Monday, February 9, 2009

12 American Solutions for Jobs and Prosperity

This is from Newt Gingrich. This make much more sense than the current spending bill that Obama is trying to pass.

1. Payroll Tax Stimulus. With a temporary new tax credit to offset 50% of the payroll tax, every small business would have more money, and all Americans would take home more of what they earn.

2. Real Middle-Income Tax Relief. Reduce the marginal tax rate of 25% down to 15%, in effect establishing a flat-rate tax of 15% for close to 9 out of 10 American workers.

3. Reduce the Business Tax Rate. Match Ireland’s rate of 12.5% to keep more jobs in America.

4. Homeowner’s Assistance. Provide tax credit incentives to responsible home buyers so they can keep their homes.

5. Controlling Spending So We Can Move to a Balanced Budget. This begins with eliminating Congressional earmarks and wasteful pork-barrel spending.

6. No State Aid Without Protection From Fraud. Require state governments to adopt anti-fraud and anti-theft policies before giving them more money.

7. More American Energy Now. Explore for more American oil and gas and invest in affordable energy for the future, including clean coal, ethanol, nuclear power and renewable fuels.

8. Abolish Taxes on Capital Gains. Match China, Singapore and many other competitors. More investment in America means more jobs in America.

9. Protect Our Right to Vote in the Workplace. We must protect a worker’s right to decide by secret ballot whether to join a union.

10. Replace Sarbanes-Oxley. This failed law is crippling entrepreneurial startups. Replace it with affordable rules that help create jobs, not destroy them.

11. Abolish the Death Tax. Americans should work for their families, not for Washington.

12. Invest in Energy and Transportation Infrastructure. This includes a new, expanded electric power grid and a 21st century air traffic control system that will reduce delays in air travel and save passengers, employees and airlines billions of dollars per year.


Writer Charles Platt during his stint as a Wal-Mart employee in Flagstaff, Ariz.
Writer Charles Platt during his stint as a Wal-Mart employee in Flagstaff, Ariz.

Some people, usually community activists, loath Wal-Mart. Others, like the family of four struggling to make ends meet, are in love with the chain. I, meanwhile, am in awe of it.

With more than 7,000 facilities worldwide, coordinating more than 2 million employees in its fanatical mission to maintain an inventory from more than 60,000 American suppliers, it has become a system containing more components than the Space Shuttle - yet it runs as reliably as a Timex watch.

Sheltered by rabble rousers who forced Wal-Mart's CEO to admit it "wasn't worth the effort" to try to open in Queens or anywhere else in the city, New Yorkers may not fully realize the unique, irreplaceable status of the World's Largest Retailer in rural and suburban America. Merchandise from Wal-Mart has become as ubiquitous as the water supply. Yet still the company is rebuked and reviled by anyone claiming a social conscience, and is lambasted by legislators as if its bad behavior places it somewhere between investment bankers and the Taliban.

Considering this is a company that is helping families ride out the economic downturn, which is providing jobs and stimulus while Congress bickers, which had sales growth of 2% this last quarter while other companies struggled, you have to wonder why. At least, I wondered why. And in that spirit of curiosity, I applied for an entry-level position at my local Wal-Mart.


Getting hired turned out to be a challenge. The personnel manager told me she had received more than 100 applications during that month alone, chasing just a handful of jobs. Thus the mystery deepened. If Wal-Mart was such an exploiter of the working poor, why were the working poor so eager to be exploited? And after they were hired, why did they seem so happy to be there? Anytime I shopped at the store, blue-clad Walmartians encouraged me to "Have a nice day" with the sincerity of the pope issuing a benediction.

I found my first clue in the application screening process. A diabolically ingenious quiz probed for my slightest hesitation or uncertainty regarding four big no-nos of retailing: theft, insubordination, poor timekeeping and substance abuse. (The quiz also tried to make sure that I wasn't accident-prone.) After I cleared that hurdle, I was called in for an interview. At the Flagstaff, Ariz., store where I applied, this took place in a vinyl-floored, gray-walled, windowless room, tucked away at the back of the store and crowded with people sitting on cheap folding chairs at cheap folding tables. Some of these people were talking on phones, some were doing job interviews, some were typing on computer terminals, and some seemed to be eating lunch.

