Wal-Mart, American Welfare, and the Way to Invest Well

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Last fall, investors and many Americans argued passionately about cuts to the Supplemental Nutrition Assistance Plan (SNAP). Today, we learned that Wal-Mart (NYSE: WMT  ) -- a company considered uber-capitalistic -- took a financial hit from the SNAP cuts.

We can also ponder the overall investing landscape given many Americans' lack of spending power as too many corporate managements utilize methods that hurt instead of help.

Wal-Mart has joined the litany of retailers issuing financial warnings after a dismal holiday season. However, its warning said more about its struggling customer demographic, which reflects a lot about our larger economy. Cuts to the SNAP program, which many bitterly viewed as unnecessary welfare for lazy Americans, are hurting this blue-chip company.

Sometimes it's easy to blame Wal-Mart for everything that ails us, but in this case, Wal-Mart's the one that signifies how badly Americans are taking some hits.

SNAP hurts more than individuals
In times of lower unemployment and more available jobs, the argument that some Americans don't feel like working is easier to defend. The key factor now, though, is that there aren't enough jobs to go around, which translates into pared income and spending power.

When Americans "give up" looking for work, "laziness" isn't a logical excuse for most jobless people. Sadly, when investors celebrate reductions in unemployment -- recently, the figure fell to a still-daunting 7.3% from 7.4% -- the ominous element is that those who have given up are no longer counted in the stats.

While Wal-Mart did compete well when it comes to sales during the holiday season, its overall customer traffic lagged, leading to lowered guidance for the fourth quarter and the year. The culprit: reduced food stamps as well as harsh winter weather in many areas. The negative SNAP headwind was more significant than expected. Wal-Mart represents about 18% of food stamp use, about $14 billion of sales as of September 2012.

Dangerous games
We're also seeing more layoffs, which can tell us that whatever is improving in our economy, it's not the employment outlook for many Americans.

Zynga (NASDAQ: ZNGA  ) shares are soaring today due to news of its $527 million acquisition of video game company NaturalMotion. Zynga's delivering 314 pink slips to workers, or 15% of its staff, may cut costs but sour the company's outlook over the long term.

Why does this matter beneath the numbers? Let's ponder morale. Many remaining employees are probably suffering from their own disappointment as well as survivor guilt -- given Zynga's disappointing post-IPO stock performance and layoffs that has already occurred; last year, it let go 520 employees. Survivors might worry about their own long-term futures as well as feel bad for former colleagues.

Maybe the employees of the newly acquired company will feel a little bit guilty themselves -- they've got a parent that's replacing other workers, pretty much at the exact same time.

January job slashing
Many investors believed Best Buy (NYSE: BBY  ) showed turnaround signals in 2013, but high hopes have fallen after the holidays. Today, Best Buy said it's cutting 950 jobs at its Canadian unit, representing 6% of its total workforce.

So far, many companies are starting 2014 with tidings of fewer jobs even though we already have a significant number of Americans already struggling:

  • Target: The discount retailer has announced 475 worker layoffs, focusing on those at its headquarters, and it will not hire for 700 previously open jobs;
  • Wal-Mart: Sam's Club is letting go 2,300 employees, about 2% of its employee base;
  • Macy's (NYSE: M  ) : The retailer is letting go 2,500 people, or 1.4% of its workforce;
  • Intel (NASDAQ: INTC  ) : The chip giant plans a 5% decrease in its employee base in 2014; it has kept quiet about any number of actual pink slips and, granted, it's claiming much of the shrinkage will relate to attrition. However, it would be good for our economy to replace those workers.

This is just the first month of 2014.

The real answers for investing and prosperity
People call for cuts to programs like SNAP in a vacuum. What replaces the reduced spending even on necessities? It's unrealistic to say that the large numbers of people who need some help these days are either lazy or failures.

Better management policies and innovation are needed to spark economic growth instead of tripping it. Some managements do know the importance of employees -- and should function as models for a better way.

Lincoln Electric (NASDAQ: LECO  ) has a no-layoff policy. According to Frank Koller, who has extensively studied the remarkable company, it has laid off exactly zero employees over the past 65 years. For 80 years, it has paid employee bonuses.

Newly public The Container Store (NYSE: TCS  ) survived tough times by finding novel yet simple ways to reduce costs without letting go of workers.

