Apple, Walmart, and the U.S. federal payroll tax hike

“Steve Jobs’s genius for design and marketing helped create the consumer taste of that educated upper class — the spare, sleek, Bauhaus-inspired devices; the turtlenecks and jeans; the self-congratulatory language of revolution and inspiration; the Einstein fetish — with the Apple Store a kind of secular temple for devotees in prosperous cities and suburbs, mostly along the two coasts. Jobs’s stylistic and philosophical opposite was Sam Walton. He came out of the heartland, where he saw the potential for a strategy of low cost and high volume in overlooked backwaters,” George Packer writes for The New Yorker. “Together, Apple and Walmart represent the intense separation of American life into blue and red, rich and poor, overpriced and undersold, hyperconnected and left behind. (China, of course, is the huge beneficiary: Apple’s factories and Walmart’s imports have become staples of the world’s second-largest economy.)”

“Last week, Bloomberg News reported that Walmart’s sales in the first days of February were abysmal. In internal e-mails that were leaked, one corporate vice-president described the situation as ‘a total disaster,’ while another asked, ‘Where are all the customers? And where’s their money?'” Packer writes. “The executives answered their own question. Their customers’ money — some of it — has gone back to the government, in the form of the two-per-cent increase in payroll taxes that took effect with the new budget deal on New Year’s Day… It’s amazing how little attention the payroll-tax increase got at the time — maybe because so few of the players and observers involved could imagine how much difference fifteen dollars out of the weekly paycheck of someone earning forty thousand dollars a year could make. It made enough difference to send Walmart’s earnings into a temporary free fall.”

Packer writes, “The Administration and Congress have overestimated the recovery countless times — was the end of the payroll-tax cut one more example? Walmart’s customers needed that fifteen dollars more than most Washington politicians and Apple Store shoppers might have guessed. ‘The worse, the better’ is bad ethics; it also turns out to be bad economics, and, ultimately, bad for business. America’s vast population of working poor can only get so poor before even Walmart is out of reach.”

Read more in the full article here.

MacDailyNews Take: It all comes down to TCO. Some things are worth the price we pay, others are not.

38 Comments

    1. You mean, do-nothing-republicans. In a private company if an employee arrives to work an hour late every day and their work suffers, the employer doesn’t ponder the traffic situation, lack of road construction or else.

      The employer looks at that employee and most likely the person will be dismissed. We have such employees, the republicans in congress that have fillibustered Obama since day one. They had no problem with deficits under Bush as long has they and their friends benefited from them. Now they want to worry how things are paid for after they took the money to help the poor, elderly, children or victims of natural disasters.

      1. Yes because Reid not having a budget in over 1200 days isn’t a dereliction of duty? Your a quak onesided and your political views are like football you just cheer for your team instead of looking at both sides. Spare us the blame bush or this guy or that one truth is the current people we have in office can do one thing efficiently and that is do nothing.

      2. do-nothing-republicans my shiny metal @$$……. Don’t play the party card. NOBODY in DC is looking out for the people they are supposed to represent. The government has become so bloated and corrupt it doesn’t matter which party you belong to.

        The e polarization and division is just a distraction from the real issue. The real issue being, if you are in Washington chances are you are chasing your own agenda and personal gain, not representing the best interest of your state or district constituency.

        1. True there are problems on both sides of the isle, but the tea party nut jobs who think the government doing anything is bad are at the center of it. Even the rational republicans are recognizing this, as was said recently they have to stop being the party of stupid. Most recently is all the complaining about the increase in minimum wage. As walmat has seen a small change in the working class income is huge, and increasing the minimum wage gives the working class more to spend, and is far more effective in stimulating the economy than giving those with plenty of disposable income a bigger tax break.

          1. Damain,

            Do you really think raising the minimum wage is going to do anything other then hurry the rise of inflation? Get real, look at Washington State. Their minumum wage is like $9.75 hr and the cost to live there is very high and getting higher by the day. They have either the nations highest or second highest gas tax in the country and they are trying to raise it another .10 cents pgal. Never mind trying to buy a alcohol there which is about double the cost anywhere else. Did I forget to mention property tax or sales tax?

            I’m all for giving people livable wages but if you think that raising the minimum wage is going to help the people in WA State one ounce then you are smoking more dope then they do. You know why they smoke so much dope? To keep them from facing reality.

  1. “was the end of the payroll-tax cut one more example? Walmart’s customers needed that fifteen dollars more than most Washington politicians and Apple Store shoppers might have guessed.”

    The rich have always pushed the idea that a person becomes wealthy by having their taxes cut. A person’s ability to increase their wealth comes from their private sector job that pays a living wage and the ability to continue to increase their wage over time.

    If Walmart is worrying about it’s customers lack of income they start by paying their own employee’s better wages and benefits and lower that $15.00 priced item that cost Walmart $0.25 because it was made in China.

      1. For republicans, pointing out truths such as a living wage is the road to success not tax cuts, Walmart products are made by modern day slaves, that republicans elected into office wave a Bible at their constituents in one hand and wave a big burly knotted stick in the other at the poor, elderly and victims while having the rich stuff money in their pockets is equivalent to shouting mother-“F-bomb” and cock sucker during Easter service.