I sat at a table that was covered in untrimmed fabric under a protective layer of sticky transparent vinyl, like a couch cover. I'd seen better-looking decor at firehouse bingo evenings. Was Wal-Mart going out of its way to emphasize its commitment to cost-cutting? I guessed that the utilitarian ethic was so deeply embedded, it was just taken for granted.

A friendly lady in her 50s, wearing the Wal-Mart Smile, sat opposite me and started asking questions from a printed form. Meanwhile another job applicant was going through his interview right behind me. Privacy, apparently, was as unaffordable here as tasteful decor.

"Are you easy to work with?" the lady asked. Since I couldn't imagine anyone being dumb enough to say "No," I concluded that the content of my answer must be irrelevant, and the way I answered must be the real issue. To judge from my interviewer's sunny demeanor, enthusiasm and sincerity were key. Fortunately, I had no problem reflecting her positivism, because I was becoming so fascinated with the Wal-Mart phenomenon, I really did want to work there.

I managed to satisfy her expectations, and then went through two additional interviews, followed by a drug test, before I received formal approval. It may have been one of the most intense hiring processes I've been through; hardly the schedule of a company that didn't care who it hired, or employees who didn't care about getting a job.


A week later, I found myself in an elite group of 10 successful applicants convening for two (paid) days of training in the same claustrophobic, windowless room. As we introduced ourselves, I discovered that more than half had already worked at other Wal-Marts. Having relocated to this area, they were eager for more of the same.

Why? Gradually the answer became clear. Imagine that you are young and relatively unskilled, lacking academic qualifications. Which would you prefer: standing behind the register at a local gas station, or doing the same thing in the most aggressively successful retailer in the world, where ruthless expansion is a way of life, creating a constant demand for people to fill low-level managerial positions? A future at Wal-Mart may sound a less-than-stellar prospect, but it's a whole lot better than no future at all.

In addition, despite its huge size, the corporation turned out to have an eerie resemblance to a Silicon Valley startup. There was the same gung-ho spirit, same lack of dogma, same lax dress code, same informality - and same interest in owning a piece of the company. All of my coworkers accepted the offer to buy Wal-Mart stock by setting aside $2 of every paycheck.

They were less enthused about health benefits, which offered minimal coverage during our first six months. The full corporate plan would kick in after that, but seemed to require significant employee contributions. Still, my fellow trainees assured me that health plans at other retail chains were even worse, and since the federal government had raised the limits for Medicaid eligibility, that was an option for people with children. (In the time since my experience at Wal-Mart, the company has improved its health plans significantly.) The assistant manager who served as our trainer was still in her 20s, highly motivated, friendly, smart, and perceptive. Naturally she overflowed with Wal-Mart positivism. In fact she projected the feel-good sincerity of a Baptist running a bake sale.

Still, she wasn't afraid to tackle the topic of termination. During our initial six months on the job, we would be on probation on a "three strikes" basis. One major screw-up would trigger a session of "verbal coaching." (Since positivism is endemic in Wal-Mart, words such as "discipline" are seldom used. The goal is self-improvement.) A second offense would trigger some written coaching. On the third offense, the employee would be sent home to think long and hard about what happened, and would have to come back the next day with a good argument for not being fired. In effect, Wal-Mart would say, "You seem to be a hopeless case. Now tell us why we're wrong." We were given only a handful of outright prohibitions. No swearing in the store, for instance - not even the word "damn," because some people might be offended. No funny-colored hair or blatant skin piercings, because some people might be offended. In fact almost all the rules devolved to the sacred principle of never, ever offending a customer - or "guest," in Wal-Mart terminology.