During the recession, Costco (NASDAQ: COST  ) didn't lay off employees -- it gave them raises. Costco has been a great stock for investors over ensuing years, and its generous ways haven't crippled its long-term viability. Costco is such a gold standard stock, I'd rather see it at a bargain but it's always a good portfolio holding.

Putting our money into companies like these -- and encouraging more long-term thinking in corporate managements at large – is the real way programs like SNAP could one day stop being so important and pervasive. Until then, more downward spirals suck too many people down, ultimately ruining the investment landscape.

Check back at for more of Alyce Lomax's columns on environmental, social, and governance issues.

Read/Post Comments (33) | Recommend This Article (29)

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  • Report this Comment On January 31, 2014, at 7:32 PM, dbhendrix wrote:

    The SNAP program is a good benefit for those who need it, and some people truly do. My biggest problem with SNAP is the liberal interpretation given to the word food as applies to this program and the methods available to recipients to game the system.

    When I stand in line at the checkout counter and the shopper in front of me pays for their child's decorated birthday cake and a gallon of sweet tea with a SNAP benefit card it kinda makes me wonder why I am paying taxes.

    Or when a SNAP beneficiary trades their card to another person for cash so they can purchase beer .

    And I could go on and on about abuses in the system that largely go undetected because Uncle Sugar is the easiest one in the world to fool.

  • Report this Comment On January 31, 2014, at 11:07 PM, SkepikI wrote:

    ^ You are way too kind. And Alyce, you are way too gullible.

    The SNAP idiocy as well as its predecessors are/were riddled with fraud, theft, waste and incompetence. Most of the IG reports over the last FOUR DECADES have ripped the program fraud and theft controls to shreds. They don't work. Fake cards turn up whenever anyone looks hard enough at astonishing rates. One estimate held that 25% of the cards used are fake, even more are illegally transacted to get cash for forbidden items, including illegal drugs.

    I am not an anti Walmart crazy. BUT if Walmart profits decline as a result of reining in this abusive program, I shed no tears for red ink at WALMART resulting from less taxpayer abuse.

    Here is what Ive never understood, maybe you can explain it to me Alyce: A large number of people turn a blind eye to this crookedness and waste, theft. Is it that you really don't see it? Is it that you really don't give a hoot about it as long as you APPEAR generous and caring? Or, do you dismiss it as the "cost of doing business" and accept that doing something about it is just "too hard". I'd really like to know since my opinion is if you really care about the people who NEED it, I believe you should nail the crooks who steal from the needy as well as the taxpayers.

  • Report this Comment On February 01, 2014, at 6:34 PM, walmartmgt1 wrote:

    Walmart management miss treat their employees upper management encourages other managers posting with your name on it stating Jail/ Thief WOW:: then they laugh about it, they preach integrity and fairness well look at their employee turnover? Working in management for them I have seen it all with the company where there is always a blame game where they turn it on you and make you be the bad one, the managers are a bunch of liars, unless their corporate office investigates this their practices at store level will always be of poor quality and services, their employment practices is very bad, especially if you have an accent, I worked in their Avon Ohio facility.

  • Report this Comment On February 02, 2014, at 4:45 PM, HoosierRube wrote:

    I'm having a difficult time thinking employment is a 'corporate management issue'.

    Isnt the real issue that as we become more efficient, more technologically advanced, our need for mass human labor is dwindling?

    The move for a higher minimum wage is going to prove out the point, again. The lower skilled workers, whose cost vs. value will be skewed, will indeed be replaced with technology.

    Do we really need someone to take our order when we can just touch the pictures on a screen? Do we really need someone to take our payment and give us change when we can simply, swipe our card? I believe the Olive Garden is introducing such systems as I write this.

    The resurgence of U.S. manufacturing is not because our wages are lower, its because our technology is less costly than a Chinese laborer.

    Human labor vs. automation. If you think thats an issue for corporate management, we will never solve this growing reality.

    Even you paid bloggers will have a shorter run than you may believe. Flawed human opinions, analysis will soon give way to automated analysis based on facts, models, and very very good predictive systems (i.e. googles ability to predict damn near anything with great accuracy).

    So, what will you do when a machine does your job better and cheaper than you can?

    For whom the bell rings? It rings for thee.

