On July 28, I joined nearly 200 residents of Chatham and Orange counties who packed themselves into the dining room of Dockside Restaurant near the county line. The last time I witnessed a cross-county gathering of this scale was in 1986 when citizens waged a pitched battle to prevent the licensing of the Shearon Harris Nuclear Power Plant.
This time the threat was Wal-Mart. Those gathered at Dockside were concerned about its impact on the local economy, its association with sprawl, its treatment of workers, and with the global role of the Arkansas-based behemoth.
Although the world's largest retailer lacks the dramatically explosive potential of a nuclear power plant, its impact has been devastating to communities across the United States. It has played a major role in the dismantling of America's manufacturing base and the disappearance of the middle-class worker.
Although the feared north Chatham Supercenter has yet to appear and things have been quiet lately along the Orange-Chatham line, Wal-Mart is again in the news. Last month, the nonprofit group Wal-Mart Watch obtained a memo to the company's board of directors written by its executive vice president for benefits, Susan Chambers.
The memo confirms what anti-Wal-Mart activists have been claiming for years: that pay, benefits and working conditions at Wal-Mart are bad, and intentionally so. This is a corporation that seeks to maintain profits by keeping its employees on the edge of poverty.
And that's not all. As Robert Greenwald's new film Wal-Mart: The High Cost of Low Price (www.walmartmovie.com) dramatically illustrates, Wal-Mart is complicit in the evisceration of main streets across the United States. Its policies drive local stores and American manufacturers out of business. The retail giant has been charged with a wide range of abuses, at home and abroad.
Wal-Mart's success is a matter of legend. As Simon Head put it in the New York Review of Books, "With 1.4 million employees worldwide, Wal-Mart's workforce is now larger than that of GM, Ford, GE, and IBM combined. At $258 billion in 2003, Wal-Mart's annual revenues are 2 percent of U.S. GDP and eight times the size of Microsoft's. In fact, when ranked by its revenues, Wal-Mart is the world's largest corporation."
Because of Wal-Mart's size and economic clout, its low standards drive down those of other companies—or it drives them out of business completely. Even the most self-interested Americans should be concerned about Wal-Mart's employment practices—someday, someone you love may have no option other than a Wal-Mart style job.
Now, with the holiday buying season approaching, Americans are waking up and fighting back. The release of the Greenwald film is only the first step in High Expectations Week (Nov. 13-19), a campaign in which Wal-Mart Watch, along with partners like Sierra Club and SEIU, is coordinating a coalition of over 400 organizations to raise awareness about the problems associated with this economic behemoth.
In the midst of what Business Week has termed "A Stepped-Up Assault on Wal-Mart," Susan Chambers' memo to her board of directors couldn't come at a worse time for the Arkansas-based corporation.
Chambers tells the directors that "Wal-Mart has a significant percentage of associates and their children on public assistance." According to Liza Featherstone's book Selling Women Short, packed in the envelope with their meager paychecks, Wal-Mart provides employees with instruction on how to apply for public assistance programs like food stamps and state health insurance for the poor.
A congressional study discovered that for a 200-employee Wal-Mart store, the government is spending $108,000 a year for children's health care; $125,000 a year in tax credits and deductions for low-income families; and $42,000 a year in housing assistance. This typical Wal-Mart store costs federal taxpayers $420,000 a year, which averages out to $2,103 for each Wal-Mart employee. It all adds up to an annual welfare bill of $2.5 billion for Wal-Mart's 1.2 million U.S. employees. That's not counting the burden Wal-Mart places on state and local governments.
Wal-Mart has long depended on high turn-over, with some 50 percent of its employees departing before they were eligible for benefits. Even so, the memo from Wal-Mart's Susan Chambers expressed concern that workers were staying too long, thereby pushing up wage and benefit costs, although she stopped short of calling for efforts to push out more senior workers.
She wrote that "the cost of an associate with seven years of tenure is almost 55 percent more than the cost of an associate with one year of tenure, yet there is no difference in his or her productivity. Moreover, because we pay an associate more in salary and benefits as his or her tenure increases, we are pricing that associate out of the labor market, increasing the likelihood that he or she will stay with Wal-Mart."
So much for the quaint idea that workers who do a good job at successful businesses should have some measure of job security.
The New York Times reported on the memo a mere four days after its business section ran a story on Wal-Mart's plan to expand its health care offerings. Turns out they need it.
The Chambers memo states that workers "are getting sicker than the national population, particularly in obesity-related diseases." Like the uninsured in general, Wal-Mart workers tend to overuse emergency rooms and under-use prescriptions and doctor visits.
According to Ralph Nader, although Wal-Mart requires an employee to work 34 hours a week to qualify as full time, the average workweek is only 32 hours. Part-time workers have to wait two years to qualify for insurance. Given the high turnover, few workers even reach eligibility. Of those who qualify, not many are willing to pay a premium that, under the current system, takes one-fifth of the average paycheck.
While the new proposal would cost workers only $11 per month, it would have limited coverage the first year and a very high deductible. Critics have called it a plan that only makes sense for healthy people.
We have yet to see an internal memo documenting Wal-Mart's practice of discrimination against women. According to Liza Featherstone, sexism is widespread at Wal-Mart. She reviews patterns of denial of promotion opportunities to women, underpayment of female employees, and the prevalence of exclusive, men-only meetings. Barbara Ehrenreich reports similar abuses in her book Nickel and Dimed.