The reason was clearly articulated. On average, anyone walking into Wal-Mart is likely to spend more than $200,000 at the store during the rest of his life. Therefore, any clueless employee who alienates that customer will cost the store around a quarter-million dollars. "If we don't remember that our customers are in charge," our trainer warned us, "we turn into Kmart." She made that sound like devolving into some lesser being - a toad, maybe, or an ameba.

And so we came to the Wal-Mart Pledge. Solemnly, each of us raised one hand and intoned: "If a customer comes within 10 feet of me, I'm going to look him in the eye, smile and greet him." Having pledged ourselves, we encountered the aspect of Wal-Mart employment that impressed me most: The Telxon, pronounced "Telzon," a hand-held bar-code scanner with a wireless connection to the store's computer. When pointed at any product, the Telxon would reveal astonishing amounts of information: the quantity that should be on the shelf, the availability from the nearest warehouse, the retail price, and (most amazing of all) the markup.

All of us were given access to this information, because - in theory, at least - anyone in the store could order a couple extra pallets of anything, and could discount it heavily as a Volume Producing Item (known as a VPI), competing with other departments to rack up the most profitable sales each month. Floor clerks even had portable equipment to print their own price stickers. This was how Wal-Mart detected demand and responded to it: by distributing decision-making power to grass-roots level. It was as simple yet as radical as that.

We received an inspirational talk on this subject, from an employee who reacted after the store test-marketed tents that could protect cars for people who didn't have enough garage space. They sold out quickly, and several customers came in asking for more. Clearly this was a singular, exceptional case of word-of-mouth, so he ordered literally a truckload of tent-garages, "Which I shouldn't have done really without asking someone," he said with a shrug, "because I hadn't been working at the store for long." But the item was a huge success. His VPI was the biggest in store history - and that kind of thing doesn't go unnoticed in Arkansas.

He was invited to corporate HQ as a guest at a management conference. "It was totally different from what I expected," he told us. "I thought it would be these fatcats talking about money, but no one even mentioned money. All they cared about was finding new ways to satisfy customers. I met everyone including the chairman of the company."


After my two days of instruction I returned for the first real day of work. Inevitably, it was anticlimactic. The essence of life on the sales floor should be obvious to anyone: It is extremely boring.

I had chosen the pet department, which sells goldfish, cat food, dog food and accessories. As I patrolled the aisles, repositioning misplaced items and filling gaps in the shelves, I realized that Wal-Mart "guests" really are like guests. They are visitors who move things around and create a mess before they go home. Cleaning up after them was not very different from doing housework.

My amiable, laid-back department supervisor had been doing this kind of thing for 15 years. When I asked him why, he took a moment to process the question. He had to think back to other employers he'd worked for in the distant past. None of them, he said, had treated him so well.

What exactly did he mean by that?

His answer lay in the structure of the store. "It's deceptive, because Wal-Mart isn't divided into separate stores like a mall," he said. "But really, that's how it works. Each section is separate. This is - my pet store! No one comes here and tells me how to run it. I could go for weeks without a supervisor asking any questions." Here was the unseen, unreported side of the corporate behemoth. Big as it was, it was smart enough to give employees a feeling of autonomy.

During my few subsequent days as a Walmartian, everyone at every level was friendly and decent toward me. No one had the slightest clue that I might write about my experiences; no one even knew that I had a former career as a journalist. Still, they behaved like poster children for enlightened capitalism.

My supervisor reminded me unfailingly to take my mandatory two (paid) quarter-hour breaks during each eight hours of working time. I was cautioned never to abbreviate my lunch hour. Most of all I was encouraged to educate myself using instructional videos on computer terminals at the back of the store.

These videos served Wal-Mart's self-interest by teaching skills ranging from customer service to the art of lifting heavy boxes without hurting your back. I was paid to view them, and was rewarded with an increased hourly rate when I finished the course.

My starting wage was so low (around $7 per hour), a modest increment still didn't leave me with enough to live on comfortably, but when I looked at the alternatives, many of them were worse. Coworkers assured me that the nearest Target paid its hourly full-timers less than Wal-Mart, while fast-food franchises were at the bottom of everyone's list.