  • Report this Comment On February 03, 2014, at 5:32 PM, damilkman wrote:

    Increased wages without increases value is doomed. Compare the training, motivation, and quality of a COSTCO employee verses a WALLMART employee and it is obvious why COSTCO employees earn more.

  • Report this Comment On February 03, 2014, at 6:05 PM, wwhitaker11 wrote:

    Wal Mart is the largest retailer in the WORLD. People tend to hate the biggest or the best. Wal Mart has saved it's shoppers (rich, poor, middle) billions of dollars, that they use to purchase other items. When they stop being the low cost provider they will go out of business.

    People work for Wal Mart because the want to, not because they are forced to. Yes, their executives are paid well and their employees are paid according to the wage market. COSTCO does the same thing except they can't compete on cost, so they compete on quality.

    The consumer will choose the winners. Personnally, I will never bet against the lowest cost or the best in quality.

  • Report this Comment On February 03, 2014, at 7:42 PM, cmalek wrote:


    I worked for the local county government as a programmer for 36 years. The county was predominantly Democrat so Democrat politicians kept on getting elected.

    My area of responsibility was to create and maintain software for the Departments of Health and Social Services. The software that our team developed and bought from third party vendors contained all sorts of anti-fraud safeguards. When the software was implemented in production, most of those safeguards were disabled, allowing for clients to apply and be approved for multiple client IDs just by making minor changes on their applications (use an initial, change birth date,change address, change spelling of name, etc.) There were clients with 10 cards when they should only have had one. This led to millions of dollars in fraudulently obtained benefits being paid out. Whenever we wanted to re-enable the safeguards to at least cut down on the amount of fraud, we were told explicitly that "these are the voters and we don't want to upset the voters."

    I don't know what percentage of SNAP clients have legitimate need and what percentage obtains foodstamps fraudulently, but, based on my experience, I can guarantee that any social assitance program involves a significant amount of fraud. That fraud can be easily eliminated, or significantly reduced, were it not for political interference.

  • Report this Comment On February 03, 2014, at 9:44 PM, Stockgamblr wrote:

    So true, yet so few people believe it. Not only should SNAP be extended, but SNAP holders should get double credit for healthy food purchases such as unprocessed vegetables. Depending on our job choice, any of us could have been in a similar position.

  • Report this Comment On February 04, 2014, at 11:13 AM, observerbob2013 wrote:

    The reality is that without adequately paid jobs there are no consumers.

    The present economic idiocy that sends jobs overseas to third world call centres in order to save a few dollars by providing an inadequate service coupled with the import clothes from a sweat shop in Bangladash to provide designer clothes of poor quality at a cheap price results in no jobs and eventually no economy.

  • Report this Comment On February 04, 2014, at 1:51 PM, crusader64 wrote:

    If the Pres and his wife were so interested in proper nutrition, snap cards could only be used for dedicated foods that were deemed by the USDA as healthy such as fruits, vegetables, certain dairy products, meet, fish, etc. I believe if this type of restriction were placed on snap recipients there would be less fraud and the general public would be more supportive of the snap program.

  • Report this Comment On February 04, 2014, at 4:11 PM, ellaerdos wrote:

    SNAP was another of the "Great Society" programs implemented with the best of intentions. It is another bandage over a wound that is not healing; add to it a poor educational system, miserable medical support, lack of program accountability, rape and plunder capitalism. All this is leading to the establishment of an economic underclass who are poorly trained, ill fed, badly housed and in permanent debt. Eventually these people will get tired of seeing how the rich live in TV land, pick up their guns and do something about it.

  • Report this Comment On February 04, 2014, at 5:01 PM, adasand wrote:

    Walmart is the biggest welfare queen, it is a company that represents the republican party. They talk about cutting welfare, but all they do is promote policies that increase the number of people depending on welfare.

  • Report this Comment On February 04, 2014, at 7:06 PM, vidar712 wrote:


    So you are saying that because someone is born into poverty, that they are not allowed to have a birthday party? Or, can they have a party, but no cake? Or, is it that they can have a party and cake, but ice tea is too much.

    Exactly how much of a birthday is a poor child allowed to have?

    Your argument is that if you are poor, then you are not allowed to be happy. Not even for one day.

    Perhaps I am misinterpreting your comment.

