Birthday Break

I am going to take a break from writing for tonight, and maybe tomorrow. July 28 is my 34th birthday. My 33rd year has been a tough one. My 34th will be better. This blog is close to a birthday as well. So its time for a break, I am working on a piece about the murder of “civilians” in “good” neighborhoods, but want to get it right. It will likely be the 1st writing of my 34th year.

Thanks for reading, watching and listening to bmore connected over the last year. New stuff will be on the way soon.

Inception, Imagination, and the Method of Politics.

I saw “Inception” this weekend. I won’t give to much away, but basically it is about the power of ideas, how they can come from a place you don’t know, and how others outside of the self can plant an idea that feels like your own. The concept is not lost on marketers, activists, politicians and others in the field of meme creation. Often I am one of those willing to explore the infinite possibilities bracketed off by the bounds of the politically possible, to push the boundaries of the now for the vision of the as of yet undreamed. I am a visionary, and pretty good at it.

But visions of the future disconnected from the method of getting there are simply fantasy, or at best theory. This is what separates the worth of dreaming a better world from the stagnant lamenting of a wish to return to a world that never was. The struggle for a living wage and a more humane politcal economy for Baltimore City is the kind of dream that can occur. The climate in this city is one that allows for the possibility of great things, things that can not only make life better for the people who live here, but also for people all around the world.

Baltimore is small enough to make things happen, and decimated enough by the politics of the status quo and the economics of the inhumane that its people are willing to give new things a try. These new things like Hamsterdam from the Wire or the original living wage legislation are risky, dangerous, and dirty at times, but in a city that has been through the worst, it may be possible that such things can happen, can work, and can blaze a trail for the millions of other people around the world experiencing similar inhumanity.

There are many good ideas for how to make this city better, but for them to be good ideas there has to be some method of making them happen. It may be that the city would benefit the most from a libertarian approach to politics, no government intervention, no taxes, trickle down economics, but these ideas might as well be ” give everybody some magic beans and a goose that lays golden eggs” they take no account for the political climate within the city, for the sense of actuation needed to turn policy into politics, or for the people who make up the body politic.

Ideas can grow from anywhere, take hold and change the world, but they must have the ability to be implemented. They must have a method, and they must take account for the possible, even if they seem unlikely or impossible at first. This is why living wage is so exciting. It can actually happen here, we can make it work. The laws of economics can be bent by the will and heart of a people, by the desire for a life better than this one, and by hard working dedicated people who can see with one, two, or three eyes to a future where no one works three jobs and still sees their family in poverty.

Sometimes in the least ideal situations the most amazing things are possible, and Baltimore is still alive today as proof of that. There are many ideas for making things better, but no matter how good the theory, or what the textbooks say, if you don’t have a method for making those ideas into reality then they are simply the idle chatter of the overly intellectual. Living wage failed, but people are starting to see the possibility of a better way, starting to see how to get there and starting to figure out how to make their dreams the reality of city that needs humane dreamers.

Writing Every Day

Writing and advocating are like sport, it requires regular practice to be good at it. Translating ideas into things that actually communicate are difficult tasks even for the best thinkers. Thank you to Andreas Spilly Spiliadis for reminding me to practice. To do it everyday, and to treat it like exercise or training. Watch, read, comment, tell me what you think. Lets get it.

Grassroots Public Policy Debate through Social Media-Who is the audience? Is anyone listening?


This week I spent a lot of time discussing, debating and advocating for the Baltimore City Living Wage. I did a lot of this using this blog and Twitter. But I also did alot of it in the streets, bars, corner stores, and other social media platforms that make up the country of Baltimore. It led me to doing a lot of thinking about the role of social media in creating the kind of public debate that can facilitate  the engaged discussion needed for popular democracy. One thing about these debates that has always struck me is that for most of the people willing to actually debate, there is little chance of changing their minds. @paul_stagg and @theprez98  for example, are great opponents for a twitter debate, but it is highly unlikely that either of them are going to change their minds. Likewise, as good of points as they make it is unlikely that when debating them I am going to change my mind on the topic of  debate, even if I am willing to rethink specific arguments.

