Wal-Mart Executives: There Are Families Not Eating at the End of the Month

Not much sarcasm or spin to put on this one; in an increasingly bifurcated U.S. society we are seeing a lot of fraying of the seams. We've been pounding the table on the "real economy" for 2+ years, as the number of Americans on food stamps surges from 1 in 11, to 1 in 9... and now even Costco (COST) is rolling out food stamp programs [Oct 30, 2009: Costco to Roll Out Food Stamps Nationwide] but the country is obsessed with very different measures in calculating our domestic "prosperity".

This line by a Wal-Mart executive will take it's place as a candidate for quote of the year [Sep 1, 2009: China Sovereign Wealth Chairman with Quote of the Year 2009]

There are families not eating at the end of the month,” said Stephen Quinn, executive vice president and chief marketing officer at Walmart Stores, and “literally lining up at midnight” at Wal-Mart stores waiting to buy food when paychecks or government checks land in their accounts.

Regular readers at FMMF will not be surprised by this quote; we're usually "early" around here. I've written about this multiple times, but I'll keep posting to keep people aware of what is happening out there in America's "under class" (which increasingly was its former middle class). Some of our earlier comments:

We also have noted over the past year, Walmart saying they see a huge rush of grocery purchases around "pay periods" (whether that comes from actual work, unemployment checks, food stamp card debited, etc). In English this means people are literally living paycheck to paycheck, and cannot buy minor items... such as food, in part of that space between pay periods. [Dec 26 2007: Target Shoppers Turning into Walmart Shoppers]

Food retailing consultant Bill Bishop, of Willard Bishop Consulting, said Costco's decision shows how pervasive the pressure on consumers has become. He said more and more grocers are seeing their sales peak and fall based on when assistance benefits are distributed.

Effectively this is our modern version of the 1930s soup lines. Enjoy....

As more wealth is concentrated in fewer and fewer hands, under the guise of "only these few people have talent or ability" this is what our system has created. It's not Democratic, it's not Republican - its systematic. Period. I would doubt the founding fathers (who are cited as a reason to defend the status quo) envisioned a society where 90%+ of national wealth is in so few hands. Which now forces more and more of the masses to depend on the "state". [Jun 5, 2009: 1 in 6 Dollars of Income Now Via Government; Highest Since 1929] Oops, I'm sorry - per dogma, everyone not in the top 0.2% is "lazy" and wants to live off the state.

Unlike the Depression of the 1930s which (painfully) redistributed wealth by "market forces", (setting up some of the best decades for America's middle class in the 50s and 60s), this crisis has done the exact opposite... it's concentrated wealth further into the hands of those who have the puppet strings. Quite amazing really. The next step will to be tax like mad those in the 2nd to 10th percentile to support the bottom 80% - Cramerica baby. Eventually this will lead to a point of social unrest (by then I assume the top 0.2% will have 'self-relocated' to a safer country), but for now printing away all our problems can help create the facade that everything will be just fine.

I'll put my "socialist" hat away now and go back to our normally scheduled dog eat dog programming. Perhaps someone from a Wall Street investment bank can line up at Wal-Mart stores on the 31st of each month to let these folks in line know GDP is up, the stock market is up, (both of which signal America is "working") and the common folk (especially those in lines) are simply lagging indicators. In fact the more people in line waiting for the stroke of midnight... the more easy money policies from the Fed; hence in market logic it's a "good thing".

Speaking of quotes of the years... Mr. Jiwei nailed it in September

It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose.

Hat tip to Calculated Risk

[Jan 18, 2008: One Lonely Voice Agrees with Me on Food Inflation - Food Bank Needs Surging]

[Nov 14, 2008: Wall Street Journal - A Run on (Food) Banks]

[Feb 20, 2009: NYT - Newly Poor Swell Lines @ Food Banks Nationwide]

Comments

[tunaman4u2:]

As printing presses unequally distribute wealth it will be their employees in the welfare line

Nov 11 05:43 PM

[herbert hoover:]

AIG needs the money to pay their employees a living wage - screw those poor people

Nov 11 07:00 PM

[jstratt:]

The author brings a necessary perspective to todays situation.

I love a fair free market system as it unlocks great human potential to excel. When it is not fair and politicians allow huge gains to the chosen few (primarily huge bankers) at the expense of all, then things will change. It may take a lot of pain but the forces of change are being put in place. The only choice longer term is the amount of pain.

In the current system Corporate executives are looting shareholders. We live in a system where owners get losses while the managers get wealthy. That also will change and the only questions are when and the amount of pain.

I am lucky as I will live most of my life in a free world with a strong middle class. I am living in perhaps a very brief moment in history. Many of the people who work for me for never experience financial freedom.