  • Report this Comment On February 04, 2014, at 9:55 PM, sweetest26 wrote:

    instead of putting your yuppie feet harder on poor people neck about any program white America has systematically created for "minorities" when there are more Caucasians on Snap and I mean the snap amount is so big hey hide behind religion and diet to feel better. please why don't you create more jobs so that Snap people or shall I say working people can receive a wage not a snap or a zipper, stop talking about what's wrong and showing what's wrong to prove yourself righteous and get up off your young yuppie asses and do something. ignorance can be bliss and Educated as well.

  • Report this Comment On February 04, 2014, at 10:44 PM, jhblauvelt wrote:

    A different, but related topic...

    As a citizen and investor, I would like all CEO to Worker ratios made public.

    I don't support that the government mandates a restriction on exuberant salaries. However, I think information like this will have an effect on our collective psyche and individual decision-making, whether choosing an employer, companies to invest in, or where I decide to do business.

    This seems like a small step in transparency and Corporate Social Responsibility.

  • Report this Comment On February 05, 2014, at 3:39 AM, jeepshepard wrote:

    I saw this first hand earlier tonight. At the end of the month in January, I went to Walmart and the store was empty of customers. I was surprised how empty the store was. I went to Walmart tonight, and the store was packed and very busy. I remembered that the SNAP cards get reloaded at the beginning of the month. That was the difference in store attendance. My friend works at BJ's Wholesale Club and told me that the electronic payment system sometimes crashes in the first few days of the month from SNAP card users overloading the system.

  • Report this Comment On February 05, 2014, at 6:14 AM, TopAustrianFool wrote:

    Ha... Even Whole Foods gets packed on Welfare pay days...

    Welfare is so big that is driving huge economic dislocations and efficiencies that make us all poorer. The problem is you will never see those inefficiencies until you stop welfare altogether. Poverty is only created by govt.

    Free the market by deregulating and stop all welfare and you will see poverty disappear.

  • Report this Comment On February 05, 2014, at 7:37 AM, emilypeter389 wrote:

    I dont get what's wrong with Walmart, they are firing permanent people, and hiring part timers to cut obama care cost

  • Report this Comment On February 06, 2014, at 11:31 AM, jbomb62 wrote:


    Interesting article. Also interesting to read through the comments and see how polarizing the issue continues to be. The myth of welfare fraud, including anecdotal "evidence" like @cmalek offered doesn't account for the data and countless studies that show that welfare fraud is negligible. However, politicians, left and right continue to wage their current war on the poor.

    In my home state, our governor, Mr. Lepage (someone who came from the streets and received a great deal of help in escaping poverty), delivered an angry State of the State address on Tuesday night, with a great deal of his nearly 50 minutes taken up demonizing poor people, or "welfare cheats," as his followers would prefer to call them.

    Americans still want to work. When given the choice between substandard wages with no benefits, insufficient, cost-effective child care, and all kinds of other disincentives, not to mention lack of updated skills for the 21st century jobs available, then of course people will do what's best for them. Only the cold-hearted and ideologically-driven want to blame poor people for just about everything.

    Don't even get me started on Wal-Mart and the Walton clan. I don't shop there, preferring to support locally-owned businesses that pump money back into the local economy, unlike Wal-Mart, that preys on local consumers and kills local economies.

  • Report this Comment On February 06, 2014, at 12:30 PM, SkepikI wrote:

    <The myth of welfare fraud, including anecdotal "evidence" like @cmalek offered doesn't account for the data and countless studies that show that welfare fraud is negligible.>

    Which studies- Name them. Otherwise your assertions are anecdotal. When individual anecdotal "evidence" that is, OUR actual experience conflicts or even directly contradicts cited studies, we are suspicious. Gather up enough news stories, conflicting personal experience and one becomes skeptical (imagine that). GET THE GOODS on a program riddled with fraud like SNAP, with real, well constructed and statistically significant data from real investigations and not lame "studies" and you get conclusions like those written in many of the comments.

    In my state, Oregon, they busted a criminal ring that was on the lam from CA, buying up merchandise on fraudulent Credit Cards. They also had HUNDREDS of the local SNAP EBT cards. Last I read nobody knew yet if they were real, transacted for cash, or counterfeit.

