Walmart and Downton Abbey: rampant inequality and detachment from reality
I’m not exactly sure what it is about the hit British TV series, Downton Abbey, that has enthralled so many of us. The scenery is great, Lady Mary’s wardrobe is just fabulous, but there are plot holes so huge one could drive Lady Edith’s car through them. I suspect the fascination it provokes has something to do with nostalgia – a hankering for a simpler time, when everyone knew their place and where the classes, though separate and unequal, were at least able to be polite to one other. Whatever it is that we find so charming about the series, however, we should try to keep in mind that the rampant inequality it celebrates is not something we should be hankering after.
America has its own real-life upstairs/downstairs thing going on at the moment, best embodied by the Walton clan, who own the lion’s share of Walmart Stores, Inc. Walmart is the single largest private employer in America with a work force of some 1.3 million. Each of the four Walton’s who have an interest in the stores increased their net worth by $7bn last year alone. Meanwhile, the company’s sales associates, who make up the bulk of the work-force, earn an average of $8.81 per hour – less than the federal poverty level for a family of four.
So it’s a bit like Downton Abbey on a bigger budget, most of which is allocated to the above the line players. While the Walton’s, with their occasional charitable doings and their apparent detachment from reality, seem to feel very comfortable in their role as modern day Lord and Lady Granthams, their poverty-wage workers seem less inclined to imitate the subservient behavior of their below-stairs counterparts. And that’s a good thing.
Today, Black Friday as it’s known among shopaholics, a slew of protests are being planned outside some 1500 Walmart stores across the country to demand better pay and work conditions. I can only imagine what Downton’s dowager countess (she, of “What is a weekend?” fame) would have to say if the workers at Downton Abbey dropped their pitchforks (or raised them perhaps) on one of the estate’s busiest days of the year. I’m sure she would be shocked at the ingratitude of the Walmart employees, particularly since at least one Walmart store was recently kind enough to organize a food drive for its impoverished workers so they could enjoy a decent Thanksgiving meal. It’s unlikely that the dowager would ever have come around to thinking that it might be better for everyone if the serving classes were given a chance to rise up the social ladder. But the Walmart bosses may someday learn that their disinclination to share the wealth may not be entirely in their best interests.
Although the Walton family made out like bandits last year and the outgoing CEO of Walmart Stores, Inc, Michael T Duke, took home nearly $20m in compensation, the company is not actually doing very well. The US stores have reported shrinking sales for three straight quarters. In a rare moment of clarity, the president and CEO of Walmart US, William Simon, attributed the drop in sales to the over stretched incomes of the low wage consumer the store typically attracts. He explained:
Their income is going down while food costs are not. Gas and energy prices, while they’re abating, I think they’re still eating up a big piece of the customer’s budget.
The irony, of course, is that by paying so many of its 1.3 million employees poverty wages, and setting a low bar for wages across the board, the company is eating into its customer base and thus may be contributing to its own decline.
Writing about this issue recently, former secretary of labor, Robert Reich, made the comparison with Henry Ford’s approach to wages. In an effort to boost sales of his Model T’s, Ford decided to pay his own workers triple the average factory wage of the time. Ford would be called a socialist if he were alive today, and no doubt was called worse at the time. His cunning plan did work, though. By raising the wages of his own employees, wages for factory workers increased across the board. More workers were then in a position to buy the product Ford was trying to sell them and he made a killing.
With so many workers in America today being paid so little that they can’t even afford to buy food, it’s no wonder that even low price stores like Walmart are suffering a decline in sales. For now, however, the company seems content with the Downton Abbey model of doing business, where the top 1% get to monopolize the wealth and the long suffering workers are expected to keep a stiff upper lip about it.
The problem with this economic model is that it tends to crash under its own weight. As Nobel prize winning economist, Joseph Stiglitz, wrote last year in Vanity Fair, if people like the Waltons (aka the 1%) are to survive and thrive, they should have the sense to know that “there would be no top of the pyramid without a solid base.” The best thing the top brass at Walmart could do to preserve their own privileged status would be to raise wages for their workers. A recent study by the progressive thinktank Demos illustrated that the company could afford to pay its workers an additional $5.83 an hour (pdf), enough to bring their wages just above the poverty level, simply by ending the company’s share-buyback program. This way prices could stay as they are but sales would increase as more workers would have more money to spend.
Even the dowager countess could get down with that scenario. So far, however, the Walton’s and their ilk have resisted such a move at every turn, preferring instead to loll around in smoking jackets a la Lord Grantham does while his estate collapses around him. Hopefully the workers, who have more to fight for, will not be so foolish or complacent.