Just a few thoughts

Nov 11 08:03 PM

[DormRoom:]

Real wages for the middle class have been stagnant since the late 70s. The beginning of the massive debt bubble in the mid 80s was the only way the middle class could keep up its purchasing power in real terms. So we borrowed, and borrowed. Now without easy credit, the disparity between income, and prices are clear.

As noted by Marriner S. Eccles, Chairman of the Federal Reserve from 1934-1948

In his 1951 memoir Beckoning Frontiers, Eccles detailed what he believed caused the Great Depression.


Eccles wrote:

“As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth — not of existing wealth, but of wealth as it is currently produced — to provide men with buying power equal to the amount of goods and services offered by the nations economic machinery.

Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped."

The great suction pump has been restarted. And the middle class is getting squeezed once again.

None of my professosr argue that capitalism is suppose to promote fairness (contrary to Adam Smith's moral philosophy, which capitalism was to promote). It's very nature is of territorizing/deterrit... all domains into the hands of a select few. The ability to do so is real power.

Nov 11 08:19 PM

[Tom Armistead:]

Mark, I have been aware for years that America was becoming progressively less equal, but had not realized it has gotten to where so many are living paycheck to paycheck as we head toward Thanksgiving.

The brief heyday of the middle class in the 50's and 60's was an outgrowth as you have noted of the Depression followed by the massive bloodshed of WWII. Somewhere in there Americans realized that we are all in it together and saw to it that the dignity of work for a living wage was available to those who wanted it.

I am hopeful that the world does not have to endure another Depression and global warfare to restore those insights. But financialism and globalism seem to gather strength, zero interest feeds more speculation and manipulation, and efforts to right the economy are merely enriching those who have fatally weakened the economy and financial system we all depend on.

Nov 11 08:25 PM

[lower98th:]

As a Mom in the classroom, with nutrition the subject, the teacher asked the class if everyone had eaten their breakfast, and if not, why.....and wrenchingly, from one little boy , "it wasn't my day."

Nov 11 08:47 PM

[Ricard:]

"It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose."

Amazing quote.

Regarding the article, equally, if not more amazing.

Nov 11 09:11 PM

[j-dub:]

Ho hum, Mark.

Let me say to you that since I lost my job earlier this year, I am able to stay home and watch CNBC all day, everyday. And I've learned three very valuable pieces of information from watching day in and day out that I am happy to pass on:

1) Everything is fine.

2) Our government is making ALL the right moves because Ben Bernake is a genius.

3) The economy is just a bit behind schedule concerning employment. That'll solve itself. (refer to #1)

Nov 11 10:32 PM

[cyber_rigger:]

Earth to WAL-MART

Of course they can't eat.

You shipped their jobs to China.

Nov 11 11:31 PM

[TeresaE:]

While kids going hungry is horrible, I have to ask myself why?

My sister, with 3 kids, gets over $17,000 a year in benefits/money for doing NOTHING.

I, or you, would have to work how long to NET $17k? How much would it cost us to drive to work, pay for health insurance, buy lunches, clothes and other supplies, daycare, not to mention pay the personal property taxes if you own your own business? How long?

So yes, at the end of the month her cupboards get bare.

However she finds a way to have cable tv, a Wii, 2 Blackberry phones with full access and get her hair cut once a month.

I can't afford that stuff.

Look at pictures of most of America's poor. They are wearing $100 tennis shoes and designer clothes. They ALL have cell phones with internet plans. The majority have cable tv, internet access and free health care.

While I feel as a human being I should help those that truly need it. Years and years of handouts with my "help" requested by threat of force, confiscation and jail time seems unfair.

Yes, there are true poor in this country that deserve our sympathy and help, but they are quiet, get up and go to work everyday and try to live within their means without the grace of Big Gubmint. They also don't have cable tv with 4 digitial tuners, a big screen tv or a $100 cell phone plan.

Nov 12 09:17 AM

[TeresaE:]

Walmart decimated manufacturing in this country and sent good paying jobs abroad.

The more you look into their business methods, the more obvious it becomes. They created their own guaranteed customer base.


On Nov 11 11:31 PM cyber_rigger wrote:

> Earth to WAL-MART
>
> Of course they can't eat.
>
> You shipped their jobs to China.

Nov 12 09:18 AM

[John Galt:]

In order for everyone to eat bread, some men must eat caviar.

Nov 12 09:29 AM

[yellowhoard:]

Once upon a time, every retailer in the country paid the same price for goods. The only advantage that larger retailers enjoyed was lower shipping costs due to the larger volume.

We should change the law back to where it was 50 years ago and level the playing field.

