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Wal-Mart Plans to End Extra Pay in U.S. for Sunday Shifts
Old 12-08-2010, 08:46 AM   #1
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Wal-Mart Plans to End Extra Pay in U.S. for Sunday Shifts

Is this just the beginning?

Wal-Mart Plans to End Extra Pay in U.S. for Sunday Shifts - Bloomberg

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Wal-Mart Stores Inc., the largest private employer in the U.S., plans to stop paying staff there an additional $1 an hour for working Sundays, taking a bite out of its single biggest expense.

The move, which takes effect next year, applies only to employees hired after Jan. 1, spokesman Greg Rossiter said in an interview yesterday. The move wouldnt affect the Bentonville, Arkansas-based retailers 1.4 million current U.S. staff.
This is a substantial reduction in pay. They must have lots of applicants and feel strongly that unemployment will stay high for many years.

Will other companies begin to do this? What is the long term cost for society and taxpayers when workers don't earn enough to afford medical care or pay for higher education for their children?
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Old 12-08-2010, 08:52 AM   #2
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DH's megacorp stopped all differential pay (including the graveyard shift) many, many years ago.
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Old 12-08-2010, 08:57 AM   #3
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DH's megacorp stopped all differential pay (including the graveyard shift) many, many years ago.
Yep. IIRC, our MegaCorp didn't pay a differential to the hourly workers if the Sunday was part of your normal work shift (they were implementing some 3/4 work weeks). This goes back~ 15 years, not new at all.

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Old 12-08-2010, 09:40 AM   #4
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Walter will be in an uproar!

Walter is Jeff Dunham's "old grouchy guy" puppet. He has very choice words to say about his j*b as a WalMart greeter.
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Old 12-08-2010, 09:46 AM   #5
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Is wage deflation a sign of the hyperinflation we've all been promised?
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Old 12-08-2010, 09:50 AM   #6
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Is wage deflation a sign of the hyperinflation we've all been promised?
Hyperinflation isn't the only possible option, but really, with the debt getting larger and larger, you either inflate your way out of a hole or make your debts impossible to repay.

And really, most corporate profits haven't been that bad in this "recession" at all in recent quarters (and their cash positions are at a record high, I think), yet they all use high unemployment as leverage to keep making the deal worse and worse for labor. At some point business needs to grow by increasing top-line revenues, not by cost-cutting on the backs of its workers. Yet that won't be possible as long as moves like these perpetuate the culture of fear and cash-hoarding.

This is an economy where labor, not business, is taking it in the shorts. And as long as real unemployment is in double digits and as long as the prevailing attitude to getting pay and benefits slashed is "it's okay, at least I still have a job", you can expect employers to keep screwing its workers with layoffs and shrinking real compensation. Why? Because they *can*.

The increasing corporatization of the ruling elite continues, with government of the corporations, by the corporations and for the corporations. And I suspect they LOVE double-digit unemployment; it's good for their bottom line as long as the public safety net allows the unemployed and underemployed to keep buying their goods. It allows them to tell their employees to work harder for less pay.
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Old 12-08-2010, 09:57 AM   #7
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Is this just the beginning?

Wal-Mart Plans to End Extra Pay in U.S. for Sunday Shifts - Bloomberg

This is a substantial reduction in pay. They must have lots of applicants and feel strongly that unemployment will stay high for many years.

Will other companies begin to do this? What is the long term cost for society and taxpayers when workers don't earn enough to afford medical care or pay for higher education for their children?

Yeah, my step-son was pissed when he found out about this a couple of weeks ago..lol.....maybe he'll be ticked off enough that he'll go out & find a real job, or get his butt in school, or join the military....
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Old 12-08-2010, 10:01 AM   #8
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And really, most corporate profits haven't been that bad in this "recession" at all in recent quarters (and their cash positions are at a record high, I think), yet they all use high unemployment as leverage to keep making the deal worse and worse for labor. At some point business needs to grow by increasing top-line revenues, not by cost-cutting on the backs of its workers. Yet that won't be possible as long as moves like these perpetuate the culture of fear and cash-hoarding.
Sounds like a deflationary vicious cycle. I wonder why so many are calling for the Fed to "cease and desist" then?
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Old 12-08-2010, 10:06 AM   #9
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Sounds like a deflationary vicious cycle.
In the near term it is. But the real problem is down the road, as the debt rapidly grows AND is made harder to pay back due to deflation. So when the back of disinflationary pressures is broken (not possible until the average worker doesn't feel threatened by layoffs and pay cuts), I don't know how a significant upturn in inflation will be avoidable. I have no predictions as to when it will happen, and maybe we are another Japan, but ultimately a rising national debt and deflation will result in either high inflation or default -- and I'm pretty sure defaulting isn't considered an option.
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Old 12-08-2010, 10:21 AM   #10
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In the near term it is. But the real problem is down the road, as the debt rapidly grows AND is made harder to pay back due to deflation. So when the back of disinflationary pressures is broken (not possible until the average worker doesn't feel threatened by layoffs and pay cuts), I don't know how a significant upturn in inflation will be avoidable.
I don't think I'm following.

So the answer to deflation, which increases real debt burdens, is tighter monetary policy, which leads to . . . more deflation?

