Why You Shouldn't Shop at Wal-Mart on Friday

A half century ago America’s largest private-sector employer was General Motors, whose full-time workers earned an average hourly wage of around $50, in today’s dollars, including health and pension benefits.

Today, America’s largest employer is Wal-Mart, whose average employee earns $8.81 an hour. A third of Wal-Mart’s employees work less than 28 hours per week and don’t qualify for benefits.

There are many reasons for the difference—including globalization and technological changes that have shrunk employment in American manufacturing while enlarging it in sectors involving personal services, such as retail.

But one reason, closely related to this seismic shift, is the decline of labor unions in the United States. In the 1950s, over a third of private-sector workers belonged to a union. Today fewer than 7 percent do. As a result, the typical American worker no longer has the bargaining clout to get a sizeable share of corporate profits.

At the peak of its power and influence in the 1950s, the United Auto Workers could claim a significant portion of GM’s earnings for its members.

Wal-Mart’s employees, by contrast, have no union to represent them. So they’ve had no means of getting much of the corporation’s earnings.

Wal-Mart earned $16 billion last year (it just reported a 9 percent increase in earnings in the third quarter of 2012, to $3.6 billion), much of which went to Wal-Mart’s shareholders—including the family of its founder, Sam Walton. The wealth of the Walton family now exceeds the wealth of the bottom 40 percent of American families combined, according to an analysis by the Economic Policy Institute.

Is this about to change? Despite decades of failed unionization attempts, Wal-Mart workers are planning to strike or conduct some other form of protest outside at least 1,000 locations across the United States this Friday—so-called “Black Friday,” the biggest shopping day in America when the Christmas holiday buying season begins.

At the very least, the action gives Wal-Mart employees a chance to air their grievances in public—not only lousy wages (as low at $8 an hour) but also unsafe and unsanitary working conditions, excessive hours, and sexual harassment. The result is bad publicity for the company exactly when it wants the public to think of it as Santa Claus. And the threatened strike, the first in 50 years, is gaining steam.

The company is fighting back. It has filed a complaint with the National Labor Relations Board to preemptively ban the Black Friday strikes. The complaint alleges that the pickets are illegal “representational” picketing designed to win recognition for the United Food & Commercial Workers (UFCW) union. Wal-Mart’s workers say they’re protesting unfair labor practices rather than acting on behalf of the UFCW. If a court sides with Wal-Mart, it could possibly issue an injunction blocking Black Friday’s pickets.

What happens at Wal-Mart will have consequences extending far beyond the company. Other big box retailers are watching carefully. Wal-Mart is their major competitor. Its pay scale and working conditions set the standard.

More broadly, the widening inequality reflected in the gap between the pay of Wal-Mart workers and the returns to Wal-Mart investors, including the Walton fammily, haunts the American economy.

Consumer spending is 70 percent of economic activity, but consumers are also workers. And as income and wealth continue to concentrate at the top, and the median wage continues to drop—it’s now 8 percent lower than it was in 2000—a growing portion of the American workforce lacks the purchasing power to get the economy back to speed. Without a vibrant and growing middle class, Wal-Mart itself won’t have the customers it needs.

Most new jobs in America are in personal services like retail, with low pay and bad hours. According to the Bureau of Labor and Statistics, the average full-time retail worker earns between $18,000 and $21,000 per year.

But if retail workers got a raise, would consumers have to pay higher prices to make up for it? A new study by the think tank Demos reports that raising the salary of all full-time workers at large retailers to $25,000 per year would lift more than 700,000 people out of poverty, at a cost of only a 1 percent price increase for customers.

And, in the end, retailers would benefit. According to the study, the cost of the wage increases to major retailers would be $20.8 billion—about one percent of the sector’s $2.17 trillion in total annual sales. But the study also estimates the increased purchasing power of lower-wage workers as a result of the pay raises would generate $4 billion to $5 billion in additional retail sales.

This seems like a good deal all around.

Comments

Why are we just focusing on Walmart, though?

Look at the average wages of other retail chains. Your Targets, your Krogers, your Kohls, your Best Buys... all of them pay their employees about the same "average". (Many even less.)

Most all retail workers complain about poor treatment, poor pay, poor benefits, and getting cheated by "part-time" status.

So why do we feel we must not speak about it? Why focus all of our hate on buy one company? Why reward others who are just as bad by giving them our money instead?

