Bad news out of Bentonville. On Thursday, Walmart, the American retail behemoth, announced that it had slumped through another quarter. Sales were sluggish, and a Walmart executive said the company was downgrading expectations for the rest of 2013. The reason? “The customer doesn’t quite have the discretionary income, or they’re hesitant to spend what they do have,” said Charles Holley, Walmart’s chief financial officer.
There is a cutting irony at play here. Yes, one effect of the great recession was to put many people out of work, or to relegate them to part-time status. And yes, the expiration of the payroll tax cut earlier this year took money out of the pockets of millions of Americans. Yet wages for working Americans flatlined long before the financial crisis, and Walmart is one reason for that. Because of its size and buying power, Walmart sets the standard for much of the big-box retail industry and the retailer is infamous for paying low wages. The company says the average wage for a full-time Walmart worker in the U.S. is $12.78 an hour, but the business research firm IBISWorld pegs it at closer to $9. In addition, it generally allots its “associates” less than 40 hours of work a week. In Washington, D.C., Walmart has threatened to cancel plans to build three new stores and possibly close three more stores due to open if the city passes an ordinance mandating that the retailer pay a “living wage” of $12.50 an hour.
In other words, the type of person who shops at Walmart today has less money to shop at Walmart — because of, among other things, Walmart.
Today, Barbara Garson, author of the book Down the Up Escalator: How the 99% Live in the Great Recession, writes about how the tactics Walmart has used for years to cut costs and goose profits – cutting employees’ hours and keeping wages down – are spreading as the U.S. economy limps back to health. It’s nothing for the executives in the corner offices to fret about: after all, Walmart CEO Mike Duke earned $20.7 million in 2012, a sum so large it would take a Walmart employee earning $12 an hour 785 years to match Duke’s compensation. So it goes in post-recession America. Andy Kroll
Abracadabra: You’re a Part-Timer
How Corporate America Used the Great Recession to Turn Good Jobs Into Bad Ones
By Barbara Garson
Watch closely: I’m about to demystify the sleight-of-hand by which good jobs were transformed into bad jobs, full-time workers with benefits into freelancers with nothing, during the dark days of the Great Recession.
First, be aware of what a weird economic downturn and recovery this has been. From the end of an “average” American recession, it ordinarily takes slightly less than a year to reach or surpass the previous employment peak. But in June 2013 — four full years after the official end of the Great Recession — we had recovered only 6.6 million jobs, or just three-quarters of the 8.7 million jobs we lost.
Here’s the truly mysterious aspect of this “recovery”: 21% of the jobs lost during the Great Recession were low wage, meaning they paid $13.83 an hour or less. But 58% of the jobs regained fall into that category. A common explanation for that startling statistic is that the bad jobs are coming back first and the good jobs will follow.
But let me suggest another explanation: the good jobs are here among us right now — it’s just their wages, their benefits, and the long-term security that have vanished.
Consider the experiences of two workers I initially interviewed for my book Down the Up Escalator: How the 99% Live in the Great Recession and you’ll see just how some companies used the recession to accomplish this magician’s disappearing trick.
Ina Bromberg genuinely likes to outfit people. Trim and well dressed herself, Ina sells petites at the Madison Avenue flagship store of a designer brand boutique with several hundred outlets. Even I had heard of the label. I had to ask what its exact place in the fashion hierarchy was, though. “We fall into a niche below Barney’s-Bergdorf-Chanel,” she explained.
In the course of a 20-year career, Ina, now in her sixties, had been the company’s top-earning national sales associate more than once. Her loyal clients return each season saying, “You know what I like. What have you got for me?”
When I first met her during the Great Recession, however, her hours had been cut back. “They’ve moved the entire sales staff onto flexible schedules,” she explained. “On Thursday, we are told what our schedule will be for the following week. When they told me my new hours that first week, it was down to ten. I said, ‘Why don’t you just lay me off? I can collect unemployment.’ And [my boss] said, ‘No, no, it won’t be this way every week.’”
“Maybe this is their way of sharing the work in order to keep the experienced people till the recession is over,” I suggested. That used to be standard practice during a downturn.
Ina didn’t think so. She referred me to an article about her firm on a fashion website. “Read the responses,” she said. “These are by people who worked in the office — probably not anymore. They say that in some of the stores they’ve taken all the full time people and made them part-time. And with that, there’s no more sick days, no more vacation days, no more commissions for anyone. They say they’re going to do that to all the stores, even New York.”
“Do your managers claim that the short hours are just for the recession?” I asked. “Do they thank you for making sacrifices till business picks up?”
“Not that I ever heard,” Ina answered. “I think — and I’ve been saying this for a year and a half — their ultimate goal is to have all part-time sales people working shifts of four-and-a-half hours. That way they’re not responsible for lunch, they have a lot of bodies, they pay no commissions, no benefits, and it’s a constant turnover. This is what I think they want even after the recession because,” here she leaned in as though to reveal a secret, “they haven’t stopped hiring people.” She checked to see if I grasped the significance of that.
I did and so did her fellow saleswomen, but it’s hard to go job-hunting during a recession. While a few of the old professionals had already left, most were holding on, chewing over any bits of information they could pick up that might indicate management’s intentions. “In our store we know they’ve continued the health benefits until March,” Ina said. “What will happen after is what we’re trying to find out.”
Eventually, the company broke the suspense. Managers called the remaining full-timers into the office and gave them two choices. They could take a small severance package and collect unemployment or they could stay at truncated versions of their old jobs if they wished, but as part-timers with no benefits and no commissions. In a way, the company had made government unemployment benefits a part of its buyout package. They were saying, in effect: you go voluntarily and we’ll agree that we laid you off.
