For unskilled labor, we're four years into the worst depression of your lifetime. It's 1933.
The ongoing wildcat strikes at Wal-Mart (WMT) and China's Foxconn (FXCNY.PK), which supplies Apple (AAPL), are reminders of this fact. So is the ongoing turmoil in Greece (GREK), which reminds us of where such problems can lead, toward extremism and autocratic rule.
Whether the Wal-Mart worker actions are a "game-changer" is unclear at this point. It is clear that Wal-Mart has a reputation for absolute opposition to worker activism, including firing union organizers, but this has not kept some workers from exploding.
These stories are closely related. Managements that are tightening belts and talking austerity are doing so at the expense of workers, and these actions always lead to an equal and opposite reaction.
When labor explosions were touched off they have been very difficult to put back down. Failure to negotiate can lead to greater extremism, which is always bad for business and often results in government intervention.
The fact that Wal-Mart has now backed-out of opening a store in New York City, possibly because of labor opposition, should give shareholders pause. So far, it seems, the reaction of management to all this labor trouble is to circle the wagons. This thing could get worse before it gets better.
This has yet to cause more than a one-day blip in the WMT stock price, which is up 24% so far this year. But if I were long in WMT today I'd be taking profits, and if I were of a speculative frame of mind I'd be buying puts, not calls.
The company remains aggressive, evidenced by its move into same-day delivery and its recent move into banking with American Express. How long can that continue, especially if the current labor strife grows?
This is true on both sides of the supply chain. There may be little sympathy for Wal-Mart workers in the U.S. media, but that's not true regarding American reaction to events at Foxconn, which is actually very similar. There seems to be great sympathy for Foxconn workers in the American press, and that can easily be translated into more support for Wal-Mart workers.
The question investors should be asking today is whether the management of Wal-Mar is up to the challenges posed by labor unrest, and whether the current hardline attitude is going to hamper profitability and corporate reputations enough to matter on the bottom line.
My guess is yes. When you tell people to pound sand, their instinct is to pound you back.
Disclosure: I am long AAPL.