Nov 12 09:32 AM

[Hot Richard:]

Walmart sent good paying manufacturing jobs overseas...where kids overseas now could eat because their parents now had jobs. AND back in the USA, millions of consumers got more for less at Walmart (oh, the horror of capitalism). Why does all the socialism and moral hugging stop at the border? Hungry kids across the border are still hungry kids. If I "gots to help the children", I "gots to help 'em all." Praise Jesus. We are all God's children.

Hungry kids in the USA and some of you are blaming Walmart? UCMTSU! Start (and end) with Congress and American's support of a one-party (Big Government) system that is corrupt and inefficient as the day is long while also knowing diddly-poo about economics.

Wowzer. America sinks to being TERRIFIED of competition for low-ass-paying jobs. Don't worry, they're coming back...your kids and grandkids will have them.

I've done a considerable amount of charity work the last decade with the poorest of the poor. I cannot remember a single instance of someone being without food who didn't also have horrible spending priorities. Don't smoke, don't buy booze, have roommates, cook your own food (live mostly vegetarian), don't own a cell phone, don't own a car, don't have a cable TV bill, and shop for bargain clothes. Done and done. You aren't going to be living large, but you can at least feed your damn kids!

Yes, there is a penalty for electing morons for most of this century. Your citizens start to starve. Stop crying "no fair".

I sincerely hope that a lot of Americans get the opportunity to experience socialism. You'll love it, really, because they'll tell you that you love it.

Nov 12 09:57 AM

[Alan Young:]

@TeresaE: Yes, look at pictures. God forbid you should ever actually have to see a poor person up close, much less talk to one.

I don't know where you get your pictures of "most of America's poor." Most do not have $100 shoes (unless they got them on the black market for $20) or 3G phones. Few of them have "free" health care.

Of the many working poor you refer to, a substantial number are no longer working, and trying now to get by with unemployment; i.e. on half the income they had while working. I guess by your definition they are no longer "true poor" and no longer deserve our sympathy?

On Nov 12 09:17 AM TeresaE wrote:

> Look at pictures of most of America's poor. They are wearing $100
> tennis shoes and designer clothes. They ALL have cell phones with
> internet plans. The majority have cable tv, internet access and
> free health care.
>
> While I feel as a human being I should help those that truly need
> it. Years and years of handouts with my "help" requested by threat
> of force, confiscation and jail time seems unfair.
>
> Yes, there are true poor in this country that deserve our sympathy
> and help, but they are quiet, get up and go to work everyday and
> try to live within their means without the grace of Big Gubmint.
> They also don't have cable tv with 4 digitial tuners, a big screen
> tv or a $100 cell phone plan.

Nov 12 10:20 AM

[John Galt:]

Hot Richard-

That's what I don't understand with the socialists, it all stops at the border. In reality you'd think it might even make them happy ( an even poorer person gets the job/income), but no, they have to complain that some Amerian lost their job.

Also, you say wealth is concentrated with the top 90%... so what? A lot of the people in the bottom 10% usually made horrible life decisions. As much as we all complain about America, it's still the #1 meritocracy in the world where you can best get out what you put into life. If you have no drive then your probably screwed where ever you live. If you want to work hard and make a life for yourself America is still probably the best place to be.

You can't even count America's poor against the poor in other countries. Being poor in America is infinately better than being poor in India or elsewhere. People talk about being "below the poverty line"... or what percentage of our population is below the poverty line. America's poverty line doesn't even compare to much of the world.

Poor people in other countries aren't fat
Don't often have running water
Don't have access to clean water
Have much worse shelter/living space
Don't have TV, nevermind cable TV ( and maybe not a radio)
etc.

Nov 12 10:24 AM

[mna:]

All things considered, the poor in this country have it a LOT better than even middle class in other nations. Americans for the most part don't know what being poor means. Please don't insult the millions of
African, Indian, Chinese and other kids by crying about lining up at midnight.

If lining up at Walmart at midnight is all it took to get food, millions of families in other parts of the world would be ecstatic.

In this country, if you bother to work and have your priorities straight, chances are, you're not starving.

Nov 12 07:43 PM

[davidbdc:]

The way that American's in general live is going to have to change. I've spent a lot of time living/working overseas. People there like to spend money just as much as Americans. But they spend it when they have it. And they adjust their lifestyle to fit there ability to live how they want. You'll find much smaller homes, more people living in "flats" than stand-alone homes, women that still make shirts and sweaters for their families, people eat 95% of their meals at home, etc. They SAVE their money....and when they have enough, then they buy the fancy handbag or new coat or car or whatever.

I too find it amazing to see pictures of people standing in unemployment lines or lines for free food and they are carrying I-phones, I pods, etc. Buts lets not exaggerate....those folks are in the minority. But it is a true statement that we have a decent percentage of people in this country that believe they are entitled to a "lifestyle". It seems to be they expect the government to cover the difference between the lifestyle they can afford and the lifestyle they want.

