Wal-Mart Dragging America Down

by Randolph T. Holhut

But are you still willing to pay less if it means lower pay and benefits in your workplace? Or if it mean subsidizing the low pay and non-existent benefits of Wal-Mart workers with your tax dollars? Or if it means having no local alternatives other Wal-Mart for the goods you need because it has driven all of its competitors out of business?

When you factor in the havoc that Wal-Mart raises upon the global economy, those "always low prices" aren't that low. Wal-Mart is a textbook example of what happens when free-market economics goes out of control.

The sheer size of Wal-Mart means it can dictate what it wants to buy and whom it wants to buy it from. The Bentonville, Ark., based discount retailer earned $6.67 billion in profits on revenues of $245 billion in 2002.

Every week, 138 million shoppers go to Wal-Mart's 4,750 stores. It controls 35 percent of the total U.S. market for food sales. It controls 30 percent of the market for household staples such as soap, toothpaste and paper towels. It even controls 15 percent of the market for magazines, books and clothing.

With its Supercenters -- the massive grocery/ pharmacy/ general merchandise stores that account for the bulk of the company's profits -- Wal-Mart has become the largest grocer and the third-largest pharmacist in the U.S.

It is also the world's largest importer of Chinese-made goods; the $12 billion it imported last year accounted for 10 percent of all U.S. imports from China.

A big reason why 82 percent of American households made at least one purchase at Wal-Mart last year is low prices -- up to 40 percent lower on some items. But the low prices come with a major catch.

With 1.4 million employees, Wal-Mart is the nation's biggest employer. Just as its size allows it to control the market for many items it sells, it also has the power to affect wages and benefits beyond its stores.

Nearly half of its "associates" (as Wal-Mart likes to call its employees) make less than $15,300 -- what the federal government considers the poverty level for a family of three. It also carefully controls how many of its associates achieve full-time status. It's no wonder the turnover rate for Wal-Mart's hourly workers, by the company's own estimates, is 44 percent a year.

Part-time workers have to wait two years to be able to buy health insurance; it's a six-month wait for full-timers. Only two in five workers end up buying it because of the high premiums and deductibles.

Wal-Mart would rather have you, the taxpayer, pick up the tab. For example, in California, Wal-Mart provides its workers with instant Web-based access to county social workers so they can quickly verify if an associate is eligible for food stamps, health insurance coverage and other state-funded assistance.

Think about it. Wal-Mart, one of the world's wealthiest corporations, steers its employees to social service agencies so state governments can provide benefits so Wal-Mart won't have to. If you're wondering why your health insurance at your workplace costs so much, think of Wal-Mart's "always low prices" and remember this.

But Wal-Mart's stinginess to its employees goes beyond its stores. Other retailers who pay their workers a living wage can't compete with a behemoth who refuses to do likewise. The ongoing grocery strike in Southern California is a prime example of this. The 70,000 unionized grocery workers who are on strike earn double what a Wal-Mart worker gets. The grocers, who fear Wal-Mart taking over their turf, want to cut the wages and benefits of their workers.

Since Wal-Mart is resolutely anti-union and has perhaps the most aggressive union-busting operation of any major U.S. corporation, the chances are less than nil that a union drive can succeed at Wal-Mart. Thus, Wal-Mart has all the leverage when it comes to setting wage and benefit standards for the retail industry and anyone that pays its workers more than Wal-Mart is automatically at a disadvantage.

Granted, Wal-Mart isn't the only company that underpays its workers. It's not the only company that's responsible for the flood of Chinese-made goods that has nearly killed off the U.S. manufacturing sector. It's hardly the first company that has exploited government loopholes for its enrichment. But as the nation's biggest retailer and the nation's biggest employer, it can't help but set the pace for the rest of the economy.

Ultimately, it's the consumer that pays for the "always low prices" with lost jobs and a lower standard of living. To save a few bucks today, you end up shelling a lot more out later in increased social costs. Suddenly, those bargains at Wal-Mart aren't so much of a bargain.

The Wal-Martization of the American economy is an issue that needs to be addressed. A race to the bottom is not a sustainable economic strategy for America.