    As to your statement that Americans want to work. I agree that some do. Most of these are already working. We got to a place a few years back when unemployment was less than 5% and the labor force participation was 30 MILLION more than today. THAT cannot be explained by retirements of boomers. Just do the math- about 3.5 million boomers getting to 65 per year for 3 years...that means even if they all retired, which they didn't, there are about 20 million unexplained by retirements. I think we forgot that full employment was something like 6% unemployed and anything less meant that a lot of people who didn't want to work were, because the job or pay or something was so good they couldn't resist. Just a theory....

  • Report this Comment On February 06, 2014, at 1:41 PM, cmalek wrote:


    "Your argument is that if you are poor, then you are not allowed to be happy. "

    So, by your logic, SNAP cards should be allowed to be used to purchase alchol, tobacco, cocaine and sexual services because that is what can make the poor happy?

    Perhaps I am misinterpreting your comment.

  • Report this Comment On February 06, 2014, at 2:08 PM, cmalek wrote:


    "The myth of welfare fraud, including anecdotal "evidence" like @cmalek offered doesn't account for the data and countless studies that show that welfare fraud is negligible."

    Please name just one chapter and verse.

    Maybe where you live there is no welfare fraud. Maybe where you live there is no need for welfare. Maybe my county is the only one in the entire US with welfare fraud. Maybe the moon landing was filmed on a Hollywood sound stage and the International Space Station is a myth.

    When a county has only 3,000 or 4,000 unique Social Services clients and hundreds of millions of dollars in benefits are paid out annually, that is a lot of anecdotal money.

  • Report this Comment On February 06, 2014, at 8:04 PM, NOTvuffett wrote:

    I used to get some enjoyment torturing the "will work for food" beggars by telling them "hey get in the car, clean up the leaves on my lawn then I will buy you a burger or whatever". unsurprisingly, no takers. lol

  • Report this Comment On February 07, 2014, at 9:02 AM, TMFLomax wrote:

    Hi everyone,

    Thanks for the thoughts on this. I agree with those who point out that Wal-Mart is actually a "welfare recipient" in its own corporate way -- really, the news that it took a hit because of SNAP speaks to that, and it's truly ironic.

    I did want the article to point out that the long-term view would be helpful if more companies acted in the ways the ones do I listed at the end -- instead of thinking short term, creating real value for the entire economy by working harder to create rather than destroy.

    The arguments about programs are interesting, and even though I didn't go into it in the article, I never said that there is no welfare fraud. Of course there is, and of course "some people don't want to work." However, I do not believe MOST of the people who don't have jobs now and might have been getting assistance from programs like SNAP "don't want to work." We have an extremely high unemployment rate, higher than it even looks due to people giving up. I don't believe that people are giving up because they're lazy but because they can't find work.

    Of course human nature includes some people who will try to take advantage of the system -- ANY system. There are plenty of people who are working who don't actually do much work, and I'm talking well heeled too. Whose dole are they on? Shareholders'. (In an aside, people who don't do their work well should be fired -- as opposed to the copout mass layoffs many managements do, which takes out the wheat and the chaff -- probably more wheat, quite frankly.)

    Anyway. This is an interesting conversation. I guess my main thrust is that truly good managements, like those mentioned at the end, will find ways to add value (and, subsequently, jobs, or Americans who have the means to go forward), not destroy them.


  • Report this Comment On February 07, 2014, at 11:07 AM, damilkman wrote:

    This is directed to TMFLomax. The problem with your model is you are assuming that the company makes the employee when it is the other way around. If COSTCO could only draw on the Walmart employee base, they could never support their model. They depend on hiring employees with a higher skill and motivation level. Your argument is like me commending the University of Michigan on the fabulous intelligence and performance of it's student base and bagging on Washtenaw Community College for their students being so much inferior.

    In an efficient economy the rate of compensation is linked to the value of the work. More motivated and ambitious individuals will do better. Employers like COSTCO will hire employees that fit their requirements. You complain about Walmart's hiring practices. Why not complain that COSTCO is cherry picking the best employees and not giving Walmart employees a chance?

    I have mentioned in the past my comparison between the Zingermans franchise(In Ann Arbor). They sell 20 dollar sandwiches for lunch. The Zingerman's owners make big hay that they offer way over minimum wage. But because it is known, they get the best employees. No project kid will ever get a sniff.