    1. You are on to something. Henry Ford was erudite enough to figure out that paying his workers an above average wage created a market for his cars. I once read a book about Wal-Mart employees being paid so little they couldn’t afford go to Wal-Mart to buy the khaki pants they were required to wear to work. That’s some kind of sad. But then Sam Walton was smart enough to insist on American made goods in his stores when he was alive, this guaranteeing a customer base. His kids and their professional managers didn’t see the wisdom in that, but they all got very rich.

      There was a lot of inertia in the American economy before the entitled white guys crashed it. The bad part is, it’s starting to look like the black guy they brought in to clean up the mess is having trouble.

  2. I punish the economy and government by cutting back to only essentials after the payroll TAX INCREASE. No more disposable spending for the foreseeable future. I will put the economy in a world of hurt and I’m sure that a lot of other people share my sentiment. Besides, I got all my apple gear prior to the TAX HIKE! Haha.

    1. I fail to understand how this punishes the government, and not the waiter at the restaurant you don’t visit, the checkout clerk at the store you don’t shop at, or the trucker that is not carrying the goods that you aren’t buying.

      The government (or more specifically, the politicians) is/are not affected by you not spending. They already took their piece when you earned it.

  3. The payroll tax cut was a gimmick. It was money that was supposed to go into the Social Security System. It’s elimination is not a tax increase! The government is robbing Peter to pay Paul instead of downsizing and living within its means. Now any sacrifice at all is too painful to bear.

  4. In Houston, the walmart stores are filthy, parking lots are trash strewn, and the employees are scarce or not that helpful, offering higher wages would attract better employees and provide a better example of a big corporation helping the little guy. I avoid walmarts at all costs. Not worth it.

    1. Whey should the Walmart employees care, when their company doesn’t care about them. They were already underpaid, and now most of them have been cut to less than full-time hours so that Walmart can drop them from the employee benefit plans, primarily so that Walmart is not bound by Obamacare mandates.

      As the employees are now making so little income, guess who is now paying for their health insurance? You are, through your state taxes. Based on income, most of these employees will now be eligible for state Medicaid coverage.

      How does anyone think it is acceptable for one of the largest and most profitable companies in America to dump their employees into publicly financed entitlement programs.

      Also, take one guess what company was one of the biggest corporate supporters and lobbyists for Obamacare before it was passed?

    2. Besides, the stores are ugly. And Walmart’s mantra is ALL about money – life is certainly not ALL about money. They think EVERYTHING boils down to price cost and money. Sure I shop there on occasion, but only if I have to. And yet … Mrs. Walmart built a fancy art museum in Arkansas – I guess she could spend money!

  5. Behold a nation indebted by its promise of cradle to grave care for its citizens. Behold a nation of lazy a$$e$ who take from the government, but give little in return. Behold a nation where people are so clueless they honestly believe their chosen political party has their best interest in mind. Behold a nation whose end is near.

  6. “Apple Store a kind of secular temple for devotees in prosperous cities and suburbs, mostly along the two coasts. Jobs’s stylistic and philosophical opposite was Sam Walton. He came out of the heartland, where he saw the potential for a strategy of low cost and high volume in overlooked backwaters”

    Nice strawman, you sanctimonious prick. The fact that Walmarts sell lots of Apple products kind of destroys your whole premise, doesn’t it?

    Have you ever been in a Walmart?

    1. Having spent a lot of time in Walmarts, here are a couple of observations:
      1. I’ve never seen an Apple product sold in a Walmart. They sit in neglected, locked cases that usually contain previous-generation product. And demo units that might have been in reach are already absent, either stolen or destroyed.
      2. There are plenty of backwater Walmarts that are the only non-mall shopping for hundreds of miles, so even the wealthier people in those communities will shop there for the basic commodities (groceries, medications, etc., but rarely for clothing or furniture). Electronics and higher-end items all come from the internet or occasional trips to the big cities.

      Just sayin’.

    2. What you said. Plus the falsehood that the Wal-Mart of today lives on in the image of Sam Walton, who insisted on American made goods in his stores. Sam knew what it was to be a little guy. His kids and their hired managers don’t.

  7. I am a budget shopper and refuse to buy most things from Walmart other than food. Clothing, household items, furniture, sporting goods, and toys all break or fall apart. It brings meaning to the old addage, “Walmart fall-apart.” It’s unfortunate really. I’ve found that real value is in buying something that will last as long as you need or want it.

    1. I don’t fault anyone for shopping at Walmart if that is an economic necessity for your family or if they are the only store in town.

      However, for anyone that has a choice, other companies like Costco or Target really treat their employees much better and are much more deserving of your business.

      1. Yes. Well said. I simply won’t shop at Walmart. I have seen them put too many businesses under. They.are beyond competitive, they are ruthless. They’re forcing their way into Burbank. The community is fighting them but they will do as they always do, they’ll buy City Hall. And I do understand your comments about an economic necessity for your family. The shame of it is that had they not forced all the other businesses to go bankrupt you would still have economical places to shop!!

  8. I know a lot of rich people (some extremely rich) and a lot of poor people (including quite a few of my own relatives). In general, I see poor people working longer and harder than rich people just to survive. Half of the US population now is considered poor or lower middle class. These folks, in the best circumstances, don’t have the money to buy much of anything other than essentials. $15 a paycheck is significant for them. Until we reverse the long stagnation of middle class incomes, and pull more people out of poverty, our economy will be stagnant too. Those who look down on, or mock those with less ought to be ashamed, but they never are.

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