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TechnoratiWal-Mart: Low Prices, but at What Cost?
Katherine Kersten tries to represent Wal-Mart as a hero of working families. But what Wal-Mart has saved poor and middle-income Americans -- and there's reason to doubt the depth and durability of the discounts Kersten cites -- it has taken that and more from them in diminished job opportunities and reduced income.
It's not just Wal-Mart. Rather, it's the economic model that Wal-Mart perfected and that others, including Home Depot and Target, also follow.
The rise of these powerful retailers over the past 20 years has decimated two long-standing pillars of the American middle class.
One consists of small business owners, tens of thousands of whom, along with their employees, have lost their livelihoods as the big boxes have taken over.
Manufacturing workers are the other. Since 1990, the United States has lost some 3 million manufacturing jobs. Many of these losses can be traced to big-box retailers and the relentless pressure they have placed on companies to cut costs by moving to countries with low wages and lax labor laws.
Starting a small business or getting a union-wage production job provided a path out of poverty for generations of American families. No other company has done more to close these avenues to a middle-class life than Wal-Mart.
Indeed, U.S. Census data show that the middle class has lost substantial ground over the past 20 years. The share of the nation's income flowing to families in the middle 60 percent of the income distribution fell nearly 12 percent.
The share flowing to the bottom 20 percent fell even faster, while the ranks of the working poor -- people who work full time but cannot afford the basics -- swelled.
Kersten points out that new Wal-Mart and Target stores often attract legions of job applicants. But this is less a sign of the desirability of these jobs than it is of widespread economic desperation.
Lacking better options, more people are applying for retail work, giving the big chains a larger, and more easily exploited, labor pool.
Opportunities for this segment of the workforce have actually declined as the big boxes expanded. That's because the chains stretch their workers, achieving the same sales with fewer people than the businesses they replace.
David Neumark, an economist at the University of California, analyzed the impact of more than 2,000 Wal-Mart stores that opened between 1977 and 2002 and found that, for every new retail job created by Wal-Mart, 1.4 were lost as existing businesses downsized or closed.
Consolidation has also given these chains enough market power to hold down growth in retail wages, according to many economists.
Nor do big-box jobs offer much hope for advancement. Although a majority of store managers start as hourly workers, as Kersten notes, the ratio of store managers to hourly employees in a typical big-box store -- roughly 1 to 350 -- makes the odds of landing on the management track incredibly slim.
Wal-Mart's vaunted logistical innovations only partly explain how it got to the top. It also got there by squeezing its employees and forcing the rest of us to pick up the tab.
Minnesota is not the only state where Wal-Mart has systematically violated labor laws by requiring employees to miss breaks and work off the clock. The retailer has lost similar suits in California, Oregon and Pennsylvania.
Stealing from your own employees, especially when they make so little, is about as low as its gets.
Not surprisingly, large numbers of Wal-Mart, Home Depot and Target employees and their families, unable to make ends meet, have enrolled in Medicaid and other public assistance programs.
Do cheap DVD players make up for all this?
Given the toll these companies have taken on earnings for both low- and middle-income families and the fact that prices for the things that matter most - housing, health care and education - have skyrocketed, it's hard to conclude that we are anything but worse off.
There's also reason to doubt the depth and durability of those frequently touted big-box discounts.
Declining product lifespans and the appalling number of products found tainted with lead and other toxins suggests that manufacturers, many of which make special lines solely for big-box retailers, may have achieved those low prices by cutting corners. We're paying less because we're getting less.
Being left with only a handful of retailers competing for our dollars is also bound to be bad for consumers in the long run. Already there's evidence that prices at Wal-Mart and other chains are higher in areas with little local competition.
Instead of shopping ourselves deeper into this economic hole, we would do well to invest more of our spending in businesses that build community wealth, rather than extract it. What characterizes such a business? Key traits to look for are local ownership, products made responsibly and even locally, and fair wages.
Stacy Mitchell is a senior researcher with the Institute for Local Self-Reliance and author of "Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses."
© 2008 Star Tribune.
