Wal Mart a Harbinger? And on the road again….

Sitting in the sun (wearing a coat) at a Starbucks in Oklahoma City.  Next stop (hopefully) Alamogordo NM.  Had really good authentic Korean in Missouri for lunch (next to an Army base in the Ozarks that must deploy units there – all the patrons were white).  Found some pretty good Moroccan food for dinner last night.  Server was an Indian immigrant.  You gotta love America.

I am finalizing a new gig as a contract Analyst for a large, research-driven, patient hedge fund (yes Virginia, they exist….!).  The fund will remain un-named.  Very excited about it.    This will probably (again) change the direction of this blog but going to post a pregnant thought here.

Wal Mart’s minimum wage rise:  Is this the end of the race to the bottom for employee/human capital management?

  • Wal-Mart’s decision to raise employee wages got a lot of coverage in terms of dollars in pockets.  I think management’s underlying reason for doing it is much more interesting.  They seem to have decided they can squeeze no more blood from the stone.
  • Wal Mart’s woeful customer service and persistent under-stocking troubles have been well documented.  Hat tip to Bloomberg for some great reporting there for those of us who don’t spend much time at Wal Mart.  I have memories of Sears’ self-inflicted woes when it dominated the retail landscape.
  • The wage rise seems to be an admission that, gasp, paying people better might lead to higher retention, lower costs, and a better product.  This is actually not that controversial.  Just econ 101.  But it has been deeply against the “grind-em-down” trend of the past 20-30 years.  Outsourcing, flex-time scheduling, anti-union, etc. etc.
  • It has been pretty clear we hit the law of diminishing returns on this model.  You can almost see the “beatings will stop once morale improves” sign hanging in the air over in so many retail models today.  Home Depot, Best Buy, Wal Mart, Bed Bath and Beyond…  It is, arguably, the last lever to pull for the big-box, “category killer.”  There are no more small chains to grind down, so the beast turned to grinding down its own flesh and bone.
  • The hopeful thing is that people at the top start to figure out that treating people at the bottom better is also better for the bottom line.  That is hopeful because it might serve to re-balance the social/political equation.
  • That equation will rebalance sometime and somehow.  It would be a lot better for it to be done via private, free market, enlightened self-interest.   If not, the populists (in which I include the Tea Party) will eventually redress than balance in a decidedly less optimal way.

Going to close with tat thought and my apologies for any typos.  Gotta get on the road.  One final conundrum of modern American life.  I generally see a Drive-Through line at suburban Starbucks while there is literally no line at the actual counter.  With ample parking just feet away from that (highly visible) counter. You gotta love America.


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