April 22, 2004
Citizen Wal Mart
I confess, I do not read either of the two Chicago dailies (I usually spend a buck for the NYTimes), and neither (very proudly) do I watch any of the local news programs.
So, after cheering Wal-Mart’s defeat in Inglewood, CA, I was stunned to find the next battleground was right here in my own backyard! Wal-Mart wants to build two SuperCenters here – on the city’s predominantly Black, South and West Sides.
After an embarrassingly arrogant and expensive defeat in California, the retail giant has retooled its plan of attack. They have reached out to local community and business leaders, local activists, church leaders, politicians and the editorial boards of the major newspapers. However, they’ve met with strong opposition from union leaders working in concert with influential Alderman in the Chicago City Council.
At the heart of the debate are the well-documented employment practices of Wal-Mart: nearly 60% of its workforce has no health benefits and the average employee’s annual salary is $18,000. Wal-Mart has also become Enemy #1 for organized unions, as can be seen here.
As could be expected, both staunch Republican Editorial boards of the two major Chicago dailies fell in line with the ‘economic rebirth’ schtke following an in-person schmoose-fest with Wal-Mart corporate heavies. However, take it from this life-long resident, these editors know what’s good for the moneyed North Shore suburb of Highland Park, but shouldn’t dare to say they know what’s good for the Englewood community on the South Side, or the Lawndale community on the West Side.
Subsequently, the feelings of the Investor’s Class can be summed up this way, by Micheal Van Winkle at The Chicago Reporter:
Chicago is witnessing some sort of vendetta against Wal-Mart taking place on the south and west sides. Labor unions are working through Aldermen to block a re-zoning that would allow Wal-Mart's first stores to be built in Chicago. The rhetoric in the debate is very reactionary and alarmist and backed with no real economic common sense.
The flip side of these arguments is that if Wal-Mart doesn't push the prices of its goods down, then their will be no money left in the pockets of consumers to reinvest in their communities. Not to mention the jobs.
Which brought this response from your humble scribe:
Sorry Micheal,
But, the West and South Side are not desolate plain-state communities desperate for the goods that Wal-Mart offers.
In many cases, the same low cost goods are offered by other retailers (Sears, Target, Best Buy, Jewel, etc) that are in reasonable distance as a proposed Wal-Mart.
What you are missing is the number of neighborhood, family-owned retail operations that will be put out of business - a reality of every Wal-Mart built to date. Those are jobs and businesses loss that Wal-Mart will not make up.
The other retailers I mentioned cannot compete with Wal-Mart's pricing, but they can offer jobs with better wages and benefits.
Now, write another story about this situation, but this time from the vantage of a working poor resident, and not a Wal-Mart shareholder.
Residents of these inner-city communities were not clamoring for a Wal-Mart to be built. Instead, the retail giant’s business model called for them to build on the annual sales of $500 million from profitable suburban Chicago stores. Building these SuperCenters would be akin to building a huge Dunkin Donuts in a neighborhood of 5 or more mom and pop coffeehouses. Hizzonor, Mayor Rich Daley, ever mindful of the need to expand his tax base, wondered aloud about all the big fuss. Seeing that two years ago, he pushed to drop a huge Home Depot in the middle of an already crowded Near North neighborhood (and over the objections of it’s residents), there is no doubt where he stands on this issue.
Is the scrutiny of Wal-Mart’s employment practices, the outsourcing of American jobs and the poor quality of those created in Bush’s recovery, impacting America in an unexpected way?
(For more information on the Wal-Mart controversy, I recommend alwayslowprices.blogspot.com)
Posted by Bert M. Caradine at April 22, 2004 03:32 AMBert,
There is little reason to cheer WMs defeat, or at no more reason to cheer rather than sob. Before we can figure out which emotion is appropriate, shouldn’t we understand the actual conditions and results when a WM opens?
