Mr. Marcus of Home Depot doesn’t understand capitalism

It’s hard to avoid stories about Prince Harry and his takedown of the royal family. His book Spare, which is released this week, apparently pulls no punches and disses much of the royal family including his brother William who he alleges bullied him as a kid.

Despite watching all seasons of the Netflix series The Crown, it’s hard for me to care too much. I tried watching the first episode of Harry & Meghan, also on Netflix, and quickly lost interest. I’m not unsympathetic to Harry, I just don’t care too much. Granted, watching The Crown, I am more informed about “the system” that guards the British monarchy. I’m sure it stilted Harry’s upbringing and doubtless his mother’s death was hugely traumatic.

Still, compared to most children, Harry’s upbringing should have been pretty good. He never had to worry about starving or ever being uncomfortable. Most Britons would be thrilled to get into Eton. The closest thing he’s done for work was a stint with the army where he claims he remotely killed some Taliban from his helicopter. I’m sure “the system” warped his perspectives of what real life is like. It also seems to have inflated his sense of grievance.

Also in this category is Bernie Marcus, 93, and one of the founders of Home Depot. Worth about $8.5B and retired twenty-one years, he recently was interviewed by The Financial Times and repeated his trope that workers today are lazy and want handouts. “Nobody works, nobody gives a damn,” he was quoted in the paper. The problem, of course, is socialism and being coddled by government, not to mention being “woke”.

No doubt he did work hard to create the Home Depot chain. He had plenty of incentive: to enrich himself, at which he proved successful. What about his workers though? Are they going to get rich working at Home Depot?

They might do okay if they make it up to store manager, but to get into the tier of corporate vice presidents after working at the Home Depot loading dock is virtually impossible. Pretty much any job at a Home Depot store is low skill, making workers easily replaced. Most are likely paid a few dollars an hour over minimum wage. There is probably health insurance available, likely only to full time employees, but it’s unlikely most can afford it. There is probably a 401-K plan too but again most employees probably aren’t making enough to contribute to a plan.

Retail workers tend to be fungible and won’t hang around long. These jobs are by nature transitory, often a second or a third job, often taken to pay a few bills. They probably don’t feel that vested in Home Depot because Home Depot is not particularly vested in them. Why work hard for the company for wages that likely keep them near the poverty line? Why work hard when by design the company finds it more profitable to hire part-timers?

By definition, if you are an employee, you are a hired hand. Since most states are so-called “right to work” states, you can be fired for any or no reason whatsoever, often without even a severance. By hiring you with these conditions, the employer is basically telling you how much it values you: not at all. And yet Marcus expects these employees to work hard in a system that they are largely not vested in?

Home Depot might get some of that hard work and loyalty if it was owned by its employees. A number of small businesses in my area do this, such as Gardener’s Supply Company in Hadley, Massachusetts. Its only stockholders are its employees, so it’s 100% owned by its employees. You bet the employees have incentive to make the business profitable and efficient. At Home Depot, if you have any spare cash, perhaps you can buy some of its stock, but likely 99 percent of it is not owned by its employees, at least not those outside its corporate boardrooms and offices. I’m betting Mr. Marcus still retains a lot of Home Depot stock.

Just as it is hard for me to empathize too much with Prince Harry, it’s hard for Mr. Marcus to empathize much with his former employees. That’s because they live different shared experiences. Particularly here in the United States, the social safety net is weak, so it’s hardly a matter of quitting your job and going on welfare, particularly when welfare benefits are niggardly and time limited.

Mr. Marcus posits a straw man that largely doesn’t exist. It’s more likely his workers are exhausted rather than lazy. They are likely clocking sixty hours or more a week between various jobs. I’ll bet eight out of 10 of their retail employees are part timers, and for most their job is a second or a third one. They are likely doing this while trying to maintain a semblance of a standard of living. You can bet whatever wage they are earning, it’s a pittance compared to what Mr. Marcus paid himself in his years in Home Depot. You can bet that many of these employees are stressed too, probably juggling kids and child care duties. It’s likely Mr. Marcus didn’t experience much of that.

My question for Mr. Marcus: why would you expect employees who have no stake in your company to give their all for the company? If you are worried about the collapse of capitalism, perhaps giving employees a stake in capitalism is the solution. Turning the company into a wholly employee-owned corporation sounds like it would be a good approach. Why not ask the owners (employees) of the Gardener’s Supply Company how vested they feel in their company?

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