Wal-Mart's working conditions take their toll on employees. According to Simon Head's recent article in the New York Review of Books, "[I]t is hard for Wal-Mart employees to take pride in their work or to have confidence in themselves ... With its deliberate understaffing, its obsession about time theft, its management spies, and its arbitrary punishments, Wal-Mart is a workplace where management's suspicion can affect the morale of even the best employees, creating a discrepancy between their objective record of high productivity and how they come to regard their performance on the job as a result of their day-to-day dealings with management. This discrepancy helps keep wages and benefits low at Wal-Mart."
Wal-Mart flouts state and federal laws that protect labor organizing. According to Mother Jones, the National Labor Relations Board has ruled that Wal-Mart repeatedly broke the law by interrogating workers, confiscating union literature and firing union supporters. At the first sign of organizing in a store, Wal-Mart dispatches a team of union busters from its headquarters in Bentonville, Ark., sometimes setting up surveillance cameras to monitor workers.
"In my 35 years in labor relations, I've never seen a company that will go to the lengths that Wal-Mart goes to, to avoid a union," said Martin Levitt, a management consultant who helped the company develop its anti-union tactics before writing a book called Confessions of a Union Buster. "They have zero tolerance."
Wal-Mart works relentlessly to find low-cost production facilities overseas. In doing so it has no regard for the consequences for American businesses or workers despite being called by Fortune "America's most admired corporation."
Hedrick Smith's Frontline documentary "Is Wal-Mart Good for America?" tells of Circleville, Ohio, where the local RCA plant was once a source of good jobs with good pay and benefits. In 2003, RCA's owner, Thomson Consumer Electronics, lost a sizeable portion of its production orders and six months later shut the plant down, throwing 1,000 people out of work. The reason: Wal-Mart was now purchasing those products from China.
With tragic irony, a Wal-Mart Supercenter is now going up next to the empty Thomson plant. It will offer poverty wages to middle-aged workers who once earned good salaries in the manufacturing sector. Asked what the future held for kids coming out of high school, Circleville's mayor shook his head and said, "We don't know. We don't know."
When U.S. producers attempt to use our laws to protect themselves, Wal-Mart can be counted on to lend a hand—to the Chinese. Five Rivers Electronics is an American TV manufacturer that sued the Chinese for unfair trade practices. Wal-Mart filed a brief opposing Five Rivers action. "Why would Wal-Mart testify to support jobs in China instead of American jobs?" asks Five Rivers President Thomas Hopson.
"Wal-Mart and China are a joint venture" is the answer given to Frontline by Duke professor Gary Gereffi, an expert in retail chains. China uses Wal-Mart to break open the U.S. market; Wal-Mart turns to Chinese factories for goods to sell at "unbeatable" low prices.
Meanwhile, as Head reported in the New York Review of Books, the labor-backed watchdog group National Labor Committee has found gross violations of local labor laws among Wal-Mart suppliers in China, Bangladesh and Central America. Such violations are also found in U.S. dependencies such as American Samoa, where Wal-Mart can take advantage of cheap sweatshop labor yet still attach a "Made in America" label to imported garments.
In 2003, Head reports, the Korean owner of a plant in Pago Pago supplying garments to Wal-Mart was convicted of human trafficking and of holding more than 200 Vietnamese workers under "conditions of involuntary servitude." The National Labor Committee has found that Wal-Mart suppliers in China, Bangladesh and Central America routinely withhold employees' wages, enforce unpaid overtime, ignore restrictions on working hours, and deny employees health care and maternity benefits.
Wal-Mart is far worse in this regard than other retailers. In 2004, the National Labor Committee found that 90 percent of Bangladesh's garment manufacturers violated their female employees' right to maternity leave. A number of manufacturers—including Liz Claiborne, Costco, the Gap, Levi Strauss and Sears—pledged that any woman in Bangladesh sewing their garments must be guaranteed her legal right to maternity leave. Wal-Mart gave no such pledge.
But what about closer to home? Wal-Mart has a long history of using predatory pricing to drive local competition out of business. According to Forbes, for every new Wal-Mart, two rival supermarkets will close.
Often Wal-Mart will open a store close to town until the competition dries up. Then that store is closed and moved to a larger space perhaps closer to an interstate.
Wal-Mart opened a Supercenter in Hillsborough last year. Their old store remains empty. The reason: Wal-Mart controls the lease through 2009 and can keep out any prospective competition.
Still, some communities clamor for Wal-Mart and the jobs it promises. However, a study released last month by David Neumark of the Public Policy Institute of California contends that Wal-Mart stores reduce employment by anywhere from 2 to 4 percent and depress local wages by as much as 5 percent.
Those who defend Wal-Mart say it meets the needs of the poor for low-cost goods. In fact, Wal-Mart tricks consumers by offering a small number of high-profile products at rock-bottom prices. These are loss-leaders to lure shoppers into departments where they often select less competitively priced alternatives. And, as the competition leaves town, Wal-Mart's low prices are right behind.
Still, there is a cottage industry in justifying obscene profits, the loss of livable income jobs, and unethical production practices using the "helps the poor" rationale. Such calculations usually leave out a number of factors, including:
Thus, big-box retail Wal-Mart style is a shell game in which costs are shifted to the public while profits accumulate in the Walton family coffers. The challenge to those who seek a socially responsible and environmentally sustainable economy is to develop systems that assign these costs to the corporations that create them, thus transforming Wal-Mart's "really low prices" into really accurate prices.
In the meantime, a movement is needed for socially responsible production, retail and consumption. To a great extent that will depend on businesses identifying themselves as such and organizing mutual support and public outreach networks. But just as important will be a citizens' movement that goes beyond the formidable task of stopping Wal-Mart to demanding and supporting the creation of an ethically sound economy.
Dan Coleman is an activist and writer who lives in Chapel Hill.