    So the punch line is if every job has to justify a certain level of compensation and thus require a certain level of value, for employees that do not have the skill set or the motivation what do they get to do? The answer is they are frozen out. If your kind were in charge of economic policy people like me would have never had their start because menial jobs I first worked for dirt could not exist. I would even say the skills I learned were greater then the monetary compensation.

    In summary there is always a lowest rung that has to be done and there will always be employees qualified only for the lowest rung. Most of us climb up. Is it the duty of for profit companies to go into charity? I thought that is what our federal government was doing with the trillions it collected? If a company wishes to dole out its assets in charity great, but it certainly should not be an obligation because then it is just a tax.

  • Report this Comment On February 07, 2014, at 12:06 PM, TMFLomax wrote:

    damilkman, I believe that you and I do simply disagree strongly on this.

    I believe the way many companies that rely on what they consider to be "bottom rung" employees so that they can pay them as little as possible. These, then, are not motivated employees. Why would they be? They are not treated well. Why would they care much about the quality of their work? Perhaps if they were treated with respect they would do a lot better in their roles.

    We are having a member event here this week, and two of our speakers -- Malcolm Gladwell and Fred Reichheld -- both spoke to topics and concepts that definitely fly in the face of conventional wisdom about human behavior and what makes good companies.

    Today Mr. Reichheld talked (among other interesting things) that customers AND employees can be net promoters. Employees are also part of that framework, whether it's because they are simply more motivated OR whether they become detractors because they despise their jobs and tell plenty of people how much they do. Very bad for brand and corporate strength.

    Of course not everyone can make say, $100K per year. However, more companies should have thought years ago that maybe they should leave "minimum wage floors" behind on their own volition and try to develop better workforces to drive company strength.

    Granted, not all companies can afford it perhaps. However, from my coverage of CEO pay, let's just say that that is generally so out of whack to the UPSIDE that we're still dealing with big economic distortions.

    To jhblauvelt's point, which I forgot to address, YES. The CEO to worker pay ratio disclosure is one that I also feel strongly about. Some companies already do it -- I wonder why (because they are doing a decent job of keeping it low enough to keep employee morale!). The public comment period with the SEC regarding the rule ended several months ago, so I do need to check in and see if there has been any movement on that one.

    Anyway, bottom line -- corporations can (and some do) voluntarily do things better by employees (and therefore customers). This isn't just ethical. It is an economically sound strategy for the long haul. (And back to the article's point -- if more had done a better job designing their business to pay far more than the minimum wage "floor," then there would be less of a furious call to raise minimum wage through law.)



  • Report this Comment On February 07, 2014, at 2:13 PM, SkepikI wrote:

    ^ Alyce, for a wonder, I generally agree with your commentary, but I still think you have a blind spot where prices and customers are concerned.

    In particular, I do not believe that the COSTCOs and WFMs of the world can be so wonderfully laudable if their prices are such that many cannot afford to shop there. Especially true of WFM or WHOLE PAYCHECK as I am fond of calling it.

    If you are Tiffany & Co, it is not only possible but easy to pay your employees well. I applaud WFM the Tiffany & Co of the grocery business for figuring this out when conventional wisdom said it couldn't be done. BUT I do not believe in giving them plaudits for their "social conscience and sustainability" when only the well heeled can shop there regularly.

    I think COSTCO is a great company, and shop there, but to imply that their business model works ONLY because they hire better employees is a crock. I observe also that the per item average price is something like $12 and the average customer spends upwards of $200 per transaction. I am no retail expert, but it seems to me that is as important as anything when it comes to what kind of employees you can hire and what you can pay them!

    Finally: <if more had done a better job designing their business to pay far more than the minimum wage "floor," then there would be less of a furious call to raise minimum wage through law.) >

    Yes indeed, but as long as WalMart's customer base cant afford to shop at WFM, COSTCO, and Tiffany, I will not crown them with best business on earth titles. Of these, COSTCO comes closest to it, much more than WFM because they save me money and anyone who can manage to shop there, store large quantities and bankroll stock ups.

    But ALYCE- if everyone used this business strategy, a lot of people would be hosed.

    BTW when will you ever do a price expose on WFM?

