Think that’s a fluke? Profits per employee jumped another 22 percent in 2011. That’s as layoffs reached record heights and 312,000 jobs were eliminated. The year 2011 also marked another record year of profits for U.S. companies. Not only did Fortune 500 corporations pocket a record $824.5 billion, they generated earnings at a rate 23 percent percent higher than the historical average. By the end of that year, Apple alone had $76 billion in the bank, after generating a profit amounting to half a million dollars per employee.
Tell me again that this was a hard year. The economy is bad only in that we've allowed the economy of corporations and the economy of real, living human beings to become totally disconnected.
It’s one thing to say that middle class wages are stagnant while those of the top 1 percent are continuously growing, but there’s a deeper, more fundamental flaw in our current notion of capitalism: Everyone understands that profit is good, but no one seems to understand what profit is for. We’ve constructed a set of standard practices that would not only make Gordon Gekko blush, they’re self-destructive. American capitalism is profiting itself to death.
Few companies are as emblematic of the New American System as is Walmart. The company that in 2011 generated more revenues than any other, the company that is now the largest food retailer in the world is the same company that recently encouraged donations of food to its own employees. It’s also a company that, putting aside any losses generated when it replaces smaller, local stores, causes a net loss to every community it enters in the form of increased tax revenues needed to support the underpaid employees. Walnart not only counts on taxpayer dollars to subsidize its “low cost” stores, it counts on that same taxpayer dollars to drive its business. Walmart employees not only need food stamps to get by, Walmart is the largest place where those food stamps are redeemed. It’s a cycle that grinds employees (and communities) relentlessly down, while driving Walmart revenues just as consistently up.
Of course, it doesn’t have to be that way.
While Walmart may be the corporate expression of the darkest timeline, Costco shows that it’s not required to be a corporate ass to be profitable. Costco workers start at a salary of over $11 an hour—a modest amount, certainly, but an amount that most Walmart employee never attain even after years of labor. The average Costco worker makes almost twice that amount on an hourly basis, and Costco workers also tend to work normal work weeks, with all the benefits that implies, rather than the truncated working hours Walmart imposes to keep employees just shy of such extravagances as health care or paid leave. Costco executives also make a much more reasonable sum compared to the corporate profits. Put it all together, and the CEO of Costco makes as much as 48 workers earning the median wage—a rate that’s high by historical standards, but downright Spartan compared to the situation at Walmart where the CEO pulls in the pay of 796 average workers (a shameful rate that is closely matched by the 645 employees it would take to reach the pay awarded the CEO of Target).
Walmart's unending quest to inflate its profit by any means is such that it scrambles to find elaborate schemes to deny the wages promised to workers who sacrifice their holidays to the corporate coffers.
The most shameful thing out of all these numbers may be this: Walmart could quite easily afford to pay its workers a living wage. It could do so without threatening its ability to operate. It could do so without slowing its relentless expansion. It could do so without residing its prices one dime. Walmart has ample ability to pay its workers more, because it's not just profitable, it's massively profitable.
If Walmart were to pay all of its employees a living wage—not a poverty rate, but something more like the $45k average that Costco workers earn—if it did that, Walmart's corporate profits would have declined last year from $17 billion, to a mere $12.5 billion.
But this isn't just a Walmart story, it's an American story. Not so long ago, American corporations accepted the idea that they had obligations to their stockholders, but also to their workers and the communities where they did business. They understood that profit was a tool, a fuel that powered the corporation to achieve its goals. But now profit is the goal. It's been fetishized beyond all reason. Many people will even tell you that there's a law requiring companies to generate as much profit as possible. There is no such law. There never was. And the only thing more insane than believing that such a harmful law might exist, is that many seem to think it's a good idea.