I & I Editorial
When Bernie Sanders crashed Walmart’s shareholder meeting Wednesday and lectured executives on how they should run their business, CEO Doug McMillon should have laughed him out of the room for his ill-informed claims and for pushing a minimum wage hike that would hurt the very people it’s supposed to help.
Instead, McMillon waved the white flag.
He told the company’s owners that the current federal minimum wage is “too low” and that “it’s time for Congress to put a thoughtful plan in place to increase the minimum wage.”
Let’s look at what Sanders claimed in his remarks.
Right off the bat, he displayed his ignorance of how publicly traded companies work. “Despite the incredible wealth of its owner,” Sanders said, “Walmart pays many of its employees starvation wages.”
Owner? Singular? Walmart’s owners include people saving for retirement, its own employees, and plenty of other people who aren’t even as rich as three-home-owning millionaire Bernie Sanders. Heck, Sanders was at that very moment speaking to a room full of Walmart owners.
Sanders went on to claim that Walmart’s wages “are so low that many of these employees are forced to rely on government programs like food stamps, Medicaid, and public housing in order to survive. “
The source for this claim was one unreliable study done in one state. And it ignores the fact that, even if some Walmart employs do rely on one government program or another, the company pays billions of dollars in taxes each year, which means it’s helping fund those programs, not sucking them dry.
Sanders goes on to talk about how big and profitable Walmart is, and “surely with all of that, Walmart can afford to pay its employees a living wage of at least $15.”
He apparently doesn’t understand the difference between revenues and profitability.
Walmart is the biggest company in the U.S. in terms of revenue, no question about it. But in terms of profitability, it ranks 40th on the Fortune 500 list. And on a per-employee basis, Walmart ranks 99th. Ironically, the company that has the highest profits per employee is Fannie Mae, which is a government-sponsored enterprise.
Measured against revenues, Walmart’s profit margin is a tiny 1.3%. That’s well below companies liberals love, like Starbucks (18.3%), Apple (22.4%), and Costco (2.2%).
So the idea that Walmart has piles of cash sitting around that it can shower on its workers while continuing to run as a profitable business is another ill-informed myth.
Sanders also seems unaware that after President Trump’s tax cuts went into effect — tax cuts Sanders vows to repeal if elected — Walmart boosted its starting wage to $11, expanded maternity and parental leave benefits, and gave cash bonuses of up to $1,000 to employees based on their years of service.
Now, to be fair, Bernie Sanders is a socialist who has never held a steady job in the private sector in his long life. So it’s not surprising that he doesn’t understand how businesses work, even if he does think he could run them better.
But what is McMillon’s excuse?
Rather than meekly agreeing with Sanders that the federal minimum wage should be hiked, why didn’t he use the opportunity to educate Sanders, and the public, about the immutable economic law of supply and demand. If the government forces the price of something up — in this case, unskilled labor — demand will go down.
That’s why researchers found Seattle’s minimum wage hike lowered the average income of minimum wage workers, who found their jobs and hours cut as a result. And it’s why right now there’s a deep recession among restaurant workers in New York City after it boosted the minimum wage to $15.
McMillon also could have explained to Sanders that, no matter what the government decrees, the real minimum wage is always zero.
Which is what many Walmart employees will be earning if Walmart executives start taking advice from Bernie Sanders.
— Written by John Merline
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