You present no evidence that WM is not desired by residents. Besides an opinion poll, letting WM open, and seeing if it makes money is one way of doing this. Of the Home Depot you say citizens didn’t want is making money, perhaps that’s an indication that citizens did want it after all.
The latest research (Emek Besker) indicates that opening a WM increases overall employment in retail by about 50 jobs, and decreases overall employment in wholesale by about 20 jobs. It will put mom and pop stores out of business, and people have every right to believe that’s a good thing for a neighborhood.
How much do people earn working in mom and pop stores? Do they get health benefits? It is highly doubtful that total compensation is higher in mom and pop stores, but that is something to be looked at.
Some fact correction. You write, “nearly 60% of its workforce has no health benefits,” which is a convenient and bald-face union lie. Almost 90% of full time WM employees have health insurance through WM or family plans. Your source doesn’t seem to want to get its facts straight about WM.
Posted by: Kevin Brancato at April 22, 2004 06:00 AMKevin,
You stated:
Some fact correction. You write, ‘nearly 60% of its workforce has no health benefits,’ which is a convenient and bald-face union lie. Almost 90% of full time WM employees have health insurance through WM or family plans. Your source doesn’t seem to want to get its facts straight about WM.
I note that at least Bert pointed to a source for his information; where is yours?
Bert:
I happen to like Walmart for its convenience, though Target is a step upscale and I like that too. Kevin makes a good point that the mom and pop stores do not pay high wages, nor do they provide health care benefits, so if Walmart is simply replacing those jobs, then its a wash. The benefits and wages are the same, though I’d suspect that Walmart might even have slightly higher wages than the mom and pops (No resource info here—if anyone has any, please provide it).
An interesting thing to consider though: Do you dislike Mcdonalds, Sears, True Value, Petco etc as much as you dislike Walmart. The connection between all of these is that they all put small stores out of business by providing a franchise or
corporate style of business in place. Yet I dont hear the clamor to rid our streets and malls of these types of businesses. Why is that?
I’d be interested in seeing some numbers on the wages and benefits at mom & pop stores in the area, too.
If, as joebago(mmm…)donuts suggests, it’s a wash or an improvement, then I’m not sure what the problem is.
Wal-Mart’s (or any large company’s) anti-union policy shouldn’t be a surprise. When Wal-Mart employees get pissed off enough, they’ll organize regardless of what Wal-Mart management does. I, for one, do not cross picket lines.
Lee:
Just to clarify—the Walmart wages=mom and pop wages suggestion was actually Kevin’s, not mine, but it seems to make sense. I’d assume the Walmart workers are at essentially the same level as the mom and pop workers, so they would be in the same wage scale.
I’ve never crossed a picket line that Im aware of, though I wouldnt be hesitant to do so. I don’t like being told what I can and cannot do by some potentially self-serving union. Thats not to say that all unions are bad, but some of the inane rules certainly are. Heard about a crew fixing a town water line that burst at 2 a.m.—-they needed three sets of hands to fix it, but only had two workers and one supervisor. The super was not allowed to physically help in any way by union regs, so they let the water supply stay down until morning. Pure self serving silliness there.
Posted by: joebagodonuts at April 22, 2004 12:21 PMJoe,
I boycott Wal Mart, as well as Best Buy, for the same reasons.
I was in Sales calling on record/music retail accounts. Best Buy would enter the market and use Cds’ as loss leaders (selling under cost), which regular record outlets could not compete with. In addition, Wal Mart and Best Buy get huge tax breaks and incentives, on top of the under-the-table discounts from distributors anxious to move large quantities.
Most mom & pop accounts I called on were family operated, with most benefits covered in that manner.
What I object to is an unfair competitive edge given to retail giants, aided by indifferent politicians more focused on the good publicity.
If Wal Mart stores have such a positive economic impact on communities, isn’t reasonable to think that an average annual salary can be more than $18K?