26 Comments so far
Show AllI can honestly say that Wal-Mart is a terrible company, based on first-hand experience. I worked there for almost a year in 2006 to 2007 in Woodstock, Ontario (a small town of about 38,000 and growing) as a cashier, and the only thing I liked about the job was the people I worked with. But that's another story. One of the biggest ways I think Wal-Mart is damaging to our communities is environmentally. While I was working as a cashier there, each time someone returned an item and brought it in the Wal-Mart branded bag, or a bag fell on the floor or was slightly used, it was garbaged. EACH night, a gigantic bag full of bags about 4ft by 4ft (not an exaggeration) was thrown into the compactor and taken directly to the garbage dump.
I approached the store manager and asked him if I could take those bags and donate them to the local library which is always looking for bags to put peoples library books in, and he said no. I asked why, and he told me it was corporate policy; that another organization cannot benefit/use Wal-Mart branded products that they already paid for.
Another situation was every item of clothing that is purchased at a Wal-Mart comes on a plastic hanger. And every hanger is also thrown into the garbage. Again, I asked the store manager if I could donate them to the Good Will store in the city and he said no, same reason. Wal-Mart is NOT supportive of the community, or the environment it's in.
All very well decrying businesses that grow only by putting others out of business, so what is commondreams doing linking to amazon to help sell this author's book? Link to abebooks and the shopper can easily order from any independent bookstore - even their closest one.
This country needs to return to protectionist trade policy`s we used until Reagan started to dismantle them during his presidency.Protectionist means just that, it puts tariffs on imports which free trade doesn`t, Imports cause wages to fall because of Free Trade because imports are cheaper than manufacturing here.Our free trade policies have destroyed the peasant farmers of the world because our produce is exported to third world countries at low prices which are subsidized by our GOV`T.Peasant farmers can`t afford to grow crops because of fuel prices,expensive genetically modified seeds and subsidies again.My guess is that the only thing American made in any Wal-mart is it`s produce and meats and that`s it that`s why their prices are low and they pay low wages with no benes.We use to be the manufacturing Mecca of the world now we import almost evrything we consume and do to free trade and enviromental policies and lack of standards in other countries we get lead in our paint, we get tainted drugs and shoddy clothes made in sweat shops overseas and our greedy corporatist are being paid huge salries for this while keeping profits and stocks going up as the middle class of America goes down the toilet.My question to the corporations is , who is going to buy and consume your products once my wages stop buying you products??????????
theres a little bit of the good old days in this...weren't, at one time, small shop owners GOP stalwarths, or in more baroque terms, the petty bougoisie ? the bad thing about big box stores is NOT that they put the mom and pops out of biz, or that they selll stuff from china, but that they have an economic model that makes it easier to squeeze employess and trans fer the money to the wealthy - which after all, is the aim of the reagan/bush world view, to make the economy into a place where a few millionaires employ the rest of us as gardeners
Particularly in regard t the buy local thing: most of the alternatives to walmart don't seem that much better, unless they are places for the rich , like whole foods, that can afford to appear nice and buy local
"Capitalism like Communism has to run its own course and destroy itself. It will not happen in our lifetime."
I disagree. It is almost over as the nearly "seamless" transition to fascism (aka corporatism) is almost complete.
SHIT on wal-mart.
Has WM done anything illigal that should be blamed for that violation? It could be fined for violation of labor laws and that is about the size of it. The rest is pure Capitalism at its best. You don't want to choose Communism like Russia and China with its known results.
Capitalism like Communism has to run its own course and destroy itself. It will not happen in our lifetime. Just be thankful that you didn't live in great Communist countries while that experience took place.
The WM is the story of the past. I refuse on line pharmcies in favor of local WM; at least it keepes a few jobs in my connunity. Be afraid of the day when every thing goes on line with free shippments. That would be the real story. You can not stop evolution.
I ain't SEEN a Wal-Mart in about five years.
Gosh, the pain is killing me.
And I'm too poor to heat my home in the mountains in the winter, so I guess poor folk can live without it.
Kernel, yes WE ARE blaming the big corporations. Progressives are very well aware of the influence channels between the elites and the people. Turns out the elites influence the people far more than the people can influence themselves. Take a look at the marketing, public relations, psych-ops mega-rackets taught in the universities. The science of psychology exploited to turn people into mindless consumers. Communities are destroyed by godzilla corporations as a result. As the elites scurry in and out of the corporations, universities and public offices, we are watching them like hawks.
