Friday, August 18, 2006

'Wal-Mart: The High Cost Of Low Price' ...

I don't shop at Wal-Mart on principle. I've been in Wal-Mart twice in my life: once I was tagging along with someone, once I was in California on my way to Big Sur and needed to use a bathroom.

But my parents have a Sam's Club membership that they used for their business. They've retired but the Sam's Club membership remains. I have a card on their account. It's the same company, of course. And we've visited Costco to investigate if it carries the products we pick up at Sam's. Costco doesn't carry the things we go to Sam's for, but after watching this documentary, I don't care. I've paid my last visit to Sam's Club. I can't in good conscience support the evil empire. And if that means that I have to spend a few more dollars to buy products at their regular retail prices, so be it.

You might dismiss these documentaries as propaganda. But any company that puts together a "war room" to help combat all its negative publicity can't just be the victim of a smear campaign. The truth hurts, eh?

This documentary shocked me. I've heard the stories about Wal-Mart not paying its employees a living wage. I've heard the stories about uncompensated overtime. I've heard the stories about illegal immigrants being locked in the stores at night to clean them. I've heard the stories about employees needing to rely on state-funded healthcare because their Wal-Mart benefits are too expensive to pay for from their meager wages.

Here are a few things in the documentary that I didn't know: I didn't know that Wal-Mart can boast that 74 percent of its employees are full-time because Wal-Mart defines full-time as 28 hours a week. I didn't know that Wal-Mart spends about $8 million per store to quash unionizing activities. I didn't know that Wal-Mart receives literally billions of dollars in subsidies, money that isn't going to local police and fire departments and schools. I didn't know that just when a community is about to start receiving 100 percent of the sales tax revenue generated by Wal-Mart, it will build another location, sometimes just a couple miles away, to avoid paying the taxes. I didn't know that as of the creation date of this documentary there were nearly 27 million square feet of empty Wal-Marts, enough room to build nearly 30,000 classrooms and educate nearly 600,000 kids. I didn't know that the living conditions in China for the workforce that makes $18 billion worth of goods imported by Wal-Mart every year are so despicable, and that even if workers elect to not live in the cramped conditions, Wal-Mart still deducts the rent from their paychecks. I didn't know that those people are earning about $3 a day. I didn't know that a toy that Wal-Mart sells for $14.95 is assembled in China for 18 cents. I didn't know that in this country, Wal-Mart encourages its employees to get on state-sponsored health and food plans. I didn't know the extent of crimes that occur in Wal-Mart parking lots that in many cases have no security coverage, or have cameras installed (often put in place when management got wind of talks of unionization) but have no one monitoring the camera feeds inside the store. I didn't know that Lee Scott, the CEO of Wal-Mart, earned more than $27 million in 2005 while the average Wal-Mart hourly sales employee earnings were less than $14,000.

The poverty level for a family of four in 2005 was $19,350.

All of those things piss me off. But it gets worse. The Walton family is worth a combined $102 billion (as of when the documentary was created). The family has given one percent of its wealth to charity. Bill Gates has given 58 percent.

But this is the best: Wal-Mart employees have the opportunity to donate a portion of their paychecks to a fund to help fellow employees in the event of a disaster. In 2004, employees donated more than $5 million to the fund.

The Walton's family combined annual contribution for that same year was $6,000.

There's a Wal-Mart about 10 miles from my house. Last year, No Wal-Mart signs started popping up in local front yards. Huh? Wal-Mart is already in the area. But no. Wal-Mart was planning on building another location, literally seven miles from the other store.

The measure was defeated.

(An aside: Hats off to Springsteen's camp for giving the filmmakers permission to use Bruce's rendition of "This Land is Your Land." It's a really powerful choice that underscores an early, crucial part of the film.)


Anonymous Anonymous said...

Yawn. Wal-Mart is a powerhouse in America because people shop there. Why? Because it's cheap. Only self-righteous liberals who believe in their own pompousity would pass up the deals at Wal-Mart. You're only fooling yourself in thinking Costco is better. I think when the government you want starts to take money from you in the form of socialist taxes, then and only then will you shop at Wal-Mart. You won't have any money left to shop anywhere else.

5:51 PM  
Blogger Beth said...

I didn't say I was going to start shopping at Costco. I said they don't carry the things we'd buy anyway. And I'll agree that it's likely no better.
Go ahead and shop at Wal-Mart. I prefer to have principles.

6:26 PM  
Anonymous Anonymous said...

Pompous liberal. "I prefer to have principles." Next you'll be complaining about the "high" price of gas.

10:07 PM  
Anonymous Ethan said...

"I didn't say I was going to start shopping at Costco. I said they don't carry the things we'd buy anyway. And I'll agree that it's likely no better."

Actually, from a labor perspective, Costco is much better than WalMart. We're big fans. But you have to buy in bulk, which can be a problem. The trick is to make it work _for_ you. (I recommend a diverse shopping portfolio anyway.)

9:43 PM  
Blogger Jeff Hunter said...

I admire you for sticking to your principles. However, most people don't think the same way you do. Most people want more for less and that transcends income level.

Wal-Mart, the corporation, has a responsiblity to their shareholders to maximize their profit for capital invested. How those individual shareholders distribute their philanthropic dollars is not the concern of the company. By the way, Bill Gates only recently started giving his money away.

The employees of Wal-Mart have a choice. They can continue working at near poverty levels, or they can find a new job that pays more. A single-income family of four that makes minimum wage is a little out of touch with what it takes to raise a family. They're not forced to work at Wal-Mart, are they?

Lastly, Wal-Mart is a company, just like the thousands of other companies, that get tax breaks. In exchange for those tax breaks, the company brings in hundreds of direct jobs and thousands of in-direct jobs. The local government may get less in property taxes, but many other tax revenues increase; income tax, sales tax, etc.

The small town I grew up in had a couple dozen mom and pop stores on it's main street. During the late '70s and '80s, the Mall concept started taking off and the majority of those stores closed down and turned into pizza joints, coffee shops, or were boarded up. The town was really in a shambles until the late 90s. Wal-Mart came in an tore down an abandoned furniture factory and feed store and created a Super Wal-Mart. Now, there are new stores popping up all over.

Pull a Wal-Mart out of a community and see what happens.

9:54 AM  
Blogger Jeff Hunter said...

Look for less of those big box stores in Chicago.

12:20 PM  
Anonymous Anonymous said...

Beth, I wonder if you ever take the time to look at both sides of any of the documentaries you see. Below are just a few snippets I found in about 30 seconds online that maybe didn't make it into this documentary. I haven't seen it to be fair.

Bill Clinton speech Aug 7, 2006: Wal-Mart, which is not normally considered an arm of the Democratic Party, has announced the most comprehensive plan: to cut back on their greenhouse gas emissions and their uses of coal and oil by designing new stores, changing their transportation patterns, drastically cutting the size of the packages of the stuff we buy, using less plastic, less cardboard, less energy. And they are going to make hundreds of millions of dollars a year out of it. All by themselves, they’re going to do that. (without government pressure)

From the AP:

Workers at more than 1,200 stores will see their paychecks grow by an average 6 percent, and the world's largest retailer said it will begin introducing wage caps for the first time on each type of job in all stores.


"We've created about 240,000 jobs in the last three years and we are continuing to grow. We need to ensure that we have the most appropriate classification and pay programs to meet our growth needs," [John] Simley said.

Posted 8/8/06

The Rockford (Rockford, IL) Register Star reports that the "Belvidere Wal-Mart Supercenter plans to award more than $5,000 today to several local organizations." The charities include "Angel Flight, which gives free airplane service to families needing medical treatment."

The incredible thing about this story is that we could write it every single day.

Last year, Wal-Mart gave more than $245 million in contributions to charities across the country. And the majority of those donations were made by local stores -- like the one in Belvidere -- to local organizations where it can do the most good.

Wal-Mart Associates and customers donated another $72 million through in-store fund raising efforts.

10:33 AM  
Blogger Beth said...

Certainly no organization is all good or all bad. But 1) The company is masterful at spin. It has former political strategists working for them to make them look good. As for their environmental policies (referenced above): Who's measuring that? They can say anything they want, and maybe they're actually doing it, but the flipside in the documentary is that there was a Wal-Mart store with palettes upon palettes of fertilizers and otherwise toxic chemicals in the parking lot, many of which had been broken open and were spilling onto the ground. Trouble was, this Wal-Mart was right near water, and all those chemicals were washing right into the town's water supply. Local officials tried in vain to get Wal-Mart to address the issue, and it wasn't until they went to the media and Wal-Mart management saw it on the news that they bothered to do anything. As for the charitable contributions, that's nice. It's also rather paltry for such an enormous company with *profits* in the tens of billions every year.

10:46 AM  
Anonymous Anonymous said...

An American company is supposed to make a profit. This is AMERICA, free market capitalism reigns supreme. If you want corportions to give away more of their "profits" to help the "little" people, move to europe where taxation is high and there are no real innovations coming out of their quagmire of socialism. Where are all new ideas and innovations coming from? America. Why? Free market capitalism.

12:18 PM  
Blogger Beth said...

Profit is indeed a lovely thing, but not when the employees that are turning that profit for the corporation have to rely on state-funded health care and food stamps because their employer won't pay them a living wage.

12:24 PM  
Anonymous Anonymous said...

$245 million is now paltry? Wow.

As for your comments on "spin" can not those against Wal-Mart spin anything they want their way as well in, say, a documentary against it?

