Wonky Muse

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May 13, 2004

The Beast from Bentonville

A long time ago, I was glad when Wal-Mart first came to town. "Always low prices, always" is its motto, and who wouldn't want to save money here and there on toiletries and household items that you have to buy anyway?

Consumers loved Wal-Mart. Wall Street and investors loved it, too. Fortune magazine this year named it the most admired company in the United States and the world. It posted $250 billion in sales last year. One hundred million customers shop in its 3,000 stores and supercenters (giant Wal-Marts that sell food and other perishables) every week. It has even opened stores overseas.

But the honeymoon didn't last long for many consumers like me. Wal-Mart quickly became that new neighbor who's worn out its welcome, bullying everybody and taking over the whole neighborhood. This corporate behemoth from Bentonville, Arkansas got bigger and bigger and wants to get bigger still, spending $1 billion monthly to buy property and build more stores.

In California alone, they want to build 40 supercenters and don't care how they do it. When supervisors in Oakland tried to ban them from building, they sued. When the city of Inglewood did the same, they arrogantly introduced a ballot measure allowing them to build a supercenter without the limits of environmental, zoning and traffic laws. They spent millions on advertisements promoting it. They even duped a nice old lady from the community and used her picture on mailers, with glowing remarks about Wal-Mart that were not even hers. Fortunately, the residents saw through the ruse and resoundingly defeated the measure.

Wal-Mart courts its consumers and shareholders at the expense of its workers. It squeezes its suppliers dry, pays sweatshop wages to workers overseas, pays its local employees as low as $6.10 an hour, offers unaffordable health benefits and busts workers' efforts to unionize. Not to mention that little incident last year when 250 illegal immigrants were found working in its stores for as low as $2 a day. No wonder it was labeled a "Merchant of Shame" by the National Organization for Women.

The company is also facing multiple class-action lawsuits across the country. One lawsuit representing 1.6 million past and present workers alleges that female employees were paid less than their male counterparts for similar jobs, and got the short end in promotion and job assignments. Another lawsuit in California representing 200,000 workers charges that Wal-Mart routinely understaffs its stores, forcing employees to work overtime or skip meal breaks without pay at the risk of getting fired.

We can't afford Wal-Mart. Every penny we save there costs our communities much more in fair wages not paid its workers and even more in social benefits and health care that must be provided those workers because they can barely make ends meet. In effect, what Wal-Mart doesn't pay, you and I pay.

I don't know about you, but I'd rather pay a few more bucks to buy my toothpaste and paper towels elsewhere. Needless to say, I'll never shop at Wal-Mart again.

Update

* A Congressional study (pdf format) was conducted showing exactly how much Wal-Mart is costing taxpayers. Some of the figures were kindly summarized by FDtate as follows:

Rep. George Miller has written up a report, "The Hidden Price We All Pay for Wal-Mart." Here's an interesting section..."The Democratic Staff of the Committee on Education and the Workforce estimates that one 200-person Wal-Mart store may result in a cost to federal taxpayers of $420,750 per year - about $2,103 per employee. Specifically, the low wages result in the following additional public costs being passed along to taxpayers:

$36,000 a year for free and reduced lunches for just 50 qualifying Wal-Mart families.
$42,000 a year for Section 8 housing assistance, assuming 3 percent of the store employees qualify for such assistance, at $6,700
per family.
$125,000 a year for federal tax credits and deductions for low-income families, assuming 50 employees are heads of households with a child
and 50 are married with two children. $100,000 a year for the additional Title I expenses, assuming 50 Wal-Mart families qualify with an average of 2 children.
$108,000 a year for the additional federal health care costs of moving into state children's health insurance programs (S-CHIP), assuming 30 employees with an average of two children qualify.
$9,750 a year for the additional costs for low-income energy assistance."

* According to Good Jobs First (pdf format), Wal-Mart took advantage of economic development subsidies totaling at least $1 billion even though the state governments providing them are hurting for money and have to cut down in areas like health care, education and public safety. This in spite of Wal-Mart's $200 billion in revenue and $9 billion in profits last year.
Other big-box stores like Target and K-Mart take advantage of such subsidies, but it's questionable whether Wal-Mart deserves them because it causes smaller businesses that employ people to close down and puts a downward pressure on the salaries and benefits of workers employed by competitors.

One example is the grocery workers' strike in Southern California that I wrote about below. The big three supermarket chains cited Wal-Mart as the main reason for cuts in pay and health benefits. It seems Wal-Mart is creating a new class of low-earning workers who can't afford to shop anywhere but Wal-Mart.

* USA Action states that Wal-Mart is funding legislation that discourages class-action lawsuits by those who were injured or harmed by corporate wrongdoing. The proposed legislation moves such lawsuits from the state level to the federal level where historically they have not fared well. The legislation if passed will benefit Wal-Mart which, other than the U.S. government, is the most sued entity in the country.

* In its annual stockholder's meeting, Wal-Mart has touted change in its wage scale,according to the Los Angeles Times (registration required). In front of their 15,000 shareholders and amidst celebrations with celebrities like Halle Berry and Susan Lucci, CEO Lee Scott--who makes 897 times more money than the average Wal-Mart employee, according Responsiblewealth.org--announces that compensation for managers will be reduced and that some employees will receive raises this month based on a new pay plan.

Scott failed to mention that it's managers' bonuses, not salaries, which will be reduced based on performance. As for the new pay structure, it remains sketchy according to Businessweek. Analysts have called it "a powerful PR play".

posted at 10:50 PM by Wonky Muse

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