The new “Walmart effect” — higher wages
Walmart has long been a target for critics on the left who lament the “Walmart effect” — the way the superstore chain tended to strangle small local merchants and lower wages and benefits as it has conquered the U.S. retail marketplace. Now there’s a new kind of Walmart effect on the horizon.
In 2015 Walmart found that its stores were a mess, its shelves were often empty, and its customers were unhappy. The retail giant took the shocking step of raising wages for its front-line workers, investing in their training, and opening paths for them to advance (The New York Times).
Surprise! The workforce liked it and started improving. Customers liked it as well and started buying more. Part of Walmart’s motivation was an improving economy, which made hiring more competitive; part was a pragmatic response to data from the field; part was a general “do the right thing” impulse.
Walmart still doesn’t match what competitors like Costco offer in the way of a “good jobs” strategy, and critics still push the company to go further and “do righter.” The new “Walmart effect” might easily die in the next recession. But it also may prove a bellwether for a broader shift in American business — one that begins to understand that paying higher wages is not just a drain on profits but an engine of collective growth.
Chipotle’s slow climb back from food-safety hell
For a year Chipotle, the burrito chain that turned “Food With Integrity” into a mass-market hit, has struggled to recover from the crisis it faced after repeated outbreaks of E. coli and norovirus poisoning among its customers. Chipotle’s road back remains twisty and incomplete, according to an epic report in Fast Company. Because the company never nailed exactly where its supply chain or preparation system broke down, it had to tighten up everywhere. It has introduced a variety of new sterilization approaches and begun pre-cooking some ingredients, blanching produce and taking other “kill steps.” Some of these moves make Chipotle look and act a lot more like the other fast-food companies from which it has always set itself apart.
There may not be any perfect way of making sure that massive quantities of produce and raw meat are safe to eat without compromising commitments to freshness and local sourcing along the way. But Chipotle could also be taking stronger steps to improve transparency and support its workers. For instance, it could publicize a complete list of its suppliers and support minimum-wage increases. Ultimately, any business built on a claim to “integrity” is also at risk of losing that trust overnight. Sterling tarnishes quicker than stainless steel.
Obama: Government’s a “legacy system we can’t just blow up”
At last week’s White House Frontiers conference at Carnegie Mellon, President Obama’s remarks gently rebuked the tech world’s “disrupt everything” ideology and defended government’s more deliberate processes. Worth quoting at length:
“Government will never run the way Silicon Valley runs because, by definition, democracy is messy. This is a big, diverse country with a lot of interests and a lot of disparate points of view. And part of government’s job, by the way, is dealing with problems that nobody else wants to deal with.
“So sometimes I talk to CEOs, they come in and they start telling me about leadership, and here’s how we do things. And I say, well, if all I was doing was making a widget or producing an app, and I didn’t have to worry about whether poor people could afford the widget, or I didn’t have to worry about whether the app had some unintended consequences — setting aside my Syria and Yemen portfolio — then I think those suggestions are terrific. (Laughter and applause.) That’s not, by the way, to say that there aren’t huge efficiencies and improvements that have to be made.
“But the reason I say this is sometimes we get, I think, in the scientific community, the tech community, the entrepreneurial community, the sense of we just have to blow up the system, or create this parallel society and culture because government is inherently wrecked. No, it’s not inherently wrecked; it’s just government has to care for, for example, veterans who come home. That’s not on your balance sheet, that’s on our collective balance sheet, because we have a sacred duty to take care of those veterans. And that’s hard and it’s messy, and we’re building up legacy systems that we can’t just blow up.”
The gig economy is growing like crazy
The gig economy, led by “rides and rooms” businesses like Uber and Airbnb, is bigger than we think, and it’s growing rapidly, according to a report by scholars at the Brookings Institution (The Atlantic CityLab). The report tracks the rise in “gig economy firms.” That’s defined here as a sole-proprietor, self-employed company — i.e., a lone worker — making at least $1000 a year in gross revenue and not employing anyone else. There were 15 million of these in 1997; there were 24 million in 2014. That’s a 60 percent increase, compared with only a 12 percent increase in payroll jobs in the same timespan. This growth is concentrated in large metropolitan areas.
The numbers are fascinating; they’re also admittedly imperfect and already out-of-date. That suggests there’s a ton more research to do, and a lot more information we need from the companies that are building the platforms for these jobs, before we can get a handle on what’s really happening in the brave new labor economy.
Investors to automakers: Get your carbon act together
Auto manufacturers need to make solid long-term plans now for a low-carbon future if they hope to retain the market’s confidence, according to a new report by an investor’s group (The Guardian). Climate experts should be sitting on auto company boards. And companies should be pushing even harder to produce low-emission vehicles. The Institutional Investors Group on Climate Change report argues that car companies, instead of resisting the introduction of climate accounting into every aspect of their businesses, ought to be taking the lead. No one should hold their breath waiting for them to do that. But the more big investors push for it — this group represents $24 trillion in assets — the better.
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