As a taxpayer and American citizen I don't want to see a single child go hungry. And I'll pay taxes to ensure they have food to eat. But the problem comes in when the parents take that money to buy cigarettes, alcohol, junk food, etc instead of food for their children. Government can/should make aid more targetted. ie - instead of food stamps you get vegetable stamps, fruit stamps, milk stamps, rice stamps, egg stamps, etc. That would cut out a lot of waste and hopefully get more good food in front of children.

The same thing is true with unemployment. If your the sole breadwinner in a family with children, then I'm ok with the extended benefits and I'll pay taxes to contribute towards it. But if your a single guy in his 20's then hate to break it to you - life is tough and you need to figure something out. When I was 25 I could live in a hole in the wall, maybe 50 bucks/week food, 30 bucks/month gym membership....everything else was spent on women,beer,fun.....not exactly what we should be subsidizing as taxpayers. And if you happen to be 45 and single and unemployed - much the same message - you are a responsible adult and have to take care of yourself. I can think of very few legitimate reasons that people don't save part of their income and our unemployment benefits are already very generous.

The wakeup call that American's don't seem to have gotten yet, is that they aren't entitled to a lifestyle. The longer our government tries to prop those lifestyles up the harder it will be to get the message across later. Life isn't fair.

Nov 13 06:34 AM

[TraderMark:]

actually I agree with you that some portion of the people in the country are "making a living" being wards of the state... on purpose. It would be beneficial to separate those out from the truly struggling.

If there is one government program worth funding is more auditing of these sort of programs and well as investigations ala IRS audits with home visits and seeing what really is going on behind the checks being mailed out. I am sure the return on assets by finding all the people abusing the system would more than pay for the extra manpower.

And yes being poor in the US is very different from Haiti, but for everyone who thinks things are dandy in the US, if the John Galt solution of letting everyone fend for themselves was in, I think by this point you wuold of seen a mass outbreak of violence. When people are hungry bad things happen... and most of the country cannot go back and farm to be self sufficient.

So its an interesting conundrum from the "let them rot" crowd... without programs for say food what would you do with these millions who rely on the state? Do you not think desperate people would do anything to feed their family? Without these programs you'd be seeing the same soup lines you saw in the 1930s, and please lets not believe charities could make up for the hundreds of billions being spent annually to provide a basic support.

So what do we do? remove the food programs so the "free market" can work? If so, most of the top 40-50% of the country better be armed... the free market can be brutal.


On Nov 12 09:17 AM TeresaE wrote:

> While kids going hungry is horrible, I have to ask myself why?<br/>
>
> My sister, with 3 kids, gets over $17,000 a year in benefits/money
> for doing NOTHING.
>
> I, or you, would have to work how long to NET $17k? How much would
> it cost us to drive to work, pay for health insurance, buy lunches,
> clothes and other supplies, daycare, not to mention pay the personal
> property taxes if you own your own business? How long?
>
> So yes, at the end of the month her cupboards get bare.
>
> However she finds a way to have cable tv, a Wii, 2 Blackberry phones
> with full access and get her hair cut once a month.
>
> I can't afford that stuff.
>
> Look at pictures of most of America's poor. They are wearing $100
> tennis shoes and designer clothes. They ALL have cell phones with
> internet plans. The majority have cable tv, internet access and
> free health care.
>
> While I feel as a human being I should help those that truly need
> it. Years and years of handouts with my "help" requested by threat
> of force, confiscation and jail time seems unfair.
>
> Yes, there are true poor in this country that deserve our sympathy
> and help, but they are quiet, get up and go to work everyday and
> try to live within their means without the grace of Big Gubmint.
> They also don't have cable tv with 4 digitial tuners, a big screen
> tv or a $100 cell phone plan.

Nov 13 08:44 AM

[TraderMark:]

You nailed it. But it is exactly because Americans have not accepted that, that this adjustment could get very ugly.

Americans will not go from ""We're #1!" thinking and the entitlement to accepting a lifestyle of a "middle class" 3rd world country person without some hectic changes happening across our landscape. That will be such a large drop in lifestyle that it will cause very large dislocations in society. Which is the part I don't think those who are floating beautiful theories of how things "should be" are getting. This transition would (will?) be extremely ugly if its done in a short period of time as it will be a shock to tens of millions in the country.

Which is exactly why I expect government interference to only grow from here, and become more of a permanent fixture. We believe we are entitled as nation and will borrow until we no longer can to keep that facade up.


On Nov 13 06:34 AM davidbdc wrote:


>
>
> The wakeup call that American's don't seem to have gotten yet, is
> that they aren't entitled to a lifestyle. The longer our government
> tries to prop those lifestyles up the harder it will be to get the
> message across later. Life isn't fair.

Nov 13 08:50 AM