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Citi Downgrades Wal-Mart over EFCA
My friend, Jane Hamsher, at Firedoglake has this gem today about a Citgroup analyst downgrading Wal-Mart because of possible passage of the Employee Free Choice Act. Jane runs through all the idiocy of this moment. First, the law isn't passed yet. Second, it would give workers more purchasing power probably helping Wal-Mart sales. I'd just add that only 7.5 percent of private sector employees belong to unions. That's going to keep falling because of the loss of manufacturing jobs. So if EFCA could increase union membership in the private sector by 50 percent, which would be a stunning achievement and hardly guaranteed byt the law's passage, you'd still have far fewer than the number in unions 25 years ago.
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Eric
"a Citgroup analyst..."
Of course, they are ALWAYS right, doncha know...
One of the subtle tactics of class warfare just got exposed.
By downgrading giant Mal Wart, all the other corporations are serving notice that they are more than willing to practice a scorched-earth policy against the middle class.
Either give up your unions and work for what we give you, or we will go belly-up and the whole world can suffer.
We'll be lounging in the sunshine on a Dubai beach. Or visiting the local children in the Virgin Islands.
March 10, 2009 4:17 PM | Reply | Permalink
I favor card-check, but this is thinly-reasoned. If it was certain that card-check would pass tomorrow, everyone would rate Wal-Mart lower. The increased compensation costs would far outweigh the increased purchasing power and would have an impact on profit. For the greater good if you ask me, but this tossed off reasoning is shoddy.
March 10, 2009 4:32 PM | Reply | Permalink
co-sign. It is jumping to wrong conclusions to ignore that WalMart's success and pricing has long taken advantage of it's non-union workforce. If the probability of unions is higher, companies that have profited from union busting would obviously profit less if forced to pay fair wages and benefits.
The macro economics of buying power for the masses cannot trump the micro reality.
March 10, 2009 4:45 PM | Reply | Permalink
"and would have an impact on profit."
But wouldn't those higher wages spur the WHOLE economy upwards? So, in the long run, doesn't that constitute an advantage even for Wal Mart.
You should rewrite that as "impact on short-term profits". Considering that Mal Wart, probably more than any other corporationin history, depends on the consumerism of the middle class.
Unions empower the middle class to demand a bigger share from the wealthy class. In doing so, it benefits that wealthy class immensely, by providing more disposable income to the biggest batch of prolific consumers in world history.
Which starts the cycle of commerce that eventually enriches even the rich.
But, this is a "merchant of Venice" conundrum; (I mean nothing ethnic by that) ...what matters more to these rich conservative ideologues? Their precious ducats or their personal political opinions?
When they are clearly willing to forfeit some of those ducats, in order to preserve an arcane political status-quo, then forget all the old models, there's a monkey-wrench in the works, and all bets are off.
March 11, 2009 12:15 PM | Reply | Permalink
Um, like I said ... for the greater good and I support it. Is it so hard to see the simple truth that card check will cause Wal-Mart stock to take a hit and therefore it is rational to reflect that possible reality as an analyst? Not that shocking.
March 11, 2009 12:59 PM | Reply | Permalink