Kevin,
The only quotes attributed to a Wal Mart spokesman claims about 50% of their employees are covered by the company, and the rest are covered by family plans. This info is from the sole news item I could find with an offcial company quote. There are dozens of contrary claims on labor union sites.
Also, take note that Wal Mart bypassed the politicians in California and went straight to a ballot measure that they eventually lost. No such effort to guage public support has been made here in Chicago.
Posted by: Bert M. Caradine at April 22, 2004 12:41 PMWe discussed Wal-Mart on the 3rd party column a few weeks back. As I stated there, the problem I have with Wal-Mart is in their ability to kill off small businesses and their poor treatment of employees relative to their competition.
Wal-Mart has built its business by targeting rural areas and siphoning off all business from the existing mom & pop stores. The novelty of the new store and the low prices lures them in. And what ultimately happens is that the corner drug store, the photography store, the children’s clothing store, etc. go under. Business owners and specialists are then forced to go to work for Wal-mart at a fraction of what they brought home when they owned their own businesses. In a pure economic sense, this is the most efficient allocation of resources, etc. and I fully understand the economic principals. But society isn’t an ecomic theory. Families are devistated financially and/or forced to relocate away from friends and family to find work. Towns are dehumanized by the lack of interaction as commerce moves away from a downtown—notice how upscale suburbs are now developing neo-traditional commons, etc. to bring back that small town interaction?
So Wal-Mart comes into town and puts the local pharmacist out of business. He used to be a highly trained specialist and entrepeneur. But now he’s stuck filling Rx at Wal-Mart. And on top of that they treat him like cr*p in terms of pay and benefits. In fact, Wal-Mart is so notoriously stingy with their employees that stock analysts recently criticized competitor CostCo for being too generous with their employees compared to Wal-Mart. Now CostCo isn’t paying $20/hr. or giving company cars to cashiers or anything, but why should they pay $7/hr. when WalMart’s only paying $5.50? Why should part time workers get healthcare benefits after 6 months when WalMart makes them wait two years? Some real family values there!
Posted by: blipsman at April 22, 2004 03:26 PMThe big picture here is about corporate and wealth consolidation into fewer and fewer hands. This is not just a U.S. phenomenon, it is occuring around the globe. Wages in real terms are going down, productivity not attributable to human labor is going up, corporate profitability is going way up in percentage terms, when one looks at the last 35 year period.
The global economic arena is like the universe. It is so vast and multivariate, that debaters may pick and choose bits of data and research to support any position on any side of the debate. What is unquestionable is that world population is increasing, poverty throughout the world is increasing, habitable environments are shrinking, real wages are going down overall globally, and all modern societies are struggling with questions surrounding issues of affordability of a middle class life style by non-wealthy non-investor class citizens.
Lou Dobbs is focusing in these issues as they pertain to Americans in his ongoing nightly series about outsourcing American jobs. The multinational identity of corporations has been growing for decades and this fact alone makes issues surrounding the effects of consolidation all but untouchable by national laws for reasons running from politics to limitations on national law making bodies over multinational organizations.
OK, so what has this to do with Wal-Mart? Wal-mart is capable of undercutting competitors prices by tapping into the multi-national nature of where product parts are produced, where they are assembled, what markets they are sold in, and economies of scale within their retail niches. Wal-Mart represents the almost complete disconnect between consumers and producers. That is to say, there is no longer any relationship between local consumers and the jobs to produce what is consumed.
This would not be a particularly difficult problem if consolidation of wealth, capital, and distribution channels were not integral to the equation. For if consolidation were removed, then a relatively equal distribution of producers, retailers and consumers on a dollar for dollar exchange would be enjoyed around the globe by all. But, that is not the case. The consumer in America buys a $25 retail product and only $16 of that sale may recirculate in the U.S. economy.
This problem is exacerbated by the fact that 60% of American corporations pay no federal taxes back into the public system. Thus, we have an annual and growing trade deficit where more American dollars are going overseas than are coming into the U.S. We have national debt which is increasingly owned by foreign investors. And we have a gradual decreasing of discretionary buying power per dollar of wage earned.