Moments exist during this process that make me worried that these debates about local and national politics on Twitter are a waste of time. They might be fun, but are they informative? Do they shape the opinions of those that might be undecided, or are they just sport, in which the people who already have made up their mind cheer for the people that advocate their point of view? Similarly, when arguing with someone in a bar is there any chance you will persuade that person or is it simply the sport of argumentation?

I like to think that the sport of public argumentation is less for the arguers, and more for the spectators. Those willing enough to engage in public argument are probably not going to switch sides, but spectators can gain new understandings, new facts, and new perspectives. Two well informed discursive combatants willing to put themselves on the line for the benefit of the observing public can and do inform public opinion, but not in a way which has the immediate impact one might hope for.

To me the effect is more subtle, it is the momentary interruption of an elite based process of opinion formation, a moment in which you realize that expertise can be located in the people who might be next to you on the bus or that you may have started following because they shared a love of a local restaurant.  Measuring the impact of these moments of informative persuasion is of course difficult, but there are a few signs that the strategy may work. For example this week, a few people who I had never debated with before, or seen publicly debating began to engage in the arguments. Some with me, some with the many pulications tweeting articles this week, and others just simply with their friends. Joining the debate is the best sign to me that people are listening. Willingness to engage in public debate is a willingness to speak on behalf of one’s self and their community, a willingness to stop simply being comfortable, and a willingness to be vulnerable in public.

While the living wage died in committee this week, it inspired a lot of debate amongst a lot of segments of Baltimore, and this is good. This is part of the process we need to have if civic life in this city is to be energized and engaged, I certainly do not take credit for starting this debate but was excited to be able to engage it with the people of this city, and to watch many others actively voicing their opinions about city politics and economics..