We're right to be angry... but rewarding one company for commuting the same sins is idiotic. But that's all we do when we focus our attention on just one brand.

In Search of, Today's focus on Walmart is multifold. Foremost among them is that some workers from Walmart are choosing to strike today because of a multitude or reasons, many cited above in the article, some left unstated. Walmart is the largest employer in the nation, so being the biggest is a great way to target to entity with the greatest impact.

Personally, I so not think that Prof. Reich is focusing 'hate' on Walmart so much as attempting to give strength to the voice of actively protesting workers. Furthermore, he offers a tangible social and personal benefit for everyone, should we succeed at raising the standard of living in the nation.

The above article explains plainly that the success of Walmart in capturing the wealth of the middle class is it's own greatest threat to the prosperity of the nation and Walmart.

This article is stupid because it doesn't include any perspective. Here's some:
Wal Mart made 9b in profit last year. It has 2.2 million employees. Employees average $10/hr including benefits. Most are low skilled jobs. Take all the profit and divide it by the number of employees. Now divide by the average 32 hours each one works. Do you know what you get? $2.35 cents. All it would take for Wal Mart to LOSE MONEY instead of make 9 billion dollars is to give every employee a raise of $2.35 cents.

And wal-mart employees actually do things people need. Consider the average unionized company and/or the postal service. They whine about taking any pay cuts and then the company goes bankrupt.

One more bit of perspective. Individual people like you and me, many of them are wal-mart employees, have lent their money to wal mart by purchasing stock. They want wal-mart to build some stores, ship goods all over the planet, make people happy and try to make a profit. So wal mart does it, and do you know what the investor got for its investment last year? 3% return. For every dollar invested in walmart last year, the company made 3 cents. Wow. So greedy. That's what 9 billion in profit is divided amongst the shareholders.

Walmart does what any for-profit company does, that is maximize wealth for owners. There is no reason to condemn their business practices more than any other for profit entity others then they're a big target. BTW betwen the ages of 16 and 18 I worked in retail doing what the vast majority of Walmart workers do...stock shelves, assist customers find things and run a register. Since when did such a job become a career with benefits? I earned $2.20 per hour and clearly understood my skills would need to be upgraded if I ever was to move out of my parent's house. The challenge before us is not to figure out a way to extract money from tax payers and corporations to subsidize entry level or low skilled jobs but rather to create higher paying jobs in the US.

Alright. We've heard from Robert Reich. We need some balance. Is there a free market economist in the house? We are talking about unskilled retail work. Walmart's pay and benefits package has been attractive enough that they have been able to attract and retain workers. Mr. Reich's approach would be to protect American jobs and to encourage (force?) American companies to increase pay and benefits. Reich is nuts. The finest electronics in the world were once made in America (RCA, Zenith, Magnavox, Fisher, Setchell Carlson, etc.). The cost of American labor, relative to Japan, killed an entire American Industry. America once had a robust shoe manufacturing industry (Frye, Bass, Florscheim, Wright, etc.). Labor costs forced that industry offshore. Demand for higher Amecian wages will only drive more jobs out of the United States. And Walmart? Walmart's operating margin is only 6%. Labor is Walmart's largest expense. Force Walmart to increase pay by 20% and they'll probably go the way of Montgomery Ward. When I read this kind of fertilizer, I wish basic economics was required study in high school, and that real-world business experience was required of every economist. Yes Mr. Reich, I mean you.

What about sex discrimination. Not sexual harrassment, but discrimination. The 2.5 million member class action suit was struck down, but women who have faced discrimination at Walmart stores are continuing to pursue this. Walmart maintains sex segregation and, though women are the majority of Walmart employees, they are underrepresented in management.

baber, US Dept of Labor policies "ensure equal protections for all employees and applicants regardless of race; color; religion; national origin; sex, including pregnancy and gender identity; age; disability, whether physical or mental; genetic information; status as a parent; sexual orientation; or other non-merit factor." (copy/paste from DOL web site). If you've got evidence baber, nail them. It should be easy to go after a large company that has developed a pattern of illegal discrimination.

Excuse me, but in case you haven't noticed there was a massive class action sex discrimination suit going through the courts that failed on a technicality--because it was too big, because according to the ruling there wasn't enough commonality between the circumstances of the plaintiffs. Now sex discrimination suits are being reconstituted at more local levels.