Mom-n-pop farmers, craftsmen, and merchants are the future of planet earth, the economic backbone of the society that provides dignity, efficiency, diversity, stability. Limit the size of businesses and everything else to as small as possible. This is the way toward classless societies. This is the future of planet earth. THERE ARE NO VIABLE ALTERNATIVES.
A timely defense against big boxes is high gas prices. Far better service from, say, our local Ace store is also turning things around.
Didn't Hillary Clinton (a Democrat) work like hell to protect Wal-mart from the evils of unionization?
For me, buying at WalMart is an economic necessity. Lately, I ran out of insulin on a Sunday nite when the WM pharm was closed, so went to CVS instead. There, the SAME BRAND was twice as much ($20 higher) so I went back to WM Mon AM to get it.
ThinkForYourself,
It's an uphill battle. I saw what Wal-Mart was doing to local-ish businesses in 1992 in the SE USA. In the towns I was living in, Wal-Mart was even putting K-mart and Roses and Walgreens out of business. In one town in Arkansas, the only place to buy things (including groceries) was Wal-Mart and the only place to work was Wal-Mart or Tyson's Chicken. If you wanted to work or shop elsewhere, you had to drive >60 minutes.
Now, I'm in Taiwan and you should see the crowds at CostCo, Carrifour, Geant, B&Q, and other US and EU big box stores! The crowds are incredible! One result over the past 20 years is that my own neighborhood no longer has mom & pop grocery stores or mom & pop convenient stores. My Taiwan friends are often surprised when I make it really clear that I won't buy things at the big box. Then I try explaining how the big box undercuts the local businesses (just as joining WTO has undercut Taiwan's small farmers, e.g. pitting local apples to apples imported from Chili). Unfortunately, most of my friends and acquaintances aren't ready to hear the problems that big box stores do to the local economy.
Worldwide, we've been brought up to hunt and gather at the cheapest prices.
When I was an AMeriCorps VISTA, 200-2002, I passed out surveys ( that I had made up )
to the kids I was working with, ( 6 -12th grade) about how they could improve, add value to our small (pop 3,000. ) town. I was horrified that fully 1/3 rd of them wanted a Walmart! Sadly, ( the local Ben Franklin 5 & 10 had closed, ( due to the owners age) when they were babes, and they had NO OTHER CONCEPT!
THe nearest place to buy socks and underwear, was 65 miles away.
Since ethen a Mom & Pop discount store, and $ store have opened there....
Back in the early 80's on my fist encounter with a Walmart, I had their number instantly. I wanted a pair of navy socks; they had packaged them by 3's a white pair & a red pair that I would never wear! I left and went across the street to the Kmart, never to return!
I think we will return to those small stores...........forced into it by the depression and the high cost of fuel to ship things around the world.
We all shop for our clothes, at the local "faith based" thrift shop food pantry......... Itis headquartered in an old established 1% community, and I think the rich folks wear something until it needs cleaning and then donate it and buy something new. ( after all you cawn't be seen at the party in something you wore last week!) SOmetimes here are LL Bean items with the price tag still in.......some donations may come from the shops at the end of the tourist season. My wardrobe is much nicer, classier, than if I had shopped at Walmart!
Tell me somthing I didn't know about wal-mart. How can we convence a large number of people that it is in their own best intrest not to shop there especially when the majority of the people that shop there are not the most educated people in the world?
Don`t blame the big corporations, folks, for all that is wrong with our country. They only made and produced what we all thought we had to have to keep up with the rest of our modern society.
If we were content to live as people did years ago the corporations would not have the enormous market for their wares that they now enjoy, and the stockholders naturally want to see more profits each year, so we are all guilty of keeping it going.
Face the facts, the mom and pop stores are a thing of the past, along with small farms and ranches. However, our lifestyles are still pretty good compared with what our ancestors had to put up with, in spite of all of the complaining.
Don't know how my ancestors lived for 1000's & 1000's of years upon the earth without money, but actual real free tade, so it all looks like the same con game to me. The world of the cash register people. Beep beep goes the scanner.
Fidility Magellan Mutal Funds include many fine companies.
These include Wal-Mart
General Dynamic
Raytheon=Cluster Bombs
And Halliburton!
