Monday, May 17, 2004

The true cost of Wal-Mart's concentration of wealth

Title: The hidden price we all pay for Wal-Mart
Source: U.S. House of Representatives
Date: February 16, 2004

From the article:
    The retail giant Wal-Mart has become the nation’s largest private sector employer with an estimated 1.2 million employees. The company’s annual revenues now amount to 2 percent of the U.S. Gross Domestic Product. Wal-Mart’s success is attributed to its ability to charge low prices in mega-stores offering everything from toys and furniture to groceries. While charging low prices obviously has some consumer benefits, mounting evidence from across the country indicates that these benefits come at a steep price for American workers, U.S. labor laws, and community living standards.
    With not a single Wal-Mart store in the United States represented by a union, the company takes a pro-active role in maintaining its union-free status. Wal-Mart has issued “A Manager’s Toolbox to Remaining Union Free,” which provides managers with lists of warning signs that workers might be organizing, including “frequent meetings at associates’ homes” and “associates who are never seen together start talking or associating with each other.” The “Toolbox” gives managers a hotline to call so that company specialists can respond rapidly and head off any attempt by employees to organize.
    By keeping unions at bay, Wal-Mart keeps its wages low – even by general industry standards. The average supermarket employee makes $10.35 per hour. Sales clerks at Wal-Mart, on the other hand, made only $8.23 per hour on average, or $13,861 per year, in 2001. Some estimate that average “associate” salaries range from $7.50 to $8.50 per hour. With an average on-the-clock workweek of 32 hours, many workers take home less than $1,000 per month. Even the higher estimate of a $13,861 annual salary fell below the 2001 federal poverty line of $14,630 for a family of three. About one-third of Wal-Mart’s employees are part-time, restricting their access to benefits.
    In 2002, 43 million non-elderly Americans lacked health insurance coverage – an increase of almost 2.5 million from the previous year. Most Americans receive their health insurance coverage through their employers. At the same time, most of the uninsured are working Americans and their families, with low to moderate incomes. Their employers, however, either do not offer health insurance at all or the health insurance offered is simply unaffordable. Among these uninsured working families are a significant number of Wal-Mart employees, many of whom instead secure their health care from publicly subsidized programs... The Wal-Mart plan itself shifts much of the health care costs onto employees. In 1999, employees paid 36 percent of the costs. In 2001, the employee burden rose to 42 percent. Nationally, large-firm employees pay on average 16 percent of the premium for health insurance. Unionized grocery workers typically pay nothing... In the end, because they cannot afford the company health plan, many Wal-Mart workers must turn to public assistance for health care or forego their health care needs altogether. Effectively, Wal-Mart forces taxpayers to subsidize what should be a company-funded health plan. According to a study by the Institute for Labor and Employment at the University of California-Berkeley, California taxpayers subsidized $20.5 million worth of medical care for Wal-Mart in that state alone. In fact, Wal-Mart personnel offices, knowing employees cannot afford the company health plan, actually encourage employees to apply for charitable and public assistance, according to a recent report by the PBS news program Now With Bill Moyers.

    When a giant like Wal-Mart shifts health insurance costs to employees, its competitors invariably come under pressure to do the same. Currently engaged in the largest ongoing labor dispute in the nation, unionized grocery workers in southern California have refused to accept higher health care costs resulting from cost-shifting on health insurance premiums by their grocery chain employers – cost-shifting, the grocers say, inspired by the threat of Wal-Mart competition. Beginning on October 11, 2003, 70,000 grocery employees of Vons, Pavilions, Ralphs, and Albertsons have either been on strike or locked out. The companies want to dramatically increase workers’ share of health costs, claiming that the change is necessary in order to compete with Wal-Mart’s incursion in the southern California market. E. Richard Brown, the director of the Center for Health Policy at the University of California, Los Angeles, told the Sacramento Bee that, if the grocery chains drastically reduce health benefits, the trends toward cost shifting and elimination of health coverage will accelerate. Following the grocers’ lead, more employers would offer fewer benefits, would require their workers to pay more, and may even drop health benefits altogether.
The conclusion:
    Wal-Mart’s success has meant downward pressures on wages and benefits, rampant violations of basic workers’ rights, and threats to the standard of living in communities across the country. The success of a business need not come at the expense of workers and their families. Such short-sighted profit-making strategies ultimately undermine our economy.

    In the past few years, Wal-Mart has been subjected to dozens of class-action suits seeking backpay for hundreds of thousands of shortchanged workers, dozens of unfair labor practice complaints by the U.S. government for violations of workers’ right to organize, and other legal actions stemming from the company’s employment practices. At the same time, it has managed to keep its wages low and put suppliers on a downward spiral to cut their own wages. To keep up with Wal-Mart’s low-cost demands, U.S. manufacturers have found it increasingly difficult to remain in the U.S. Cuts in health care benefits to Wal-Mart employees are pushing other U.S. grocers to do the same.

    Wal-Mart’s current behavior must not be allowed to set the standard for American labor
    practices. Standing together, America’s working families, including Wal-Mart employees, and their allies in Congress can reverse this race to the bottom in the fast-expanding service industry. The promise that every American can work an honest day’s work, receive an honest day’s wages, raise a family, own a home, have decent health care, and send their children to college is a promise that is not easily abandoned. It is, in short, the American Dream.
See also these posts on Wal-Mart: