Nov 02, 2003
HIGH COST OF LOW PRICES
New focus on Wal-Mart's effect
Neal Peirce - Washington Post (columnist)
Why would the world's biggest retail firm, America's largest private employer,
a company adding "Supercenters" at pell-mell pace and registering
a staggering $6.67 billion in profits last year, knowingly stoop -- as a federal
jury in Pennsylvania is now being told -- to hiring janitorial firms staffed
by meagerly paid, benefit-denied, illegal immigrants?
The recent raids by federal agents and charges that Wal- Mart broke federal law with the knowledge of high executives ought to be a total surprise. But they aren't. Call it, if you will, the price -- or consequence -- of a no-holds- barred drive for supremacy.
This amazing corporation, now employing 1.4 million Americans, is the dominant retail force in most of the regions where its 1,512 retail stores, 53 "neighborhood markets," 1,344 Supercenters and 528 Sam's Clubs operate. It represents one of the great success stories of American capitalism.
With assets of about $20.5 billion each, the widow and four children of founder Sam Walton constitute the richest family on Earth, Forbes magazine reports.
Not since the 19th century robber barons, whose ruthless bids for monopoly power paved the way for the nation's antitrust laws, has any single firm impacted America quite so deeply.
The story is already legend: communities coast-to-coast drawn, like moths to a flame, by Wal-Mart promises of phenomenally low prices, jobs and enriched local tax coffers.
All along, critics have groused that Wal-Mart stores imperil historic Main Street retail areas and exacerbate sprawling development patterns. But Americans' love of low costs -- goods as much as 40 percent cheaper than the competition's -- has muted opposition.
Still, as Wal-Mart grows, its impacts are likely to be getting much more attention.
Why? First, there's the Supercenter boom. Begun in the early '90s, Supercenter expansions, making Wal-Mart not just America's prime retailer but its prime grocer, are so rapid that in some regions the stores are popping up everywhere. The virtually total geographic coverage of these super-stores suggests disturbing single-firm dominance in the nation's food chain.
Then there's pay. Known for its dead-end jobs, Wal- Mart is clearly dragging down pay and benefits for millions of workers. The company does not release figures, but start- up Wal-Mart workers aren't likely to get more than $6.25 to $8 an hour. A big chunk are part-time -- clearly by design -- and an amazing 500,000 quit each year. Nearly half the company's workers make less than $15,300 a year, the federal annual poverty income for a family of three.
Result: Wal-Mart workers often turn to food stamps, apply for the federal government's Earned Income Tax Credit, and turn to states for child support payments. Wal- Mart gets to "sell for less" because it shifts the costs to all taxpayers. When you buy for less at Wal-Mart, you're paying: It's just a question out of which pocket.
Then there's health. Part- time Wal-Mart workers have to wait two years, full-time employees six months, for insurance -- and even then the coverage has high premiums and deductibles. The result, says United Food and Commercial Workers (AFL-CIO), which has been trying to organize Wal-Mart: "Nearly 700,000 Wal-Mart workers are forced to get health insurance from government or through spouses' plans, driving up health costs for all of us." As insurance for all Americans turns into a hot political issue, Wal- Mart's dereliction on health coverage for its army of workers will be hard to ignore.
Realism says it will be hard to deter a retailer so huge it can pressure suppliers for extra- low prices. Globally, Wal- Mart buys so many goods produced by inexpensive foreign labor that it's become the world's largest importer of Chinese-made goods.
Nor will it be easy to prevent potential "Wal-Mart-ization" of food retailing -- now especially acute in Southern California, where 70,000 grocery workers are striking major local chains (Vons, Pavillions, Ralphs and Albertsons). The companies are demanding a 50 percent cut in workers' medical coverage, plus a two-tier wage system denying new employees the rather solid middle-class wages now paid the region's grocery workers. Though still highly profitable, the companies say potential Wal-Mart competition is forcing their hand.
Unionists now fear that Wal-Mart, globalized and dominant, is poised to lead a downward spiral of worker wages and benefits across the United States. Labor's chances of organizing Wal-Mart itself seem dim given the firm's overwhelmingly unskilled, fast- turnover work force.
But the raids by federal immigration authorities are a reminder: Eventually, through all of American history, unfettered power gets curbed.
Fair Use Notice
This site occasionally reprints copyrighted material, the use of which has
not always been specifically authorized by the copyright owner. We make such
material available in our efforts to advance understanding of issues and to
highlight the accomplishments of our affiliates. We believe this constitutes
a 'fair use' of any such copyrighted material as provided for in section 107
of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the
material on this site is available without profit. For more information go
to: www.law.cornell.edu/uscode/17/107.shtml If you wish to use copyrighted
material from this site for purposes of your own that go beyond 'fair use',
you must obtain permission from the copyright owner.