Wal-Mart: Helping to Keep America Poor

Last week, Wal-Mart employees took to the picket lines to protest low wages and poor benefits on the busiest shopping day of the year. Black Friday protests took place in over a hundred cities in 47 States and attracted thousands of other activists outside of the company.

The nationwide, yet semi-isolated strikes may have brought a little more awareness toward the general public, but it did very little to dissuade Americans from partaking in one of their favorite pastimes; shopping. According to Wal-Mart, the world’s biggest retailer sold over a million televisions on Thursday night alone.

I sometimes wonder what Sam Walton would think of the company he founded, now twenty years after his death. By the early nineties, Mr. Walton had built his company into one of the world’s biggest success stories with his friendly customer service approach and his deep understanding of logistics. At the time of his death in 1992 he was one of the richest men in the world; he employed 380 000 in over 1700 hundred stores (17 super-centers) that grossed $50 billion in sales per year.

Walton built his stores mainly in small towns and rural areas (a fact reflected in the 70% of Wal-Mart shoppers who vote Republican). He might not have known it at the time, but those normal discount stores would turn into super-centers and thus went from having a minor impact on the community to having a devastating one. There are now over 3000 super-centers across the country.

Wal-Mart’s competition eventually began to catch on to Sam’s formula for success and began to emulate it across the country, a strategy they continue today. Wal-Mart was forced to find other ways to increase profits and it has done so with a thumb up from Uncle Sam and a middle finger up to the American people.

Wal-Mart’s explosion of growth in the last twenty years could not have been possible without the help of the government easing of anti-trust laws, deregulation, lowering tariffs, free trade and providing incentives to off-shoring jobs and investing overseas.

The year Walton died; his company imported only 5 to 6 per cent of its products, but today it imports closer to 60 per cent (or more) from 63 countries, over 50 per cent of Wal-Mart goods are from China alone. Fifty thousand factories have closed in the United States in the last thirty years, Wal-Mart and the retailers that follow in their footsteps are a huge reason why.

Independent retailers also fell by over sixty thousand in the period of time. Not only does Wal-Mart steal business from local merchants with their government subsidized low prices, but they also wind up lowering the property value of local “mom & pop” businesses when a superstore opens up down the street, sometimes resulting in the property value falling under water. It has been said, for every Wal-Mart there is a loss of 77 (often middle class) jobs as a result.

Black Friday Wal-Mart strikers

There are few reasons why the low cost of Wal-Mart’s merchandise is considered to be government subsidized. Local and state governments have been known in the past to give Wal-Mart tens of millions of dollars in subsidies to open up shop in their towns, money that could be better spent on schools, police or infrastructure.
Aside from the American government offering incentives to companies who decide to offshore employment, most of Wal-Mart’s government subsidies revolve around penny pinching its American employees. Wal-Mart employs 1.4 million Americans, roughly 1per cent of the entire workforce.

Wal-Marts are typically understaffed to begin with in order to save money, but those lucky enough to gain full-time employment receive on average $8.81/hour (2010). This hourly wage converts to an annual pay of $15 576 based on Wal-Mart’s full-time status of 34 hours per week, nearly $7000 below the poverty line for a family of four.

These low incomes drive down wages by $3 billion/year nationwide and forces hardworking employees to seek help from Medicaid and food stamps. Just to get insurance through the company, it costs an average of $75 every two weeks, roughly 15 per cent of the average salary.

Wal-Mart has not only forced their associates to seek help from tax payers, they have actually encouraged it repeatedly over the years. In 2011, American tax payers forked over $2.65 billion in safety net benefits to Wal-Mart workers and the number has been steadily climbing for years. The percentages of employees on food stamps in some stores go as high as 80 per cent. You might think you’re saving a little money when you buy those double stuffed Oreos, but we’re all paying for it.

Even without the help of the government and our tax dollars, Wal-Mart represents so much of what is wrong with free market capitalism today. They spend millions to spy on their employees in order to root out any talk of unionization and close the stores that succeed in doing so, their promises to become environmentally friendly have gone largely unfulfilled (especially in China), they even take full advantage of the United States having zero paid holidays as we saw last Thursday when they opened their stores on Thanksgiving.

Sam Walton’s heirs are now worth a combined $102 billion and since life has been so kind to them, they have donated only 2 per cent to charity, compare that to the 50 per cent of Bill Gates or 75 per cent of Warren Buffet. Wal-Mart now generates more than $450 billion in revenue per year (more than the GDP of Norway who is ranked 23rd in the world), $16 billion of which is pure profit.

Wal-Mart is fully aware that they have us all by the balls. No matter what they’ve done in the last twenty years, they know that in many small towns Wal-Mart is now the only retail store and only employer. They know as long as people need to work, they can hire at near minimum wage. They know their low wages are duplicated elsewhere which forces more and more to shop at their stores. They know as long as their prices are so cheap, a hundred million people will continue to shop there every week and the average family will continue to spend $4000 a year at any given Wal-Mart.

I have the utmost sympathy for the hundreds of brave Wal-Mart employees putting their jobs at risk, carrying picket signs across the country in some cases just to be able to feed themselves. I look at them and wonder whether it’s 2012 or 1912.

I’m grateful that I’m in a position that has allowed me to avoid walking into a Wal-Mart since I got hired by an agency to prepare their inventory back in 1995, even then I bought nothing. Regrettably, a personal boycott is not going change anything here. Americans will continue to shop there no matter what Wal-Mart pays its associates. All we can do is show our support for those unafraid to fight the power of this Goliath from within.


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