Twitter Weekly Updates for 2010-07-25

  • Bmore Connected- Twitter Weekly Updates for 2010-07-18 http://dlvr.it/2lnLV #
  • Hot day to walk from the monument to 39th and greenmount, glad I did it in the morning #
  • @matt_gaylor me and the zoo, or the goats in reply to matt_gaylor #
  • @jeska_saur sure either I can do it or get you in touch with the people who I know who can help in reply to jeska_saur #
  • @rlibby01 totally legit…perhaps a compromise solution can be found? in reply to rlibby01 #
  • People's Hoop Party your smile slays days and children play and rhymes from this week pick up heat from the street,… http://dlvr.it/2pT7d #
  • What happened at read and cathedral, police everywhere, prints being dusted at kyro #
  • Bmore Connected- Help Baltimore Retail Workers Secure a Living Wage http://dlvr.it/2pgyF #
  • Chimney sweeps, preparing wait staff resumes, trying to find a do both that keeps bmore connected alive #
  • Gbc: I have read your criticism of the living wage bill. What is your alternative? #
  • Real data on living wage  http://bit.ly/a4bKN0 disproves many dire predictions #
  • Reading: expanding baltimore's black middle class. Workforce strategies for advancing prosperity #
  • @QueenB_IBe maybe, but I have to read something while the chimney sweeps work, and I have read all the struggle books on my shelf in reply to QueenB_IBe #
  • @QueenB_IBe beyond that though I'm not sure that the right move is maintaining economic apartheid based on a fear of co option in reply to QueenB_IBe #
  • @QueenB_IBe seems at least worth considering to expand economic opportunity and put the work into retain the politicization in reply to QueenB_IBe #
  • @QueenB_IBe I hear you, somethings in this report fight against the tendency you hilite, others think liberation comes only thru economics in reply to QueenB_IBe #
  • Coach of two intercollegiate national champion debate teams with a good deal of sm skill wants to work for you! Dm or @ to inquire #
  • @jeska_saur still don't know, anyone know why police were all over mt vernon last night in reply to jeska_saur #
  • @MDPolicy recognizing you are simply retweeting, but what data do you point to back up the claims in this article? in reply to MDPolicy #
  • @mdchamber when you post this what data are you relying on to feel confident supporting the claims made in this article? in reply to mdchamber #
  • Low walmart wages mean more big government "welfare" programs to their employees http://bit.ly/bTic6O #
  • With bmorelocal doing good (@ The Windup Space w/ @concertopera @baltimoregal) http://4sq.com/4BlkSk #
  • @mdchamber ill post what I think is some more objective less anecdotal evidence through the night, but I appreciate public arg so let's see in reply to mdchamber #
  • Bmore Connected- Some Data on Living Wage Bills/Walmart In Baltimore http://dlvr.it/2rZc3 #
  • People's Hoop Party Katrina you jerk this is a test to see if we can put up music http://dlvr.it/2sdR1 #
  • @MDPolicy I saw fry's arguments, they are better, but mostly focused on the belief that retailers will not come if the law is passed in reply to MDPolicy #
  • @MDPolicy some retailers may not, but many retailers (costco is a prime ex) are vol. in compliance because it makes a more loyal workforce in reply to MDPolicy #
  • @MDPolicy me too, but legal measures are required when the lack of voluntary compliance will hurt the community in reply to MDPolicy #
  • @MDPolicy walmart for example drives down wages,forces lower prices amongst competitors, shifts the burden to govt,when workers can't get by in reply to MDPolicy #
  • Bmore Connected- Big Box Living Wage Laws Level the Playing Field-Other Retailers Are Not Forced to Copy Walmart In… http://dlvr.it/2t4jH #
  • Bmore Connected- Living Wage Applied to Wal-Mart Would Benefit Low Income Workers & Shoppers http://dlvr.it/2t4jM #
  • Bmore Connected- WAL-MARTS model relies on indirect subsidies to compensate for the low wages it pays to employees http://dlvr.it/2t6Fn #
  • Bmore Connected- Wal-Mart’s Job gains are marginal and short term http://dlvr.it/2t6Fr #
  • Bmore Connected- WAL-MART Decreases Wages and Health Coverage for Other Local Retailers http://dlvr.it/2t6Fv #
  • Bmore Connected- Costco proves that higher wages decreases turnover and increases productivity http://dlvr.it/2t6Fg #
  • Bmore Connected- WAL MART drives down retail prices and profit margins for other retailers in areas it moves into http://dlvr.it/2t6Fk #
  • Good list of living wage resources http://laborcenter.berkeley.edu/livingwage/resources.shtml #
  • Bmore Connected- The Cheap labor model is costly to taxpayers, cuts consumer spending and spurs working poverty http://dlvr.it/2t7jM #
  • Bmore Connected- Costco proves high wages lead to loyal and productive workforces http://dlvr.it/2t7jJ #
  • @juliemore any word on where warren branch is on living wage bill #
  • Santa Fe New Mexico has a living wage bill and a walmart or 3. Retailers need the market they will still come http://bit.ly/9fjP3p #
  • @Juliemore thanks, let's see what he does tomoRrow in reply to Juliemore #
  • @Juliemore I think he is in an interesting spot after the bottle tax vote, wanna see where he goes on this…i live in mpc district, in reply to Juliemore #
  • People's Hoop Party Philosophy and Violence: Part Two http://dlvr.it/2vWW3 #
  • Living wage hearing today! Let's get it baltimore. this is our city, and we should demand retailers care about our people. #
  • @Juliemore I am ! in reply to Juliemore #
  • @JayHazel301 I think baltimore city was the first in 94 to require it for city contracts? in reply to JayHazel301 #
  • @BaltimoreGal check out baltimorecan.net to see how you can make that happen! in reply to BaltimoreGal #
  • At city #
  • At city hall for for labor hearing on living wage union presence growing…waiting to go in #
  • Here we go. Let's get it done for the people, labor and community turnout really strong. #livingwage #
  • Bdc says no, but as of yet has made no argument in 5 minuts #
  • Bdc is saying no because they have done a bad job at being the bdc #livingwage #
  • Bdc also has no idea how many businesses this would effect #livingwage #
  • Does bdc need a researcher, ill be glad to help out #
  • Hey warren branch, did you just cut off a leader of build so you could let the bdc guy go for 15 minute, have fun in 2012 #livingwage #
  • Goodwill speaking now, apparently they want to keep people in poverty, maybe that's how they keep their funding. #
  • Goodwill just said the people they work worth are basically not good enough for livable wage. #goodwill you are on notice #
  • Shoppers worker says loyal workers equal better profits #livingwage #
  • Middle class families need cheap retail, these families are key to the city, but her heart goes out to the low income workers #livingwage #
  • Naacp says the city needs to hold retailers accountable if they want to come here #livingwage #
  • Young person speaking saying anyjob is good, vote no #livingwage #
  • Ufcw worker says can not afford to buy what they sell #livingwage #
  • Md minority contractors say no, because of construction loss… #livingwage #
  • municipal employees say yes because it will help increase spending power, its not just moral its econonomicly beneficial #livingwage #
  • councilman craft seems to say we should build for young families on the back of surplus cheap labor #livingwage #
  • Warren branch, seriously you are the chairman of the labor cmtte, why don't you know what the city contractor living wage law is now #
  • Santonis says, we can't make it on 2 per cent margin, we give good benefits…but living wage shuts us down. #livingwage #
  • @Juliemore can that be the story in the sun tomorrow, if not we can be on it right @rdfoxworth in reply to RDFoxworth #
  • How is living wage hearing #
  • @Juliemore warren no belinda yes? in reply to Juliemore #
  • @Juliemore yup, especially given that he is in charge of the labor subcommittee and he didn't know stuff about labor in reply to Juliemore #
  • @BaltimoreGal @bmoreloc #livingwage while organizing in his district! in reply to BaltimoreGal #
  • @bmoreloc you know, when you have bad arguments, refer to holocaust in reply to bmoreloc #
  • @bmoreloc are you all at wind up? in reply to bmoreloc #
  • @OutTheBoat they said their people could never earn a living wage(poverty level) seems like a reason they should support in reply to OutTheBoat #
  • @bmoreloc sure I have plenty of free time in reply to bmoreloc #
  • Does anyone have the quotes from goodwill #baltimore #livingwage #
  • @goodwillint #
  • @goodwillintl please explain why the people you work with don't deserve to make living wages. #
  • Rt:@Juliemore: Councilwoman Clarke just told me she's hopeful that the living wage bill can be resurrected. The 94 law took 18 mos to pass #
  • @visionspeaks just don't halfway cook the chicken in reply to visionspeaks #
  • Stuck in a jobless vortex #
  • Searching for jobs, all day #
  • @NashLawFirm Thanks for the #ff shoutout in reply to NashLawFirm #
  • People's Hoop Party fruit the rhyme tree flea flicker sticker, love choose growth blues nicker, kiss distance… http://dlvr.it/2xY3J #
  • People's Hoop Party more music about windows and moods http://dlvr.it/2xbw1 #
  • Still looking for direct quote from goodwill testimony from #livingwage hearing yesterday, anybody have it? #
  • The tired, untrue, and fear based arguments of the #livingwage opponents have not grown in over a decade, eventually this will be their loss #
  • Middle class families should not build their desire for city retail by exploiting cheap surplus labor. #livingwage #
  • Low wage Jobs for 16 year-olds should not come at the expense of working adults. #livingwage #
  • The retailers are not coming to #baltimore because of the work of the gbc or the bdc, but because they have saturated the suburban mkt #
  • Low price-low wage retailers drive down wages and hours and profit margins for existing retailers #livingwage #
  • An extra 3 dollars an hour is likely 2 an hour going back into the economy, consumer spending is good for everybody. #livingwage #
  • Well paid employees stay on the job longer, this save business money in turnover costs #livingwage #
  • Baltimore acts like a socially awkward guy at the bar, convinced that any business that wants to talk is the best they can do. #livingwage #
  • Hey santoni,fry, branch. Live on 7.50 an hour with no guarantee of hours week to week. #
  • Low cost low wage retailers destroy the manufacturing sector by driving down wages at home and abroad, no mkt for us made goods #livingwage #
  • @mobtowngeorge @ExploreBaltCo @bmoreloc #livingwage this is extortion, let's find a different developer, put in a costco, and all benefit in reply to mobtowngeorge #
  • It does not help the city or the state to attract developers who think public assistance is a benefits package #livingwage #
