Time to Target Wal-Mart

By Robert L. Borosage and Troy Peters, TomPaine.com. Posted November 15, 2005.


Wal-Mart's size, policies and politics have become major threats to America's well-being, and it's time to strike back.

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More stories by Robert L. Borosage
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Wal-Mart must feel like a piñata these days -- everyone's lining up to take a shot at it. This week, 7,000 house parties are being held to screen Robert Greenwald's blockbuster documentary, "Wal-Mart: The High Cost of Low Price." The inspector general of the Labor Department censures its sweetheart deal that promised to give Wal-Mart notice before any future investigation of illegal child labor practices. Legislators from the L.A. City Council to the U.S. Senate are introducing legislation to curb the giant's public subsidies. Communities are rejecting Wal-Mart's demands for subsidies and zoning exemptions. Right-wing groups are furious Wal-Mart is taking the Christ out of the Christmas holidays. It's gotten so bad that Wal-Mart has created a war room staffed by veterans of political campaigns to wage the PR battle.

Why Wal-Mart? For one thing, it's hard to avoid. It is the world's largest private corporation, employing more than 1.6 million "associates" worldwide -- more people than Ford, GM, GE and IBM combined. The company serves 138 million customers per week worldwide and has outstripped any competitor. In 2004, it pocketed $10.3 billion in profits, on sales of $285 billion, more business than Target, Sears, Kmart, J.C. Penney, Safeway and Kroger combined. There are upward of 3,800 Wal-Mart stores in the United States today, in addition to nearly 1,600 locations in countries from Mexico to China. Wal-Mart alone is China's eighth-largest trading partner. It accounts for over 10 percent of our annual trade deficit with China, with over 70 percent of its products made in China.

If Wal-Mart's size is a problem, its policies are a threat. Wal-Mart is the model "low-road" corporation in the global economy. Its efficiency is celebrated; but its exploitation is caustic. The average pay of a Wal-Mart employee is $8.23 per hour, or an average yearly income of $14,000 -- not enough to lift a family out of poverty. Wal-Mart is infamous for requiring workers to work overtime off the books. It's been cited for locking workers in plants overnight. The company has been hauled into court for discriminating against female employees. And it is viciously, rabidly anti-union, crushing any attempt by its workers to organize to gain a fair share of the profits they help generate.

But Wal-Mart doesn't merely follow the low road; it drives its suppliers and its competitors into the same race. When Wal-Mart comes to town, it purposefully wipes out small mom-and-pop stores, leaving small towns looking like they were hit by a neutron bomb -- buildings intact, but people gone. Wal-Mart also undercuts big competitors that have unions and pay decent wages and benefits. They must slash wages, cut back on benefits or hang it up.

Given its size in the United States, Wal-Mart is a major force in driving wages down and forcing cutbacks in benefits. It is a central reason why we have an economy in which CEO salaries are up, stocks are up, but wages are down.

In China, Wal-Mart pushes its suppliers to lower their costs, generating sweatshops in which young workers -- primarily women -- are forced to work grotesque hours at subsistence wages. According to The Washington Post, Wal-Mart even pressures its suppliers to pay less than the Chinese minimum wage.

Wal-Mart also exploits taxpayers, for it is what Ronald Reagan would denounce as the leading corporate welfare queen. It's estimated that Wal-Mart's government subsidies total a whopping $2.7 billion, or $2,100 per employee. An internal memo to the board leaked recently reported that "our [health care] coverage is expensive for low-income families, and Wal-Mart has a significant percentage of associates and their children on public assistance." In fact, nearly one-half of the children of Wal-Mart employees are either on Medicaid or have no insurance at all.

While Wal-Mart is driving down wages and driving up public health care costs, its CEO and its owners are making out like bandits. The Walton family is the richest in the world. And they use their private wealth to foster their low-road policies. The Waltons donate millions to politics. Most goes to Republicans who defend their low-wage sweatshop practices, while 20 percent goes to buy a few business Democrats and divide the opposition. They are leading contributors to the voucher movement seeking to privatize education, and staunch advocates of the free trade policies that have stymied efforts to link trade access to the right to organize, environmental protection or even a crackdown on sweatshops.

Across America, people are starting to realize the stark reality: Wal-Mart's triumph is the defeat of middle-class America. If Wal-Mart sets the pace, Americans will pay the price, in declining wages, rising health care costs, longer hours, worse workplace conditions and rising personal taxes to offset soaring corporate subsidies.

America as we know it can't afford Wal-Mart. We can't sustain a $200 billion annual trade deficit with China, but Wal-Mart drives that deficit. We can't afford to subsidize the health care costs of the largest employers in the country -- even as declining wages starve our public coffers. We can't afford to allow sweatshop labor access to the largest distribution network, without accelerating a global race to the bottom.

In the Gilded Age of the 19th century, America faced a similar problem: corporate behemoths, private fortunes amassed from exploiting workers, unions banned, politicians bought. It took a progressive movement to put new rules around the marketplace -- to break up monopolies, create the 40-hour work week, institute the minimum wage, the right to organize, environmental protection, and workplace health and safety laws.

Now a new progressive movement is beginning to emerge. Once more, its agenda is to ban sweatshops, lift wages, empower workers and curb corporate power.

And surely Wal-Mart is and must be that movement's first target. The question isn't why Wal-Mart gets such bad press. The question is why Wal-Mart hasn't been confronted sooner.

Robert L. Borosage is co-director and Troy Peters is policy fellow at the Campaign For America's Future.