a $15/hour living minimum wage.  That sounds great!  But let us pause for a moment and look at reality.  Walmart’s 2012 profit was 17 billion.  They have approximately 2.2 million employees.  Let us suspend business reality, and overall reality, for a few moments and pretend Walmart decided to divide the 17 billion dollars profit evenly between the 2.2 million employees, essentially breaking even.  This would amount to a $7,727 yearly raise for each employee.  This $7,727 raise breaks down in the following manner:

---  $7,727 / 52 weeks = $148.60 per week raise

---  $148.60 per week / 40 hours per week = $3.71 an hour pay raise

---  The average sales associate hourly wage is approximately $8.81

---  $8.81 + $3.71 = $12.52 per hour is the new hourly wage

     If Walmart operated to simply break even financially they could not afford to pay their employees enough money to attain the level of the proposed $15/hour living minimum wage.  In fact, Walmart would be short of this goal by almost $2.50/hour.  Walmart does not have the profit margin to allow for a minimum living wage of 15/hour.  In such a scenario, Walmart would lose billions in one year and board up their stores resulting in the loss of over 2 million jobs worldwide.  Of course, Walmart could pay their employees more but how much more?  Return to our previous example of $90 a month of discretionary income.  How much of your $90 a month would you be willing to give someone else?  In the previous example you made $40,000 a year and this resulted in $90 a month in profit.  Combine this with the fact you took all the risk over 50 years ago and now provide over two million jobs.  I ask you again.  How much of your $90 a month would you be willing to give up?   Of course Walmart could raise prices to accomplish this lofty goal.  Walmart could pay the employee more but when they returned to Walmart to buy necessities the price of necessities will have increased also.  If McDonalds has to pay a living minimum wage of $15/hour I assure you the Dollar Menu will become the Two Dollar Menu.  The cost will be passed along to the consumer.  We will have more money in our pockets at the end of each month but it will buy considerably less.  Walmart, nor any other business, should be expected to operate at zero profit or anywhere near it.  This is business not government.

     I should also mention the Walmart investors who would see diminished, if not non-existent, dividends on their Walmart investment. These investors would run from Walmart as if it were on fire.  This exodus would also bring an end to the Walmart enterprise subsequently eliminating over two million jobs.

Health Care

     The other great criticism of Walmart is they fail to provide health insurance for their employees.  A 2009 Kaiser report revealed the average employer contribution for health insurance, per employee, is approximately $9,860.  If this cost is accurate, Walmart cannot provide health insurance for all its employees without incurring a net loss.  Most assuredly Walmart, with its two million employees, could negotiate reduced rates.  If the $9,860 figure is correct, Walmart would have to negotiate a twenty two percent reduction in health care insurance premiums to simply break even.  Again, Walmart should not be expected to “break even.”  They are already working at a 3.6% profit margin. 

     The numbers are pretty clear.  Walmart cannot afford to provide the “living” minimum wage OR healthcare coverage without eliminating profits subsequently closing its doors permanently.  Even more ridiculous there are those who believe Walmart should provide BOTH.  One is a mathematical impossibility.  Both are not even imaginable.

     Why should Walmart provide health insurance?  They are a business.  They are in the business of providing a product to the masses and in return for employees working toward this goal they are paid a wage.  How is it a moral imperative for a business to be compassionate to their employees beyond a wage?  Is that not enough?  Evidently it is when it comes out of our pocket.  Over the last forty years the US government, controlled by citizens, has decided we should not pay for universal health care.  We do not want our tax dollars going toward health care for all citizens yet we are repulsed by a corporation who acts in the exact same manner.  We expect a corporation to more compassionate and proactive than we are.  We are hypocrites!

     The average citizen, with their employee mentality, must accept the fact money is made by taking risks not by working hard.  Sam Walton benefitted tremendously, billions of dollars in profit, because he was willing to risk his and his family’s future at various points in his life.  He took the risk of going broke, working without a paycheck, and having an uncertain future over the perceived security of an hourly/salaried employee’s income.  Most people are not willing to take this chance.  When someone else takes the risk and becomes highly successful many wish to attack the success.  This is unfair and irrational.  Sam Walton started his business with $5,000 of his own money and a $20,000 loan from his father-in-law.  Sam Walton only had 20% of the money needed to start his first store.  He found a father-in-law who trusted his abilities based on his previous experience as a retail manager and subsequent revenue increases.  As an employee Sam Walton excelled.  As a franchise owner Sam Walton excelled.  And when he finally had the money to be the sole owner he hit the jackpot.  He earned the right to make this money.  Many are unaware Sam Walton took Walmart public in the early sixties because he could not cover his debt.  Again, he had the courage and brains to find a way to continue his business.  He took great risks and produced great rewards.  This is the American dream!

     Do I believe Walmart could do more for its employees?  Sure I do.  I have outlined the factual and irrationality of many of the complaints.  This does not change the fact Walmart could raise wages and provide some sort of health care for the employees.  They could find a middle ground and still make a few billion dollars profit.  Why would they?  Would you?  ……… Liar!  When someone gives you too much change back do you correct them?  If someone forgets to charge you for an item at the register do you notify them? NO!   When it comes to greed we are just like Walmart. 

     Can we force Walmart to do something?  We could ask our congress to do something.  Why do that? They are the rich people also.  They really don’t give a damn about us.  So the question is can we make Walmart or any other business listen to us?  This question started unions in the early 20^th century.  What if we don’t want a union?  Could we create a boycott that would bring Walmart to the bargaining table?  Sure we could!  All we would have to do is organize 2.2 Walmart workers and focus them on a single goal.  Of course if we could do that…. we would be Sam Walton.