  • Back to job search #
  • @theprez98 #livingwage according to a study on walmart the avg worker would take home 5g more a year avg customer would spend 89$ more a yr #
  • @theprez98 #livingwage what do you mean, unemployment is higher now than at the time of the study or that living wage will increase unemploy in reply to theprez98 #
  • @theprez98 #livingwage if the latter can you point to the data source, cause none of what I have seen bears that out, #
  • @theprez98 santa fe shows that big retail gained employment after second wage hike compared to county and state, in reply to theprez98 #
  • @theprez98 chi shows that big retail cost .6 jobs for each created in first year and 1 to 1 a year out, but at lower wages in reply to theprez98 #
  • @theprez98 because big retailers who pay low wages have a downward pressure on competitors profits, wages, and hours. in reply to theprez98 #
  • @theprez98 I hate this textbook economics argument, it is not borne out in policy implementation that cleanly ,lets talk emperics not theory in reply to theprez98 #
  • @theprez98 maybe in the short term, but its bad for consumer spending, and bad for wages in the longterm in reply to theprez98 #
  • @theprez98 yes, but with caveats, but go ahead in reply to theprez98 #
  • @theprez98 1)the retailers the city is trying to attract use scale and buying power to drive down prices. Competitors have to respond in reply to theprez98 #
  • @theprez98 which means that other biz has their profits eaten by big retailers in reply to theprez98 #
  • @theprez98 2)turnover decreases with higher wages, which decreases hiring costs and increases productivity and customer loyalty in reply to theprez98 #
  • @theprez98 3)exemption for benefits creates healthier workforce, which decreases productivity loss and public expenditure in reply to theprez98 #
  • @theprez98 or less profit, margin is better spread the bigger the retailer. in reply to theprez98 #
  • @theprez98 but that's only shortterm, by not depressing the wages of competitors consumers across the market have more to spend #
  • @theprez98 I'm surely playing offense in order to secure defense, I don't think it creates I think it is good econ policy that doesn't cost in reply to theprez98 #
  • @theprez98 I think targeting sectors that profit off of other sectors and depress wages is scary but needed, either way thanks 4 the debate in reply to theprez98 #
  • @theprez98 let me reword, low price low wage retailers have a unique impact on a local econ, only govt can level plaYing field in reply to theprez98 #
  • Secured two interviews and another prospect for next week, good day on the job front #
  • Chicago wal-mart deal is falling apart, this is why legislation is a necessity for #livingwage #
  • @theprez98 yes, I like having the debate though, thanks for the civility in reply to theprez98 #
  • @bmoreloc let me know a time we can talk #
  • People's Hoop Party some songs from the band Jefferson Forklift http://dlvr.it/2yFJH #
  • Warren branch says temp city workers should get living wage first. Sure, make that happen, quickly, then pass it for workers at maj retail #
  • @BiteSizeDiva yeah non taxed should be what they are called in reply to BiteSizeDiva #
  • #Livingwage opponents:the floor is yours, what is your alternative to help those on the bottom of the baltimore economy? #
  • I am hula hooping tomorrow at waverly mkt join me 7-noon #
  • @jeska_saur don't let that happen in reply to jeska_saur #
  • @Paul_Stagg what is your method for making that happen in baltimore? in reply to Paul_Stagg #
  • @Paul_Stagg right, I get that, but how in this city are you going to elect a city council with that approach in reply to Paul_Stagg #
  • @Paul_Stagg funny, but do you have an actual policy answer relevant to the political reality of baltimore? in reply to Paul_Stagg #
  • @zackpund #livingwage decreases the ability of employers to consider public assistance a benefits package in reply to zackpund #
  • @jeska_saur make sure you succeed in reply to jeska_saur #
  • @Paul_Stagg I disagree with the strat but am willing to listen, how do you convince voters to support? in reply to Paul_Stagg #
  • @Paul_Stagg this is what I don't ,isn't a decrease in poverty in your interest as a property owner, why then no solutions that could work? in reply to Paul_Stagg #
  • @zackpund so its all to the good then? in reply to zackpund #
  • @zackpund like? in reply to zackpund #
  • @zackpund fair enough and we probably agree on hc in practice in reply to zackpund #
  • Bmore Connected- The living wage bill and my own struggle for a (living) wage. http://dlvr.it/2yQGr #
  • #ff @zackpund @misterperturbed @Paul_Stagg @jeska_saur @bitesizediva @theprez98 @nicegrl99 @NashLawFirm @bmoreloc @visonspeaks #
  • #ff @outtheboat @Juliemore @mobtowngeorge @BaltimoreGal #
  • Alright good people of Twitterland, home with the gf, gonna pay attention to her instead of tweet-debating all night. #
  • Wow its hot outside, but the hula hoops had to be sold…time to cool down a bit #
  • @Paul_Stagg I guess what I am trying to ask is how do you make that a viable political solution, which candidates should get support etc in reply to Paul_Stagg #
  • The #livingwage in baltimore city is not a perfect solution, but as far as viable changes to the status quo it is very good one. #
  • @Paul_Stagg I think that has been my argument against your strategy for the last 36 hours;) in reply to Paul_Stagg #