  • Report this Comment On February 07, 2014, at 2:32 PM, damilkman wrote:

    I agree that we disagree. I put the onus of responsibility on the individual instead of it being an obligation of society. Quoting the late Bo Schembechler. "If you are just a bathroom floor cleaner, you be the best darn floor cleaner there is. And soon you will no longer be a bathroom cleaner" If someone is not motivated, why should someone feel obligated to pay them more then their value. As a teenager I did exactly that. I had a horrible job. But because I worked so hard and was thankful, I was promoted ahead of everyone else who were looking to do as little as possible.

    If you have an issue with CEO pay, do you have issues with the compensation of entertainment stars? Some entertainers and sports stars have base pay of over 20million, certainly in line with most CEO's. If you can command a price for your services, what is wrong with that? Should we hate Tiger Woods because he makes millions for allowing the use of his name on a product?

    Lastly if all companies got rid of their bottom rung, there would still be a furious call. It would just be a furious call to do something about all of the unemployed. If there is no bottom rung job, those under employed people will just be unemployed. That is my point that I was trying to make. I will state more explicitly. If WALLMART followed the COSTCO model as you suggested, most of WALLMART's employees would be out of a job.

    And I say I am thankful that companies did not get rid of the minimum wage floor. Because when I was a teenager my skills were zero. If I had not learned Bo's lasting lessons, I would not have the salary I have today.

  • Report this Comment On February 07, 2014, at 4:24 PM, SkepikI wrote:

    < I will state more explicitly. If WALLMART followed the COSTCO model as you suggested, most of WALLMART's employees would be out of a job.>

    An excellent point milkman. Another is that there are a WHOLE LOT of places in rural America where there are no COSTCOs but there is a WALLMART. I suggest that if WALLMART followed the COSTCO model many of WALLMARTS customers would be sucking vacuum for a place they can afford to shop.

    And no, I don't expect that to be obvious to the crew in Alexandria....too close to DC.

  • Report this Comment On February 07, 2014, at 4:35 PM, roadslide wrote:

    for those so fixed on the negative mean spirited side of welfare. there are many benefits to these programs, they indeed help millions of needy families and every dime almost goes back into the communities. do not be so frightened that someone you hate is getting something for nothing. there are cheaters in every aspect of american business and government. welfare is welfare.

  • Report this Comment On February 07, 2014, at 10:44 PM, SkepikI wrote:

    ^ and the frauds and cheats are "just the cost of doing business" (heavy sigh) a very ironic view of the current status of a country "dedicated to the PROPOSITION that all men are created equal" (A. Lincoln)

    But then, we are likely to be condemned to the ash heap of history roadslick.

  • Report this Comment On February 15, 2014, at 10:42 PM, ATy2 wrote:

    Alyce: Thanks much for your thoughtful take on this topic. Your articles are always a breath of fresh air amid the torrent of sanctimony and the general demonizing of poor/low income workers that typifies most of the commentary on investing web sites. I'm so glad you're a Fool!

    Yes, some people try to game the SNAP system. And some succeed. There are systems in place that have significantly reduced trafficking and other forms of SNAP fraud. (If anyone is interested in going beyond the sort of "data" that comes from reading the news or scrutinizing folks in the check-out line and passing judgment on what they choose to put in their shopping carts, see, for example: OR ).

    This is a polarizing debate because it's about fundamental beliefs and values. If you believe that every success in your life is entirely the result of your own efforts--your sweat, your smarts, your motivation, your ability to shine above the rest, etc---then you're also more likely to believe that others who are poor or underemployed occupy a lower station because they are lacking in those same qualities. And if the only thing you really care about is the bottom line of your portfolio, you're not likely to give a hoot about how companies treat their workers let alone be able to wrap your head around the idea that--in the long run-- investing in workers and creating a healthy workplace can actually turn out to be sound business practice.

  • Report this Comment On April 11, 2014, at 3:57 AM, thidmark wrote:

    "So you are saying that because someone is born into poverty, that they are not allowed to have a birthday party? Or, can they have a party, but no cake? Or, is it that they can have a party and cake, but ice tea is too much."

    Buy a damn cake mix and tea bags and show some respect for the taxpayers who are funding your existence.

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Alyce Lomax

Alyce Lomax is a columnist for specializing in environmental, social, and governance (ESG) issues and an analyst for Motley Fool One. From October 2010 through June 2015, she managed the real-money Prosocial Portfolio, which integrated socially responsible investing factors into stock analysis.

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