I found myself reaching an inescapable conclusion. Low wages are not a Wal-Mart problem. They are an industry-wide problem, afflicting all unskilled entry-level jobs, and the reason should be obvious.

In our free-enterprise system, employees are valued largely in terms of what they can do. This is why teenagers fresh out of high school often go to vocational training institutes to become auto mechanics or electricians. They understand a basic principle that seems to elude social commentators, politicians and union organizers. If you want better pay, you need to learn skills that are in demand.

The blunt tools of legislation or union power can force a corporation to pay higher wages, but if employees don't create an equal amount of additional value, there's no net gain. All other factors remaining equal, the store will have to charge higher prices for its merchandise, and its competitive position will suffer.

This is Economics 101, but no one wants to believe it, because it tells us that a legislative or unionized quick-fix is not going to work in the long term. If you want people to be wealthier, they have to create additional wealth.

To my mind, the real scandal is not that a large corporation doesn't pay people more. The scandal is that so many people have so little economic value. Despite (or because of) a free public school system, millions of teenagers enter the work force without marketable skills. So why would anyone expect them to be well paid?

In fact, the deal at Wal-Mart is better than at many other employers. The company states that its regular full-time hourly associates in the US average $10.86 per hour, while the mean hourly wage for retail sales associates in department stores generally is $8.67. The federal minimum wage is $6.55 per hour. Also every Wal-Mart employee gets a 10% store discount, while an additional 4% of wages go into profit-sharing and 401(k) plans.


As for the horror stories: Let's take a couple of random examples. Unpaid overtime? Maybe it happened at some stores in the past, but an instructional video warned me that if anyone in management ever encouraged such a heinous transgression, I should report him to his superiors immediately. Illegal aliens? That particular news story really referred to a cleaning company retained by Wal-Mart. The cleaning company hired the illegals.

You have to wonder, then, why the store has such a terrible reputation, and I have to tell you that so far as I can determine, trade unions have done most of the mudslinging. Web sites that serve as a source for negative stories are often affiliated with unions., for instance, is partnered with the Service Employees International Union; is entirely owned by United Food and Commercial Workers International Union. For years, now, they've campaigned against Wal-Mart, for reasons that may have more to do with money than compassion for the working poor. If more than one million Wal-Mart employees in the United States could be induced to join a union, by my calculation they'd be compelled to pay more than half-billion dollars each year in dues.

Anti-growth activists are the other primary source of anti-Wal-Mart sentiment. In the town where I worked, I was told that activists even opposed a new Barnes & Noble because it was "too big." If they're offended by a large bookstore, you can imagine how they feel about a discount retailer.

The argument, of course, is that smaller enterprises cannot compete. My outlook on this is hardcore: I think that many of the "mom-and-pop" stores so beloved by activists don't deserve to remain in business.

When I first ventured from New York City to the American heartland, I did my best to patronize quaint little places on Main Street and quickly discovered the penalties for doing so. At a small appliance store, I wasn't allowed to buy a microwave oven on display. I had to place an order and wait a couple of weeks for delivery. At a stationery store where I tried to buy a file cabinet, I found the same problem. Think back, if you are old enough to do so, and you may recall that this is how small-town retailing used to function in the 1960s.

As a customer, I don't see why I should protect a business from the harsh realities of commerce if it can't maintain a good inventory at a competitive price. And as an employee, I see no advantage in working at a small place where I am subject to the quixotic moods of a sole proprietor, and can never appeal to his superior, because there isn't one.

By the same logic, I see no reason for legislators to protect Safeway supermarkets with ploys such as zoning restrictions, which just happen to allow a supermarket-sized building while outlawing a Wal-Mart SuperCenter that's a few thousand square feet bigger.

Based on my experience (admittedly, only at one location) I reached a conclusion which is utterly opposed to almost everything ever written about Wal-Mart. I came to regard it as one of the all-time enlightened American employers, right up there with IBM in the 1960s. Wal-Mart is not the enemy. It's the best friend we could ask for.

Charles Platt is a former senior writer for Wired magazine.