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The living wage bill and my own struggle for a (living) wage.

The Baltimore City Council-Labor Subcommittee defeated a bill yesterday that would ensure a living wage of $10.59 per hour to workers at retailers with $10 million a year in annual revenue. The bill, Council Bill 10-0505 , sponsored by Councilperson Mary Pat Clarke of Baltimore’s 14th district, would have brought full time retail workers to a wage rate which would have allowed them to make wages equivalent to the federal poverty level for a family of four.

Major businesses and the interests they serve defeated the bill by banking on an argument that it would hurt the economy, dissuade retail from coming into the city, and cut jobs and wages. While most of these arguments were not backed up by any particular data, fly in the face of the empirical, and take as a given that poverty must be a part of the life of working families in the city,  they prevailed. There will be time enough to answer these tired and untested arguments, as Councilperson Clarke has suggested she will continue the effort to pass the bill, and in time( if yesterday was any demonstration), the people, workers, and communities that need this the most will be able to organize and win.

I have always been dedicated to the value proposition behind living wage and workers justice, but for the last year the issue has taken on an urgency that is driven by self interest. In the summer of 2009 the youth entrepreneurship non-profit organization that I was working for was forced to close it’s doors due to the economy. I have been looking for work at almost every point since then. I have a lot of skills that i have developed over a decade of community and non-profit work, but I, like many workers, do not have a college degree.

I have submitted over 200 job applications, I have applied for everything from non-profit positions to cashier jobs at major retailers. On occasion I have gotten callbacks, interviews, and even offers. Many of the offers have been for minimum wage retail positions, these are not jobs I am against taking, but there is a basic standard of income I need to make in order to keep the lights on, insure and gas up the car I would need to drive to work, and make sure I have a roof over my head. While at points in the process my pride has been the factor that  led me to turn down options, for the most part what has forced me to say no is the inability to live on the wages and in the conditions that have been offered.

I am not against working multiple jobs, I understand this is the way many working class people get by, and in fact this has been my strategy.  But it is a buyers market out there, employers demand acceptance of variable hours, variable schedules, and are not eager to make positions full time for fear of paying benefits. $7.75 an hour is better than no employment, but when it does not guarantee a budgetable number of hours in any given week, and precludes you from getting another job either by mandate or by schedule variability it becomes almost impossible to survive.

I also have looked into AmeriCorps a program often touted recently as a way to get job training, or to shift careers, but these positions also pay an unsustainable wage, a living stipend of $13,000 is the typical offer.

How anyone is supposed to sustain on these wages is beyond me. The federal poverty level, which both the minimum wage and the AmeriCorps stipend are below, is not a sustainable living. Well beyond sustainability, and perhaps more importantly to this discussion, these wages do not provide the people working them with the money they need to spend at local and national businesses. Consumer spending is the only way the recession is going to end, and the economy is going to turn around, but with zero extra dollars to spend the workers and unemployed persons like myself will neither take part in the recovery or be able to shop at the retailers the city is trying to attract.

Why would retailers want to come to a city where a vast swath of the population has no ability to spend at their stores? Furthermore why would the city want retailers to come in who will only serve to drive down wages further? They wouldn’t, and they wont. The living wage may not be the immediate solution to the problems facing the City of Baltimore, but theses wages are a part of long term strategy that must be undertaken, to push the city toward a humane economics.

My question for the opposition is not why do you oppose a living wage, but what is your alternative? More of the stratification and poverty that has plagued the city since the manufacturing base left, more catering to the middle and upper class, more building the comfort of the few on the backs of many?

Living wage is not the silver bullet that will make Baltimore what it once was before these interests destroyed it, but is a start, and it is a means to show the working people of the city that the powers that be care, that they get it, and that they think that Baltimoreans who live on unsustainable wages matter.

