Category: Economy

You see them everywhere now, spreading like a fungus, invasive, unstoppable, a contagion blighting main street America.  What we used to call downtown is a pale shade of what once gave vitality and lent identity to our cities and towns, now reduced to a town hall, a few restaurants, maybe a police station, a bank or two, perhaps a post office and a motley of lawyer offices.

While the rise of the shopping mall, geared to a modern, mobile consumer, has played a significant role in emptying our town centers, the rise of box stores has accentuated the trend, with Wal-Mart foremost among them.

In the U.S., Wal-Mart is our largest retail employer, with 1.2 million workers; worldwide, more than 2 million.  It’s also the richest, with 2012 sales of $444 billion.  Each week, an estimated 200 million visit a Wal-Mart, at last count, some 10,700 stores located in 69 countries.  There are also ten web sites internationally for those finding it more convenient to shop at home.

Wal-Mart has its vociferous critics who malign its resistance to unions, poverty scrapping wages, marginal health benefits, and harsh impacting of local commerce.  Defending itself, Wal-Mart takes pride in pledging $2 billion through 2015 to combat hunger in America.  It gave 17 million to needy Gulf communities in the aftermath of Katrina.

Wal-Mart claims it’s done much to help small farmers by its increasing emphasis on local produce with $1 billion in purchases.  In countries such as Brazil, it has confined its meat sources to those farms not engaging in deforestation.

It has pioneered in garnering healthier foodstuffs in a commitment to reduce sodium by 25%% and added sugar by 10% and the elimination of transfats over the next two years at no price increase.  Last February, it introduced “It’s Great For You icons” to suggest healthier food items.  Along the same lines, it has contributed $26 million to programs promoting better nutrition.

In the sustainability area, Wal-Mart is a leader in transitioning to solar for 5 to 20% of the energy needs of its stores.  Last week, it announced immediate solar implementation for ten of its stores in Maryland.

But much of what Wal-Mart does is all about public relations, or polishing its image, a shellac concealing inequities.  Were it done for its own sake, or from compassion, or a sense of social need, such altruism would doubtless be received warmly.  It continues, however,  to advance itself by marginalizing worker wages and benefits.

In 2002, there were the revelations in Mexico, where bribery was used to purchase land sites and contracts. Initially, Bentonville, AR headquarters hushed up the scandal, only to sense media’s gaining on them and the fact of declining stock value.  Its response, as nearly always with Wal-Mart, was damage control.  Appointing its own investigators, it ultimately sent its findings back to the very authorities in Mexico tainted by the scandal, resulting in exoneration of the accused.

There is also no denying Wal-Mart has been fiercely anti-union.  In Canada, for example, it closed a store just after it had been unionized.  In late 2012, organized union boycotts were staged against Wal-Mart on Black Friday, though few “associates,” about 50 nationwide, took part and consumers virtually nil.  In fairness, unions were a principal factor behind the collapse of Hostess Brands following last November’s strike and have often exacerbated costs elsewhere in a marketplace keenly sensitive to foreign competition.  In Kentucky, where I live, Toyota workers have repeatedly turned down unionization by large pluralities.  My point is that when employees are treated well they have little relish for unions.  The lack of participation by Wal-Mart employees smacks of fear of reprisal, given their meager earnings yet need for income.

In those industries represented by unions, businesses in general have responded to decreased profitability by increasingly resorting to contract labor, reduced hours, reduction in workers hired, layoffs, elimination of stores and factories, or by simply packing-up and leaving the U. S.  Hostess Brands, makers of Twinkies I grew up on,  had already been struggling with indebtedness and sagging profits, and yet one of its several union called a fatal strike.  But it’s one thing to work for Toyota that treats workers like family and quite another working for parsimonious Wal-Mart, which has increasingly been turning to the same cost limiting measures.

It may come as a surprise, but nearly a third of Wal-Mart’s hires come from heavily unionized grocery stores and fast food enterprises that actually paid their workers less in wages and benefits than Wal-Mart.  According to the Bureau of Labor Statistics, the average pay of a Wal-Mart associate is $21,744 (2012) compared with $20,200 for grocery store workers.  The anomaly is that Wal-Mart prospers while retailers like Montgomery Ward have bellied-up, and chains like JC Penney and Sears may be about to follow.  It seems obvious consumers have been voting with their feet.  Sam Walton’s philosophy was to sell cheap and reap volume.  He seems to have gotten  the message, but for self-advantage rather than entering into the ethics good stewardship of wealth demands.

Turnover at Wal-Mart is high, with half of hires quitting after only a year. Still, it’s less than the 65% average in the retail industry at large, which merely demonstrates worker discontent is intrinsic in a market place defined by low wages and marginal benefits generally.

Recent headlines have focused on alleged discrimination against women in areas of  pay and promotion with several class action suits underway.  Though two-thirds of Wal-Mart’s workers are women, only a third are in management.  Wal-Mart’s argument is that the statistical disparity doesn’t reflect context, with many women preferring part-time employment or lacking in prerequisite skills.  Pay and promotion are decided by local stores anyway, not Bentonville.  In a 2011 High Court decision, the Court ruled by a 5-4 vote in Wal-Mart’s favor, based on local determination rather than national policy.  To Wal-Mart’s credit, two years ago it launched a support program to assist women in acquiring management skills.