And besides the workers making a living, maybe you should consult the thousands of stockholders across the nation that are benefitting from Wal-Marts eye on the bottom line.

12:45 PM  
Blogger Beth said...

Making a living? You call not being able to feed your family on what you earn at your job making a living?

12:49 PM  
Blogger Dave said...

Maybe your arguments for Wal-Mart and what they stand for would hold more water, Anon, if we knew a bit about your background. You come across as one of those Republican types who was born, if not with a silver spoon in your mouth, then with some level of comfort. If that's the case, then at least admit it, 'cause it can be safely said that your opinions here could be clouded by what you know of the world from your eyes. That's not a slam, just common sense.

Verification word: qmhsvbhj

1:36 PM  
Anonymous Anonymous said...

Although not the famous Anon from above, I agree with her/him (Beth, this is Gretchen). I am a republican with a small "r" and vote for the right candidate not partyline. I grew up in small town of 700 and just paid of my school loans at the age of 31. I started my own business 5 years ago being a pauper for the first 2. My town of Jacksonville, IL has a Wal-mart that has been a godsend to the community bringing jobs and more stores and restaurants than before. A Home Depot came in and opened close. I personally know many of the people that work there and I think we up here in Chicago and the urban areas get skewed about what a living wage is and how they live. You CAN live on $20-30,000/year down there. Not lavishly but certainly okay. Did you know that a full-time (40 hours) manager for Subway, Domino's, DQ, etc. makes $18-25/year? And it is up to each store owner whether or not to offer benefits. My sister has been branch manager in our town for 14 years and makes $32k per year with two kids, own their home and just bought a new car.

I do think that there are two sides to everything. Two stories as a writer would say. I honestly have never had one of our family friends that work there complain about the wages or benefits.


3:03 PM  
Blogger Jeff Hunter said...

Making a living? You call not being able to feed your family on what you earn at your job making a living?

Certainly you're not advocating that a person should be able to raise a family and live the good life on a minimum wage job? Are people supposed to put food on the table in Chicago on the inflated $10/hr "living" minimum wage? I think not.

4:16 PM  
Anonymous Anonymous said...

Uh, Jeff, (Gretchen here), I believe I mentioned that I was talking about non-urban areas, specifically my town of about 700 HUNDRED. So what would they have to make to raise a family and live the good life as you say? $15/hr.? $20/hr? $50/hr.+ automakers? Why speculate, what do you think these workers should be making per hour in Southern Illinois or the Chicago area?

6:16 PM  
Anonymous Norberto Quintanar said...

My wife, Gretchen, sent me a link to this thread. I am pro Wal-Mart. I've slacked off on reading your blog. First off on poverty, I grew up poor on the east side of Aurora IL. The oldest of four raised by a single mom. If you don't believe me I'll walk you through my old neighborhood, but you'll have to bring your own bullet proof vest. I'll be wearing mine. It's my opinion that to escape poverty one must choose to not be poor. Anyone can escape living poor they have to want to escape. It's my opinion that if the only job you can get is a job at Wal-Mart, you have no one to blame but yourself. It's stupid economic policy to force a company to have to pay a "living wage." Watch what happens in Chicago of Daley doesn't veto the "big box" bill. Stores are already threatening to leave the city. If people can't afford to live in a particualr community, maybe they should move somewhere else. Gretchen and I know another woman who is always harping about how the government needs to do more for poor people. I say tell poor people to get off their lazy asses and do something about their situation. There are plenty of programs out there to help the poor. For example, my last employer, a community college, gave single mothers free tuition, stipend, and day care for their children while they attended classes. All they were required to do was work ten hours in the day care, they were being provided. There were slots for 30 women a quarter, it never filled. The most they ever had was 12 women. I agree with free-market capitalist anon above. Especially since 2% of our portfolio is WMT. We also have some XOM. I guess that makes me evil.


8:41 AM  
Anonymous Ethan said...

FWIW, here's what the Harvard Business School had to say about Wal-Mart.

In the meantime, chew on this for awhile: There's no such thing as a "free" market in the context of an economic "system". Discuss. Or not.

9:30 AM  
Anonymous Norberto Quintanar said...

Very good article. I'll give you that we're not a "true" free-market. But now you're just splitting hairs. I've got better things to do with my time, like study for a masters in business so I can get rich off the backs of the poor.

9:51 AM  
Anonymous Ethan said...

Being that you (and others) are defending your position with the "free market", I disagree that I am "splitting hairs" with my caveat. It's cool if you don't want to talk about WM anymore, I need to get back to using some MBAs as office furniture.

11:55 AM  
Anonymous norberto quintanar said...

Just like any degree there are people who use it to "get ahead," but don't necessarily know how to use it. I could give you a hammer, it doesn't mean you will now know how to build a house. I have a pharmaceutical chemistry degree, if you ever need kindling for a fire, call me, in the midwest it's useless.

3:42 PM  

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