If those Baltimoreans do not actually matter to the powers that be( through deeds and actions, not just platitudes) then it is time to organize an make sure new people get to make decisions for the city. There is an election coming up in 2011/12 and we should remember who failed us this time and every time.

Costco proves high wages lead to loyal and productive workforces

http://www.businessweek.com/magazine/content/04_15/b3878084_mz021.htm

Bloomburg Business Week, April 12 2004

Given Costco’s performance, the question for Wall Street shouldn’t be why Costco isn’t more like Wal-Mart. Rather, why can’t Wal-Mart deliver high shareholder returns and high living standards for its workforce? Says Costco CEO James D. Sinegal: “Paying your employees well is not only the right thing to do but it makes for good business.”

Look at how Costco pulls it off. Although Sam’s $11.52 hourly average wage for full-timers tops the $9.64 earned by a typical Wal-Mart worker, it’s still nearly 40% less than Costco’s $15.97. Costco also shells out thousands more a year for workers’ health and retirement and includes more of them in its health care, 401(k), and profit-sharing plans. “They take a very pro-employee attitude,” says Rome Aloise, chief Costco negotiator for the Teamsters, which represents 14,000 Costco workers.

In return for all this generosity, Costco gets one of the most productive and loyal workforces in all of retailing. Only 6% of employees leave after the first year, compared with 21% at Sam’s. That saves tons, since Wal-Mart says it costs $2,500 per worker just to test, interview, and train a new hire. Costco’s motivated employees also sell more: $795 of sales per square foot, vs. only $516 at Sam’s and $411 at BJ’s Wholesale Club Inc. (BJ ), its other primary club rival. “Employees are willing to do whatever it takes to get the job done,” says Julie Molina, a 17-year Costco worker in South San Francisco, Calif., who makes $17.82 an hour, plus bonuses.

The Cheap labor model is costly to taxpayers, cuts consumer spending and spurs working poverty

http://www.businessweek.com/magazine/content/04_15/b3878084_mz021.htm

Bloomburg Business Week, April 12 2004

Yet the cheap-labor model turns out to be costly in many ways. It can fuel poverty and related social ills and dump costs on other companies and taxpayers, who indirectly pick up the health-care tab for all the workers not insured by their parsimonious employers. What’s more, the low-wage approach cuts into consumer spending and, potentially, economic growth. “You can’t have every company adopt a Wal-Mart strategy. It isn’t sustainable,” says Rutgers University management professor Eileen Appelbaum, who in 2003 edited a vast study by 38 academics that found employers taking the high road in dozens of industries.

Costco proves that higher wages decreases turnover and increases productivity

http://www.businessweek.com/magazine/content/04_15/b3878084_mz021.htm

Bloomburg Business Week, April 12 2004

Surprisingly, however, Costco’s high-wage approach actually beats Wal-Mart at its own game on many measures. BusinessWeek ran through the numbers from each company to compare Costco and Sam’s Club, the Wal-Mart warehouse unit that competes directly with Costco. We found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco gets lower turnover and higher productivity. Combined with a smart business strategy that sells a mix of higher-margin products to more affluent customers, Costco actually keeps its labor costs lower than Wal-Mart’s as a percentage of sales, and its 68,000 hourly workers in the U.S. sell more per square foot. Put another way, the 102,000 Sam’s employees in the U.S. generated some $35 billion in sales last year, while Costco did $34 billion with one-third fewer employees.

WAL MART drives down retail prices and profit margins for other retailers in areas it moves into

There are ongoing discussions in the United States about the effects of Wal‐Mart’s low wages on retail workers. You’ll hear more about this later today, as well as the dampening effect of Wal‐Mart on labor organizing. The effects of Wal‐Mart on retail workers and domestic suppliers are painfully apparent to those who to take the time to look.

Wal‐Mart’s business model does bring prices down. A study of 165 cities between 1982 and 2002 found that the entry of Wal‐Mart led to retail prices falling by 1.5 to 3.0 percent in the short‐run to four times as much in the longrun. But, Wal‐Mart’s business model also has a host of undesirable effects. The entry of Wal‐Mart into a community is associated with, among other things, losses of small, family‐owned business,  a higher growth of poverty (or slower declines in poverty reduction), greater expenditures of public benefits for low‐wage workers, and environmental degradation.