Four years after the official end of the recession I interviewed Ina again. She was the only one of the former sales staff still working there. Her earnings were less than a quarter of what they’d been a few years earlier.
“I can afford to retire,” she assured me. “In a way, I already am. I just like coming out of the house and seeing my regular customers. But everyone who had to support themselves left. All the new people are young,” Ina complained. “They have no commitment to the job. They skip days whenever they feel like it.
“But why shouldn’t they?” she said suddenly, reversing her judgmental tone. “It used to be if you missed a day, you missed a chance to earn commissions. It mattered. But at nine or ten dollars an hour, if they have something else to do they skip it.
“The job is only worth it if you’re a college student and the hours are a perfect fit for your schedule. If that changes the next term, they leave. And it doesn’t seem to make a difference to the company. They treat employees like nothing now. I don’t mean it has to be a family, but it isn’t even a team.”
I recently checked her company’s website under “careers” and it was true; they were advertising for more than 70 sales assistants for their various North American stores. All but one of the positions was listed as part-time. The sole full time job happened to be in Canada.
In other words, under the shadow of the recession, the company hadn’t sent jobs offshore or eliminated them. It had simply replaced decently paying full-time employment, including benefits, with low-wage, contingent employment without benefits. It had, that is, pulled the old switcheroo, turning good jobs into bad ones on premises.
Entering the Freelance Life
Here’s how the same magic trick works a little higher up the food chain.
Greg Feldman was a full-time professional doing computer graphics for an educational publisher which produces test preparation materials for school districts. One day during the recession, his company laid off some 20 staffers including him. As far as I can tell, its business wasn’t declining. (Standardized test prep must be one of the last things desperate school districts cut.)
“When I got home I went into panic mode,” Feldman remembered. “I said I better redo my resume before the weekend. And I did. But there were a couple of openings I could have applied for that day — one full time, one long-term temp. But I waited till after the weekend to send it in. That was in November  and this is February . I’m on the websites every day and I haven’t come across any other regular staff positions since those two.”
Four years later Feldman was piecing together his living by combining a steady but low-paying part-time job with freelance gigs. He still considers himself unemployed. Whenever we speak he enumerates the new computer graphics programs he’s mastered and asks me about job leads.
But is Feldman really unemployed by post-recession standards? He may not have a full-time job with his old company, but neither does just about anyone else who did the work he used to do for them. It’s by no means impossible, I once suggested to Feldman, that he himself might wind up working for his old firm through a subcontractor.
“Possible but not likely,” he answered. “What I heard is that they send that work overseas now.”
The Good Old Switcheroo
When America’s industrial workers were hit hard in the 1970s and 1980s, the excuse for breaking their unions, lowering their wages, and outsourcing their work was that we had to compete with foreign manufacturers. But not to worry, it was then suggested, there might be tough times ahead for a few blue-collar troglodytes who couldn’t be retrained, but the rest of us would soon be data manipulators in a booming postindustrial society.
Feldman is as postindustrial as you can get and his former company doesn’t even compete with foreign firms. It seems, though, that corporate headquarters no longer needs excuses or explanations to make workers cheaper and more replaceable.
The recession itself certainly doesn’t explain such job transformations. Traditionally, during recessions employers reduced hours or laid people off in a way that would enable them to reconstitute an experienced work force when business picked up. In the meantime, they competed on price and took less profit. As a result, the share of national income that went to owners and investors used to decline during such periods, while the share that went to workers actually rose.
No longer. Ina’s and Greg’s employers used the downturn to dump entire departments and reorganize themselves so that the same work, the same jobs, requiring the same skills, would henceforth, in good times and bad, be done by contingent workers. Many other companies seem to be doing the same thing. One sign of that: during the course of the Great Recession corporate profits went up by 25%-30%, while wages as a share of national income fell to their lowest point since that number began to be recorded after World War II.
According to the latest Labor Department figures, 65% of the jobs added to the economy in July 2013 were part-time. The average hourly wage fell slightly. Interpreters of those statistics will make it sound as though it’s simply a matter of factories firing and burger joints hiring. That, at least, would be a situation that could be reversed over time. If, however, golden jobs are being transmuted into lead by the reverse alchemy described in this piece, then they’re not coming back gradually, certainly not without a growing labor movement and a fight.
I checked back recently with Ina Bromberg to see if anything had changed for the saleswomen in her store as the nation crawled into what’s now called “recovery.”
“The hours are creeping back up,” she said, and pointed to an irony. “When they started all this they told us that short shifts make us more efficient. Now, they’re letting a few people work, six, seven, even eight hours some days.”
I asked if benefits and commission were also creeping back.
“Of course not!” she answered.
“It’s sad in a way,” Ina mused. “If one of these young women gets eight hours for a while, she’ll think she has a regular job. None of them can remember what a regular job was like.”
Ina is describing a perfect sleight of hand. Good jobs disappeared into bad jobs so deftly that hardly anyone has noticed the switcheroo. Soon enough the zombie jobs that replace the real ones will move among us as if they were normal. If you sense that there’s something missing, there must be something wrong with you. Get with the program. We’re becoming a freelance nation.
Barbara Garson is the author of a series of books describing American working lives at historical turning points, including All the Livelong Day (1975), The Electronic Sweatshop (1988), and Money Makes the World Go Around (2001). Her new book is Down the Up Escalator: How the 99% Live in the Great Recession (Doubleday). To catch Garson discussing her latest book on Moyers & Company, click here.
[Note: "Ina Bromberg" and "Greg Feldman" are not the actual names of the two workers quoted in this piece.]
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Copyright 2013 Barbara Garson