Wal-Mart and the Economy

You are guilty ... of shopping at Wal-Mart

by Mike Kilen, Register staff writer

September 26, 2004

Nearly every day you can read astounding Wal-Mart Nation news and add your own exaggeration.

Recently, officials with the large toy chain Toys R Us said they may sell off the company's toy business. The culprit? Wal-Mart. They're taking the toys right out of crying toddlers' hands.

It was also announced last month that Wal-Mart pulled in $134.5 billion in net sales the first six months of 2004, a 12.7 percent increase from last year. It plans to build 220 to 230 new Supercenters in 2005. Wal-Mart is taking over the world.

The No. 1 Fortune 500 company is accused of paying its 1.3 million workers paltry wages to keep its prices low. Its in-house workers average only $7 to $8 an hour, according to Annette Bernardt, a policy analyst at New York University's Brennan Center for Justice, and if Wal-Mart increased wages $1 an hour for all its workers, prices would only go up one-half of 1 cent. Wal-Mart is a cheap labor camp.

So I ask Christine Reay of Johnston if she feels guilty shopping here.

"Well, I was next door at Sam's Club because I own a small restaurant. I needed a couple things over here," she said, almost apologizing. I look into her cart, nearly full of items. "I know, friends tease me about how much I hate Wal-Mart. I'd rather be shopping at Dahl's but ... "

It's the big "but," otherwise known as price.

I take a break in reporting to notice the shampoo my family really likes. It's $2.94. What a price! What harm could it do to buy it?

The guilt should kill me after talking with Ellen Rosen.

The Brandeis University scholar is writing a book on Wal-Mart's abuse of workers.

"They are violating all the labor laws," said Rosen. "The right to organize a union. The right to have a job defined. Sex discrimination."

Among the many lawsuits against Wal-Mart is the largest work-place discrimination lawsuit in United States history. Women claim they have been denied equal opportunity to apply for management positions. About 65 percent of the company's hourly employees are women but only 33 percent of managers are.

"Women are the predominate labor force in low-wage jobs and that's why they can do it," Rosen said. "Men wouldn't stand for it."

She is asked if she ever shops at Wal-Mart.

"I did go to see what it was like," she said. "I bought some underwear."

Past the masses in the cluttered aisles, I realize I am among the rich, poor and middle class. I am among people who are speaking English, Spanish, Indian. I am among DVD players for $38.76!

I ask a senior citizen if, given the alleged discrimination against women, she feels guilty shopping here. She looks puzzled and says, "No."

It's the prices, stupid. We all only have so much cash to go around until the next paycheck.

Wal-Mart has set up a nifty system, best described by the magazine the American Prospect: "Wal-Mart, America's largest employer, pays its U.S.-based workers such low wages that salaries end up lower throughout the retail sector, and an underpaid working class is compelled to shop at low-end Wal-Mart. A thing of beauty, really, if you don't mind all the downward mobility it entails."

The magazine also says the chain pays sub-subsistence wages in "sweatshops of the world" where it demands its products to be produced. It scans the globe for the cheapest goods.

But hold on a minute here. Honey Nut Cheerios for two bucks! I need a cart, before I ask another woman if she feels guilty.

"I'm visiting here from Tipton," she said. "We have a Wal-Mart, and it's the only place where you can get what you need."

The effect of Wal-Marts on small-town Iowa is well-chronicled. They build out on the highway, and small businesses on Main Street wither and die, leaving only a bustling Wal-Mart. Usually cited as a source is Ken Stone, the retired Iowa State University professor who lectures worldwide on the effects of Wal-Mart. He says dollars spent at Wal-Mart have to come from somewhere, and it's at the expense of other businesses.

"Iowa lost 45 percent of its hardware stores, 50 percent of its grocery stores and 70 percent of its men's clothing stores," Stone said. "Wal-Mart didn't cause all that, but it caused a lot of it."

Now that Wal-Mart has become the nation's No. 1 grocery, the bleeding continues. "In Mississippi, Texas and Iowa, sales go down 8 to 10 percent for existing grocery stores," he said.

So you would expect Stone to be as against Wal-Mart as anybody.

He's not.

"On the plus side, they brought low prices and better selection to us," he said. "They also caused many businesses to get better, to be more efficient. Their target market is people who earn less than $35,000. These people believe Wal-Mart is their savior."

He said the big stories going around now about Wal-Mart are that society is subsidizing its poverty-level employees who have few benefits.

"Yet Wal-Mart pays about 60 percent for its employees' health coverage," he said. "A lot of local employers don't even have benefits. You have to put these things in context."

Just then I notice a big tube of toothpaste for $2.48! I put it in my cart, thinking of the Wal-Mart handbook distributed to managers. The magazine The Nation published part of the handbook recently. It said management is expected to invest "365 days a year" to meet the "union- free objective." The magazine goes on to say that Wal-Mart screens out potential employees with union histories or even personalities likely to be sympathetic to unions. Workers told The Nation they have to sign forms agreeing that they would not support any efforts to join a union, which is a violation of labor law.

So where is the guilt for driving down wages, pitting workers against consumers and for ravaging Main Street Iowa? Average Iowans vote with their feet and enter by the thousands under the "Lower Prices" banner every day. They can't afford not to. The question remains for any shopper: At what point do personal savings outweigh the social cost?

"If they already have a strong favorable opinion toward Wal-Mart, they will discount the bad publicity," said Kay Palan, who studies consumer behavior at Iowa State University.

Even if they are lukewarm on the subject, they may change their "belief system" in light of, my gosh, a three-piece Pyrex mixing bowl set for $7.97!

Palan said she shops at Wal-Mart, guilt-free.

"I live in a small town, and they have everything. In my opinion there are lots of things big companies do that we don't know about. They are no worse than the rest."

Most of the time I try to stay away, but I was not strong. I added $28.46 to the sales of Wal-Mart. I stopped at the Hy-Vee on the way home and checked prices on the three items I could compare.

I saved $4.15.

Which is today's (always low) price for Wal-Mart guilt.