Wednesday, October 26, 2005

What Kind of Society Are We Building?

I've spent much of the last six months heads-down building Zvents. I am incredibly excited about the opportunity to build a great new product that will, in some small way, change the world and make users happy. Users are these slightly foreign beings to us product-builders, and sometimes it's hard to get inside their heads and understand what their real concerns are. When I read something like this New York Times article on Wal-Mart's HR practices:

"...The [board] memo acknowledged that Wal-Mart, the world's largest retailer, had to walk a fine line in restraining benefit costs because critics had attacked it for being stingy on wages and health coverage. Ms. Chambers acknowledged that 46 percent of the children of Wal-Mart's 1.33 million United States employees were uninsured or on Medicaid.

Wal-Mart executives said the memo was part of an effort to rein in benefit costs, which to Wall Street's dismay have soared by 15 percent a year on average since 2002..."
I am stunned. How can any user be thinking about movies, or bands, or Little League games, when their kids don't have healthcare? Will they ever use Zvents? Not likely. Wal-Mart is the largest U.S. employer and regularly held up as a paragon of new business practices. Why isn't Wall Street worried about the 46% of Wal-Mart kids who don't have health care? Even in the most narrow commercial view, aren't those kids the future customers and employees of the Wal-Marts of the next generation?

Henry Ford single-handedly created the 20th century social compact in 1914 when he unilaterally raised the minumum wage of his workers to $5 per day, reasoning that if his workers couldn't afford to buy the cars they were building, the great hamster wheel of capitalism might stop spinning:

On January 5, 1914, Henry Ford announced a new minimum wage of five dollars per eight-hour day, in addition to a profit-sharing plan. It was the talk of towns across the country; Ford was hailed as the friend of the worker, as an outright socialist, or as a madman bent on bankrupting his company. Many businessmen -- including most of the remaining stockholders in the Ford Motor Company -- regarded his solution as reckless. But he shrugged off all the criticism: "Well, you know when you pay men well you can talk to them," he said. Recognizing the human element in mass production, Ford knew that retaining more employees would lower costs, and that a happier work force would inevitably lead to greater productivity. The numbers bore him out. Between 1914 and 1916, the company's profits doubled from $30 million to $60 million. "The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made," he later said.

There were other ramifications, as well. A budding effort to unionize the Ford factory dissolved in the face of the Five-Dollar Day. Most cunning of all, Ford's new wage scale turned autoworkers into auto customers. The purchases they made returned at least some of those five dollars to Henry Ford, and helped raise production, which invariably helped to lower per-car costs.

We're a tiny little company at Zvents, and soon we'll have a health care plan in place for all our employees. Not just for the highly-paid engineering types, but everyone. Wal-Mart can do better, and if they don't, and if Wall Street doesn't lengthen its short-sighted view, the hamster wheel might start slowing down.

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