And this last fact is what puts Wal-mart square in the crosshairs of unions, consumer protection groups, and citizen committees responding to new Wal-mart superstore development. But attacking Wal-mart is like trying to put a band-aid on a shotgun blast to the chest. Wal-mart is a focal point for a very, very much larger and more complex issue and set of problems facing American consumers.
And if anyone believes Bush’s retraction this week about outsourcing being good for America, I have a bridge in N.Y. I would like to sell you.
Posted by: David R. Remer at April 22, 2004 06:01 PMI find it hard to get worked up about the “dehumanization” process you talk about, blipsman. I’m still buying products from humans (although I really like the self checkout counters some stores have) and it’s just so convenient to have everything in one place.
joe, I’m not assuming that mom & pop stores pay the same or less in wages and benefits, I’d like to see some numbers before I give any opinion on this particular subject. For all I know, the smaller shops in the area have a better relationship with their employees, and so provide better wages and better benefits.
The loss of quaint, picturesque storefronts is a shame, but I’m sure the ramshackle, rough-cut structures and tents they replaced in their time are thought upon nostalgically by our grandparents. Maybe you can have the area declared a historical district, Bert.
And the consolidation of wealth in the retail business hasn’t reached a care threshold for me, yet. Maybe someday.
Thats not to say that all unions are bad, but some of the inane rules certainly are.
So change the inane rules, joe. Don’t throw out all the good things unions do just because of a little nonsense.
I find it hard to get worked up about the “dehumanization” process you talk about, blipsman. I’m still buying products from humans (although I really like the self checkout counters some stores have) and it’s just so convenient to have everything in one place.
When I said dehumanization, I was referring to the cog-in-the-machine attitude displayed at big retailers such as Walmart. Whereas in the old days at some mom-and-pop store the propriator would warmly greet you, offer advice, special order items, etc. today you get indifferent blank looks when asking an employee a question or an “It’s not my department.” You get a monotone “thank you for shopping Walmart” repeated without thought. And the only greeting upon entry is a scary grin from some senile senior who didn’t put away enough for retirement. As simply employees, on their latest stop on the hourly wage carousel, there’s little respect for the people doing the job and little respect for the job to be done.
Posted by: blipsman at April 22, 2004 10:51 PMLee said
“I’m sure the ramshackle, rough-cut structures and tents they replaced in their time are thought upon nostalgically by our grandparents.”
Does that mean you and I will remember the big boxes and parking seas in a similarly nostalgically way?
I hope not.
Posted by: DaveO at April 22, 2004 11:01 PMI think the problem is, the people who run WalMart, and the people like them acknowledge the free market pressure to drop labor expenses and product prices, but do not acknowledge that the free market can push things in the other direction, and in fact often does.
Because of their market share in communities, Walmart can often stifle such pressures, creating dysfunctional economic situations. many other companies do the same, complaining that American workers weren’t willing to take those jobs, instead of admitting that their asking price for the work they want done is too low. It’s funny seeing the results of Outsourcing, seeing that cheaper labor, once again did not turn out to be better labor. I mean, this was supposed to be the new business panacea, but yet again the CEOs of this country have proven that there is no such thing as a free lunch. If you want gourmet talent, sometimes you have to accept gourmet prices.
Posted by: Stephen Daugherty at April 22, 2004 11:11 PMDoes that mean you and I will remember the big boxes and parking seas in a similarly nostalgically way?
In 20 years when I’m living on Mars and doing all my shopping online… Maybe. :)
Posted by: Lee at April 23, 2004 03:16 AMI get the 90% figure from page 23 of this wal-mart study (BIG PDF).
Posted by: Kevin Brancato at April 23, 2004 09:04 AMKevin,
Of the 90% figure you cite, I think we will agree that Wal-Mart still only extends company benefits to an estimated 50% of it’s employees.