If you are a Nader lover, you might ask that creep to divest his holdings in Fidelity.
I'm not against Cluster Bombs, but Wal-Mart did sell me a Lou Reed CD that was scratched one time.
I've been trying to convince everyone I know - family, friends, etc - for over ten years to not shop at Wal Mart, and no matter how solid the arguments, no matter how much data, no matter how many books and videos, I have never once succeeded.
Hell, I even know 3 very disgruntled former employees who still shop there religiously.
The general response is: whatever. Wal Mart ain't going nowhere, so why bother...
sad that the author makes only a single and tangential reference to Wal-Mart's union-busting, which is probably the most destructive of all its evil works.
In the late '90s, while watching the small home-owned for generations stores in the town in NE WA state where I grew up close, one after the other over a two year period after walmart came to town, until all that was left were a couple of grocery stores, a new super foods store, car dealerships, eating places, and the undertaker, a large hot core of anger burned in me. It is still with me. Of course the buildings where the five pharmacies, two variety stores, two hardware stores, two clothing boutiques, and other clothing stores, JC Penney included, and all a huge part of my childhood, had been, were soon filled again - with a consignment store, antique stores, second-had stores. A small book store had opened a few years before W, and had done quite well with a small coffee corner and a used book closet. Just before I left there, never to return, I heard W had put in a large book section. Last news of the book store, from the local paper, was that it had closed to the public and had gone on-line.
When someone tells me, "Oh, you can get food so cheap at WalMart, or you can get prescriptions for only $4!," my reply is, "I'd rather die." And I will die before I give WalMart one cent.
I have little, but I'll just buy less from a small local store with higher prices. I haven't bought an article of clothing in five years; I divide plants in my garden to keep it filled with pretty plants to enjoy. And my container garden of beans, squash, and tomatoes, are doing very well. I planted a lot of carrot seeds, but only have four carrots growing. I'll really relish them when they're ready.
And WalMart can go ....
Good article,but I think we all are aware of this aspect of Walmart. The bigger concern is the rise of China,both economically and militarily thanks to the hugh investment of our money to their economy. Walmart will be shown to be the biggest contributor to this shift in the balance of power to them from us. I for one refuse to shop at Walmart and try to keep my wife out of there. Thankfully, we have several other choices for groceries and other products,which I gladly pay for better service and help to keep some money back in our community.
My mother ingrained in me the value of buying the cheapest option and breaking that habit has been hard. The book, Your Money or Your Life by J. Dominguez and V. Robin helped me re-think buying. Also, the year I lived on less than $6,000 gave me the opportunity to really see how much stuff I could do without. Now, with every purchase, I think about whether I need the item or if it will bring me the satisfaction I think it will.
I admit that I have enough money to have more flexible spending habits. But, I gained some of that flexibility because I don't buy things I don't need or really want! That said, I enjoy buying from local companies. Although I might spend a few extra dollars, I see those dollars staying in my community. For example, a business advertises on local radio. I buy at their shops. In return they donate to the public radio station. This is just one visible advantage that I have observed. Those few extra dollars also give me the satisfaction of knowing my dollar power isn't going directly into the coffers of a huge corporation or the pocket of their CEO.
Changing buying habits is hard but by finding the smallest satisfaction in NOT buying I am rewarded.
Don't be so sure about the Democrats' commitment to labor laws and workers' rights or about their abhorrence of Walmart and other big box stores. They're probably no more than marginally better on these issues.
The way to live more happily with Walmart is to go there and purchase ONLY the things you actually need and would buy no matter what (groceries, household stuff) and buy them ONLY in the truly-discounted house brands (Great Value and Equate) or on "Clearance". Key word above was "ONLY".
An alternative, if you can afford dropping a thousand or two a year and feel better about it, is to buy that stuff elsewhere and spend more money (even after clipping your coupons and chasing "specials")for the same things (but with brand names) at smaller boxes like Kroger, Safeway, Walgreens, CVS, Albertsons, etc.
Another alternative, if you feel Walmart exploits workers and does not adhere to labor laws is to ELECT DEMOCRATS to Washington who are far more likely to do enforcement, even against great big corporate Walmart. (Republicans don't do much of that, you know.)
Home spun or Thrift Shop or do without - all are virtuious options to corporate domination.