Walmart has also been taken to task for relying on imports, especially from China, resulting in decimation of the manufacturing sector.  For me, this is reliable criticism, though I would argue America’s manufacturing exodus had begun before Wal-Mart’s emergence as a retail colossus.  I also ask, Where is this not happening and how likely its rebirth?  Still, Wal-Mart has pedaled foreign goods with unabated alacrity from the outset in consort with low wages to maximize profitability.

I started out with the given of the decimated local community; it’s a fact, much of it caused by Wal-Mart, but not solely.  What about Lowes and Home Depot, Best Buy and Macy’s among a plethora of entrepreneurial empires that have increasingly homogenized America’s look and short circuited the mom & pop stores of our childhood?  Will they also go away?

But there’s a good side, too.  Consider Vermont.  I’d gladly live there if it weren’t so cold and costly.  Vermont has only four Wal-Marts!  This comes about largely through small town pressure to maintain community cohesiveness.  Yet in Burlington, Vermont’s largest city, you’ll find the same crowded Wal-Mart aisles as anywhere else.  What’s more, it’s proved a spinoff as an anchor for other chain stores like Lowe’s.  Nonetheless, it comes at a price and I remember popular writer Bill Bryson commenting on his adopted Hanover, NH town how much he enjoyed the intactness of the town  center not yet impacted by suburban malls.

In today’s troubled economy, at least more than a million Americans have found work at Wal-Mart unlike many millions more who want to work and are open to even lower paying jobs, but cannot.  But this speaks to me of desperation and not free, and first, choice. Personally, I don’t like to shop at Wal-Mart’s and avoid doing so in favor of cleaner, less-crowded aisles; that special intimacy I find at my local drug store where they know me by name; foods that somehow look fresher and less picked-over.

I do sometimes think the Wal-Mart criticism, at times justified, borders on an unceasing venom fostered by some of my fellow Progressives yearning to restore us to a pristine world, which I doubt ever existed except in the weave of human myth, proving again Idealism’s too frequent folly in pursuing a salient, but unhelpful, simplicity. Bottom line, Wal-Mart is not some rude renegade in the business commune. They’re simply the largest and thus most visible target and hardly the sole sinner.

I suspect my fellows resent as I do the oligarchy of the rich, particularly when its comes to the money pinching Sam Walton who became America’s first billionaire, $2.8 billion, in the mid 80s.  Even then, parsimony came easily to Sam, who had a vogue for $5.00 haircuts and never left a tip.  He made sure his family, Helen and the four children, were  well-provided for, however, bequeathing a net worth of $23 billion.  Six of the surviving Walton offspring ultimately had as much money as the bottom 30% of Americans.  But money talks.  In 1992, he was awarded the Presidential Medal of Freedom by President Bush and his wife, who came to Bentonville for the occasion.

I’m chagrined at the $23 million executive salary paid to Wal-Mart CEO Michael Duke this year.  According to the Huffington Post, at an average pay of $12.67 an hour, it would take 785 years for an “associate” to earn Duke’s one year salary.  But maybe this is an unfair gripe or poor sense of what makes for injustice,  After all, Apple’s Tim Cook gets just under $400 million per annum, exhibiting capitalism’s vulgarity at its worst.

What I also fervently dislike about Wal-Mart is its intrusion into virtually every nook and cranny, not just textiles and food.  Not only do they sell gas, they now feature inside banks, subway and McDonalds outlets.  Medicine is currently all the rage, having begun with optometric services.  Now Walmart wants to be your physician, too, with thousands of clinics offering an array of services.

But I’m being unfair again, since Wal-Mart currently lags behind CVC and Walgreens in this market dash to offer such services.  But my insistent defiance leads to my confessing I now shop at a Kroger superstore for our groceries, another box store in other words, where I can also buy furniture, kitchen utensils, even jewelry.  New Yorker writer George Packer eloquently captures my mood in his acute analysis of America’s fall from grace (Unwinding [2013]) in writing of fellow resistant types:

… in parts of the country that were getting richer, on the coasts and in some big cities, many consumers regarded Wal-Mart and its vast aisles full of crappy, if not dangerous, Chinese-made goods with horror, and instead purchased their shoes and meat in expensive boutiques as if overpaying might inoculate them against the spread of cheapness, while stores like Macy’s, the bastions of a former middle-class economy, faded out, and America began to look once more like the country Mr. Sam had grown up in.

Like it or not, we’re all caught in the net. Wal-Mart has coalesced with the landscape, ubiquitous and with many imitators.  We can never, no matter what we do, get quite free again.  We can never go home again.

–rj

Related articles

• Walmart’s Troubles Continue In India (forbes.com)
• Wal-Mart’s ‘American Idol’-style contest is back (money.cnn.com)