Sex discrimination is pervasive, and extensively documented when it comes to Walmart's policies. But you jerks don't caret. We women don't count. I doesn't matter that laws forbidding discrimination aren't enforced and we're stuck with boring pink-collar shit work. Try getting a blue-collar guy job if you're a woman--impossible.

baber, I'll confess that I have not been following that. So the DOL dropped the ball. Seems you have a complaint with the Obama administration.

Couple of things "free market" Harry. I doubt Wal-mart's pay and benefits package has been attractive so much as that when you are absolutely desperate for a job you will hang on and keep your mouth shut. Just like the days of the "company store" where a man would lose his house as well as everything else if he quit the job.

Apparently you also think it's OK for the government to supplement Wal-mart's pay for their employees, which is what is happening when employees are paid so little that they are still below the poverty line and the government has to step in an give them food stamps so they can feed their kids. Sure, the old greeters at the front door aren't going to complain because they collect social security and the job is a little extra money. But a lot of those employees are working mothers.

And yes, it is unskilled work, but labor none the less. Just because it doesn't require a degree, it is a job and someone has to do it. What do you suppose would happen if everyone in this very rich country got an education and there were no unskilled workers for Wal-mart to beat up? Who would they hire then? Maybe dogs?

And the last thing is these handy little charts that will show you what is really happening with the economy that is hurting us all: http://washingtonpolicywatch.org/2012/07/02/skinny-wages-fat-profits-the-american-economy-is-out-of-balance/

Apparently the rich think the best way to handle poor striving Americans is to keep them barefoot, pregnant and so desperate they don't have a choice but to work for peanuts. Unless, of course, they get really, really, tired of working everyday and still having their kids go hungry. Wasn't there was a revolution somewhere in France over eating cake or something?

Well Bob (RimKitty), why are we targeting Walmart? And where is Walmart to pull money from to pay the workers? Can we refer to Hostess as an example of where this might end? The folks at Hostess wound up shuttering the company. Do you remember Eastern Airlines Bob? They were grounded by a greedy union just a few months before they liquidated the company. Those jobs were lost Bob. I believe you are arguing that the minimum wage is too low. On the other hand, a rising minimum wage for US workers will only drive more work offshore. It is complicated, isn't it ? Bob? This business about the "rich" taking advantage of the common man? To the extent that our government (and unions) make the US less business-friendly, you will see an increase in offshore manufacturing and service (call centers). Brilliant. Bob.

and Bob- you're going to love this- food stamps and other welfare programs are a necessity- no argument there, but government handouts are out of hand. These taxpayer funded subsidies are crippling an entire class of Americans, removing aspiration to train for better opportunities (oops, we've sent many of those opportunities offshore, now haven't we). Instead of food stamps for an indeterminate period of time, why don't we offer free (or greatly subsidized) online training to those who want to earn more than a Walmart job pays? Squeezing Walmart is not the answer Bob. Amazon.com is eating into Walmarts share. Do you think it is a good idea to accelerate that trend? What will happen to those Walmart jobs after you've forced Walmart to raise prices? Do you own so much AMZN stock that this looks like a good idea Bob?

"... Who would they hire then? Maybe dogs?"
An economist would tell you that Walmart will figure that out. Compensation must be set at a level that will attract and retain workers. That is basic economics Bob. (dogs, indeed!)

You know Bob, in a stronger economy, employers would be competing for employees with more attractive compensation packages- Walmart would be forced to raise pay levels. Perhaps the Federal Government should stop trying to squeeze corporations and the "rich" and- instead, foster a healthier business environment that encourages corporate investment. Taxes rise on growing revenues, unemployment levels decline, pay levels rise... everybody wins. Not a novel idea Bob, it is basic economics.

I think you got the point, but because of the media and advertisements people are still coming to the WalMart because of its advantage. However, with regards to the issue of the employees and the employer all I can see is that this have to do with the appropriate of every individual and the benefit of every worker in the store. If there is such issue I think labor union can handle situation.
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I even forgot when I went to Wal-Mart to buy something, usually my wife goes there. The last week I bought day dresses for my niece, I have found this website and decided that I should give it a try, it was the first time I made an on-line order but I managed to make a order, in one day the order arrived, I was so proud of myself.

I decided to Buy hair cutting scissors at XtremeShears.com after I saw the rates for the cutting scissors at Wal-Mart, the quality was so deplorable that I am sure they would have failed after a short period of time. My new scissors are great and I am sure they will last long.

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