The Wal-Mart Indicator of the Economy

It used to be that economists could look at Wal-Mart’s sales numbers as indicative of what was happening in the economy. Wal-Mart’s target customer has an average income of $35,000. That is solidly Middle America. If those shoppers were holding up, then the country was doing okay.

Recently, Wal-Mart’s retail sales numbers have been pretty good. The company has struggled in recent years as Target stole some of its customers and took over the more lucrative $55,000 and up category with its discounted designer clothes and furniture. But in the last year, Wal-Mart has stayed on course and actually posted decent Christmas numbers this year, when some of its competitors faltered.

Wal-Mart stores, then, don’t seem to be signaling that the regular American is struggling.

Except for this:

10,000 people turned out over four days to apply for a job at a new Wal-Mart in DeKalb County, Georgia. Wal-Mart was hiring 350 to 400 workers.

Wal-Mart didn’t even advertise the job fair. It was simply word of mouth that got the crowds to show up.

From the Atlanta Journal Constitution:

Christine Roberts, a 39-year-old married mother of six, is hoping to get a job at the Wal-Mart deli. Roberts, who has long worked as a nursing assistant in Sandy Springs, wants a job closer to her Decatur home. At the Memorial Drive store, “I could walk to work,” she said Thursday after filling out her application.

According to the article, Wal-Mart never discloses what it pays for the jobs. The prospective employees who showed up that day to apply had no idea what the pay was. But rumor has it that pay starts around $10.65 an hour.

10,000 people.

This Wal-Mart indicator is not a good one.

Another big turnout was expected for the jobs at the new Kia plant in Georgia. From the Columbus Ledger-Enquirer:

Preliminary estimates from the Georgia Department of Labor indicate as many as 30,000 people will take part in the scramble to fill roughly 2,500 jobs up for grabs at the Kia auto assembly plant being built in West Point, Ga., off Interstate 85 between LaGrange and the Alabama state line. It’s the automaker’s first such facility in North America.

The pay for the Kia jobs will be higher. Pay will range from $14.90 to $23.50 for “team members” whereas tool & die makers will start at $20.80 and top out at $27.00 an hour. Ironically, one job seeker said:

“I’m taking automotive manufacturing technology, basically trying to get a job with Kia. That way I can improve on my financial status,” said Spearman, 34, who now works at a nearby Wal-Mart Supercenter for $10.30 per hour. The divorced man has three young children.

Well, we know there are 10,000 other people waiting to take his Wal-Mart job if he’s successful getting the Kia job.

Right now, the employment reports have been pretty decent. Nationwide unemployment is only 5%, which is historically pretty low. But I fear that may be ticking upward in the next few months.