On Wages, If Walmart can Raise Wages, Why Not Everyone

Shreveport       Walmart is still the world and America’s largest single private sector employer. Headquartered in Bentonville, Arkansas, they still leave a huge footprint in their home state just as they do around the world.  For decades, Walmart led the race to the bottom, sweating workers on wages and hours, allegedly and likely discriminating on gender and perhaps race according to numerous filings, and practicing wholesale disruption, many would say destruction, in communities and countries around the world, even before that became a tech catchphrase.   In recent years because of corruption scandals in Mexico, India, and elsewhere and constant pushback and publicity about the negative practices that built its brand and its impacts, Walmart has tried to put a glove on its iron fist.

Partly in reaction to the tight labor supply in recent years as the economy improved and partially because the national minimum wage has been stuck at $7.25 for over a decade now, Walmart has become a leader of sorts in announcing minimum wage rates for all of its hourly employees.  Most recently the company announced that it was moving all of its workforce to no less than $11.00 per hour.

On Wade’s World  I talked to David Couch, a Little Rock based lawyer who is frequently the standard bearer and last line of legal defense for progressive forces in Arkansas and is the sparkplug behind a committee that is trying to get the signatures to put an initiative on the ballot there to raise the minimum wage.  The Arkansas minimum wage is now $8.50, since a similar initiative was approved by the voters in 2014.  This ballot initiative would raise the wage to $9.25 in 2019, then $10 per hour in 2020, and in 2011 wages would be – yes, you guessed it — $11 per hour.  Couch said he got the idea from Walmart.  If Walmart could raise everyone to $11 now, then surely the rest of Arkansas should follow.

Of course, Arkansas has a long mountain climb in order to win this fall.  First, they have to get more than the 20,000 signatures from registered voters they have now up to over 67,000 with 75% of them being valid by July 6th.  Then they have 14 days to “cure” the petitions and 30 days grace to get to the 125,000 signatures they want to make sure it’s on the ballot.  Couch has a paid canvass crew on the job around the state.  In 2014, the secretary-treasurer of the AFL-CIO told me they raised $500,000 for the effort then.  Couch said he was able to raise the full amount for this effort from a deep-pocketed nonprofit c4 group.  They are in it to win it.

Stepping back and looking at other states and the tight labor market throughout the country, no matter what anyone thinks about Walmart, why can’t we all follow their lead, and push to win $11.00 per hour for workers now?

Let’s play follow the leader!

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The Achilles Heel of the Gig Economy is that Workers Can’t Make Enough Money

New Orleans   Uber is the canary in the coal mine. After years of listening to the reports that held up Uber as the herald of the future, creating a new business model where an application would substitute for an employer, the accounting is finally coming due. Its drivers were touted as the vanguard of the gig economy, complete with claims that this was what the “new” worker really wanted from employment. Now it turns out Uber may be the canary dying in that coal mine because the Achilles heel of the gig economy is increasingly revealed: it’s not sustainable. No matter what Uber and others want to call them, they depend on workers, and workers are voting with their feet that they can’t make it on temporary work, so they have to keep moving, and that means working for another company. The gig economy doesn’t work when people can’t make a living on Uber and similar gigs.

Uber has lost $4 billion over the past 18 months for lots of reasons, but largely because it can’t make its workforce either happy or stable. They are like a bait-and-switch operation offering incentives, prizes, tips, and extra bonuses, but increasingly hitting the brick wall where their drivers are realizing they still are barely making minimum wages per hour. In fact the Wall Street Journal reported that Uber cooperated with a study done by a New York University professor that,

“found that no matter which directions fares go, drivers invariably take home about the same earnings over time…[because] When there is a fare cut, drivers’ pay per trip falls but riders flood the service, offering more business. A price rise eventually lures more drivers than Uber needs and scares away riders. The changes are short-lived as an equilibrium is reached after about eight weeks, and drivers’ average pay comes out the same.”

This means that Uber, the harbinger of the future, “must lean heavily on pricey incentive payments – cash for completely a certain number of rides a week, say – to bring driver earnings above what typically amounts to around minimum wage.”

Wow! I’ll guarantee you, because I know many once upon a time Uber and Lyft drivers that join on the promise of higher wages, and they leave when they finally realize that paying for gas, their car, insurance, and then looking at their pay, it just doesn’t add up. Uber is stuck on a business model that is based on exploitation of workers, that business model, like most of the vaunted “gig economy” is unsustainable, because workers fooled at first, are not fooled forever when it comes to the empty pay envelope.

Uber and the rest of these companies are not a new model, but an old one. They are labor contractors trying to sweat workers with a new tool, but an old scam. This is a piece rate scheme. Some workers can make it, but most can’t. Worse, all of these companies are pushing off their responsibilities as employers to provide social security, unemployment and even bare bones benefits, but making the workers who are their lifeblood into subcontract labor. In Europe and some US cities, that part of the hustle is also falling apart as Uber is increasingly declared an employer.

Workers are being gigged by this model. The canary is dying in red ink. A business model that depends on exploiting workers is doomed, even if it takes some time to die.

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