It seems that if our only choices are between inflation and default, and we've ruled out default as an option, then we should get busy trying to inflate now, rather than waiting for real debt burdens to grow significantly more. So that still doesn't explain calls for tighter monetary policy today.
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Old 12-08-2010, 10:25 AM   #11
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. . . yet they all use high unemployment as leverage to keep making the deal worse and worse for labor.
That old supply and demand thing I read about. Should businesses ignore it? Would workers ignore it if labor were in short supply right now? History sure says they don't.
There's no cabal of evil CEOs scheming to keep the oppressed proletariat in check, just people looking at price signals and responding.
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Old 12-08-2010, 10:26 AM   #12
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I don't think I'm following.

So the answer to deflation, which increases real debt burdens, is tighter monetary policy, which leads to . . . more deflation?
You may not be following because I said nothing about current or near-term monetary policy, just that *eventually* when we break the back of deflationary pressures (perhaps partially with looser monetary policy), then there will be an enormous debt as the aftermath (made larger in real terms with near-term deflationary pressure on wages) which we can either pay down by inflating the currency or struggling to just make interest payments on if the deflation results in a drop in nominal GDP.
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Old 12-08-2010, 10:28 AM   #13
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That old supply and demand thing I read about. Should businesses ignore it? Would workers ignore it if labor were in short supply right now? History sure says they don't.
There's no cabal of evil CEOs scheming to keep the oppressed proletariat in check, just people looking at price signals and responding.
Obviously they are using market forces and there's no grand conspiracy. And in a competitive environment, when one business does this, they gain a competitive edge that all their competitors feel a need to match. And so begins the race to the bottom (and that's exactly what it is, IMO). The exporting of jobs to places like China and India isn't helping in that regard, either.

The problem is that this corporate behavior just leads to more of the same.
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Old 12-08-2010, 10:39 AM   #14
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You may not be following because I said nothing about current or near-term monetary policy
Fair enough. But then I'm still left wondering why so many are calling for tighter monetary policy.
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Old 12-08-2010, 10:55 AM   #15
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And in a competitive environment, when one business does this, they gain a competitive edge that all their competitors feel a need to match.
Yes, but only to a point. When an employer cuts compensation too much, then the quality of employees goes below the level needed for the job and overall efficiency suffers, and with it the company's profits. If employers could just slash away and still get employees of sufficient quality, they'd already have done it (and should do it, to stay competitive and thereby stay in business and allow these employees to continue to be employed).

The best way for workers to make more money is to be more productive so it makes sense for employers to pay them more--or lose them to an employer that will. Some of this is an employer responsibility (providing tools and the environment needed), but a lot is the responsibility of the worker--stay educated, work hard, show up for work, volunteer for the extra hours when needed, etc. There's no way American businesses can pay $35 an hour for the same work that can get done in Singapore for $4 per hour. No legislation, tariffs, unions, or beneficent actions by US employers can change that.
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Old 12-08-2010, 11:06 AM   #16
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Yeah, my step-son....maybe he'll ... or join the military....
As for the USN - well, he will have to stand in line. High school grads are at the bottom of the priority totem pole for enlisting. Our enlisted target market is high school seniors - people who WANT to join...not those who think of the military as a last resort, or changed their minds about college, work, etc. (or veterans who discovered the civilian grass is not as green as hoped, and want back in)

From what I am hearing, the other services are shifting to this approach as well.
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Old 12-08-2010, 11:18 AM   #17
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I just don't see strong inflationary pressures in the US without wage inflation, and I don't see that in the near term or even the mid term. I think high unemployment is here to stay for a long while, and as long as it does - no high inflation.

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Old 12-08-2010, 11:30 AM   #18
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I just don't see strong inflationary pressures in the US without wage inflation, and I don't see that in the near term or even the mid term. I think high unemployment is here to stay for a long while, and as long as it does - no high inflation.

Audrey
I agree. There are people looking at what the Fed is doing and saying that has to cause inflation. But they are not looking at the other aspects offsetting the Feds actions - high unemployment, increased savings, consumer fears, state & local governments cutting back.

Later in the decade we can have inflation if the Fed does not drain the economy of all the money they put into it at the proper time. On the international scene, China floating its currency some, decoupling of commodities with the dollar - oil, gold and a low interest rate could cause an high increase in imports.
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Old 12-08-2010, 11:44 AM   #19
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Even if US economic conditions do not warrant it at the moment or even in the near future, inflation could still rear its ugly head if we have a commodity shock (disproportionally high economic growth in emerging markets, bad harvests, hoarding by producing countries, oil supply disruptions, etc...) or a further loss of confidence in the dollar.
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Old 12-08-2010, 11:58 AM   #20
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Even if US economic conditions do not warrant it at the moment or even in the near future, inflation could still rear its ugly head if we have a commodity shock (disproportionally high economic growth in emerging markets, bad harvests, hoarding by producing countries, oil supply disruptions, etc...) or a further loss of confidence in the dollar.
We've already had serious commodity shocks in the past few years and they haven't resulted in inflation. Rather they have had the opposite effect - slowing the economy. And IMO it's tough for a commodity shock to be sustained once the US economy slows, because the emerging economies with the high commodity demand end up slowing too.

Sudden loss of confidence in the dollar? Whenever any of the other countries sneeze, investors still run to the dollar as safe haven. Look how many times that has happened this year. And if the dollar drops too much our "trade deficit partners" get all bent out of shape and try to lower their currency 'cause frankly as long as they keep running such big export surpluses with us, they have no choice but to keep accepting dollars. Eventually they will have to develop other markets to export their goods, and until then they won't be able to wean themselves from holding so many $$. That development will take a long time.

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