I worked for a Fortune 500 company and after 3 months, I was eligible for full benefits and 401K - as a stock picker in a wharehouse making $8.50 an hour.
Shouldn’t employees of the #1 Fortune 500 company expect at least the very same treatment?
Posted by: Bert M. Caradine at April 23, 2004 12:17 PMI think we will agree that Wal-Mart still only extends company benefits to an estimated 50% of it’s employees.
If you mean that 50% are covered by WM and 40% are covered outside of WM, then yes, we agree. If you mean that 50% are covered by WM and the rest are ineligible, then no, I disagree.
What are comparable numbers for other stores? I don’t know.
——-
What do employees of WM have a right to expect? They have a right to expect to get exactly what they agree to—no more, and no less.
We shouldn’t pretend that, if WM didn’t exist, or if it were somehow fully unionized, all current WM employees would be getting higher wages and full benefits.
I’m all for higher wages, but that’s not a realistic scenario. Without WM, some employees would have earned more, some less, and a whole bunch would have been unemployed. A unionized WM, given the bare bones way it is run, would most likely have to raise prices.
Given that many WM employees spend a hefty portion of their wages in WM (where they get a 10% discount), a raise in prices and wages would mean that money would be going in one end, and out the other.
What are the real-world alternatives for WM employees? Well, some say that WM eliminates the mom and pop stores and other retailers that would have otherwise employed them, and that’s why wages are relatively low at WM. But, I don’t buy this argument…
In my area, WM is not the lowest-end retailer. Smaller, regional “department” stores, often owned and run by immigrants, compete heavily on price.
Given the level of service, it’s not clear to me that they pay more than WM, and their working conditions are certiainly poorer.
Competition from WM has recreated the retail sector, which becomes increasingly specialized in terms of service and shopping experience. WM caters to those looking for the least service and best prices. Other retailers want more from their employees and pay more. Should there be no difference in pay between workers of different abilities?
Posted by: Kevin Brancato at April 23, 2004 12:53 PMKevin,
You still did not answer my question. Isn’t a community weighing a decision on a new Wal-Mart, correct in expecting full benefits as an employee?
Correct, when it’s billed as a rather significant economic boom to the community?
Correct, when it is a profitable, #1 Fortune 500 company?
All of the specifics of Wal-Mart’s ‘realistic scenario’ you just detailed were presented to the people of Ingelwood, CA - not by Wal-Mart, but by unions and opponents of the new store.
And, Wal-Mart was defeated by a 3-to-2 margin.
Posted by: Bert M. Caradine at April 23, 2004 06:52 PMWhy do you compare walmart to dunkin doughnuts? As a life long Rhode Islander, I have always lived within 2 miles of a dunkin’ doughnuts so I must defend the extrodinary cafinnated confectioner. DD is a franchise owned by small buisness owners. DD is not putting small coffee shops out of buiness, because all coffee consumption increases for everyone when you bring in more of these franchise type of buisnesses. since McDonald’s has expanded accross the world have they put small restaurants out of buisness? No, instead we have seen that Mc’D’s paves the way for other franchises to come in, which are also franchises owned by small buisness etc. I dont disagree with your conserns over walmart, I know they are ant-compeditive (being a capitalist in the TR vein) means that monopolies are destructive to capitalism. Walmart maybe evil but dont go after my beloved DDs.
Posted by: Miguel at April 24, 2004 07:49 PMMiguel,
By using Dunkin Donuts in my analogy, I did not intend to equate them with Wal-Mart’s business practice. If I gave you that impression, I’m sorry I wasn’t more clear.
Try to cut down on the caffeine too, Miguel…
Posted by: Bert M. Caradine at April 25, 2004 04:11 PMmy comments were more tounge in cheek than serious commentary. And so no appology is nessecary
Posted by: Miguel at April 25, 2004 05:02 PM
