Retailers and Workers and Small Towns (or big ones)

When I was a wee lad growing up on a farm outside of New Sharon, Iowa the population of New Sharon was 1006 people, if I remember correctly. 10 miles away was Oskaloosa a booming metropolis of 10,000 good souls. We were also about 60 miles from the state capital Des Moines, Iowa; a big city we visited on rare occasions.

In my hometown were two drug stores, one of which, Holybrands, whose owner would give we kids an ice cream cone if we showed him our report cards at the end of the year. As near as I can recall there were about 7 churches and an equal number of taverns. There was a grocery store that did a good business. There was also a thriving hardware store, a Minneapolis Moline Implement dealer, a blacksmith, several gas stations, an insurance company, a bank, a newspaper, a butcher shop/locker, a hair salon, two barbers, the was a Ford car dealership, there was a electronics store that sold fans, radios and eventually TVs (the first was a round 9” model with a magnifying glass over it the grocer bought),  3 or 4 restaurants, a movie house, an overall factory, a  local phone company (complete with an operator you talked to in order to place a call), a dairy queen (later on), oh yes, there was a gas station plus a grocery store that stayed open on Sundays much to the chagrin of the good church goers (who would stop there anyway if they needed something for Sunday dinner), and likely a bunch of other businesses I’ve forgotten about. There they were all those stores in that tiny town.

Now these were small businesses by definition. Some run by individuals, some by couples, some hired some help and paid them decently. As I recall they were all pretty honest trustworthy business folk; they had to be because it was a small town and if they pulled a fast one on their customers word would get around and pretty soon they wouldn’t have any customers.  All in all we lived pretty decently in that wee town.

Today my hometown has grown to 1,500. The churches while not as many outnumber the bars which one could say is progress (only 1 bar now I think). But the number of businesses, that is another story. There are still a couple of filling stations, none that do service that I know of. There is a wee grocery store and a Casey’s. My cousin has a big store that sells all types of stuff people need in a farm community; his motto is, “If we don’t have it, you don’t need it.” (Well, he retired but it’s in the family.) They generally manage to keep one restaurant going at a time. I think they have a barber that was a neighbor boy of mine. There is an artistic friend that invented some weird name and sells stuff, antique like and interesting and helps restore some of the buildings that have deteriorated over the years. Generously, maybe there is a third of the businesses that once were but that might be optimistic.

People still love my hometown and are loyal and proud of it. They now have a country club with gold course, swimming pool and club house. You can golf there cheaper than most places by a long ways. The elm trees died when all the elm trees died around the country so I miss them.

Oskaloosa has fewer stores as well but some of the biggies have come in. They have a Wal-Mart.

This was back in the 50’s as I graduated from high school there in 1960. Back then if you lived in a big city and worked at a motor company, say GM, you could earn about $50 an hour including your pension and health benefits. They were the largest employer in the country. Today, if you live in New Sharon or elsewhere, and you work at the largest employer in the country, Wal-Mart you’d get about $8.81 an hour and since most of their employees work less than 28 hours a week you won’t qualify for benefits.

Now I checked out other big stores – Target, J C Pennys, Costco, Menards, Cabellas and Gander Mountain, and you’d get about the same; a little better by about a buck at the sporting goods places.

Now if you are in management you can do better, $50,000 to $100,000 but to 1950 dollars I’m not sure that is a real big deal. What we do know is that most people work a lot longer and a lot harder today, (despite what we old fogies might tell you), but it will likely take two in your family working to make about what one made in my youth.

Some of us also have funny ideas about what constitutes a small business, just those millionaires unlike the billionaires that own their stock.

Oh yeah, Sam Walton who with his family who own Wal-Mart have more wealth than the bottom 40% of families in this country. They made a paltry $16 billion last year; I think that is better than my cousin in New Sharon.

Now folk in New Sharon for the most part don’t think much of unions but it seems to me that if they worked in union jobs there would be a lot more restaurants and stores in New Sharon and you’d have the money to go to them. But there are so few union workers left in the country they don’t have much clout. But they likely make more than they $18,000 to $21,000 that the average full-time retail worker earns a year.

Now some of you may be thinking, those Walton’s are just smart and making a buck (many bucks in this case), and they do employ most folk, so that good. And those Wal-Mart workers that demonstrated and tried to strike on Black Friday, are just a pain and stupid. We need money for big business (or small businesses that seem like big ones in New Sharon).

A word to the wise; something the Ford company knew when they began. They figured that if they paid their workers well they could buy those cars they were making. And that worked and the whole country benefited. Consider this, if retail workers and others got paid more, they would spend more and the country would prosper, meaning the whole country, especially the middle class. Robert Reich who keeps track of these things cited a study that showed raising the salaries of full-time retail workers to $25,000 a year would lift 700,000 out of poverty. Oh there’s a cost to that; we’ve have to pay 1% more for our stuff. It seems worthwhile to me.

Oh, just a note to folk who complain about the high wages, said to be $70/hr, of today’s auto workers. Here’s some facts about that I found out: Let's start with the fact that it's not $70 per hour in wages. According to Kristin Dziczek of the Center for Automative Research--who was my primary source for the figures you are about to read--average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income--hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers.

More important, and contrary to what you may have heard, the wages aren't that much bigger than what Honda, Toyota, and other foreign manufacturers pay employees in their U.S. factories. While we can't be sure precisely how much those workers make, because the companies don't make the information public, the best estimates suggests the corresponding 2007 figure for these "transplants"--as the foreign-owned factories are known--was somewhere between $20 and $26 per hour, and most likely around $24 or $25. That would put average worker's annual salary at $52,000 a year.

But then what's the source of that $70 hourly figure? It didn't come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages--again, $28 per hour--and you get the $70 figure. Voila.

Even so, that only $20 bucks more per hour than they got over 50 years ago.

I thought I'd add this graph to go with the article. Click to enlarge.