Why Wal-Mart Does Not Strengthen Our Economy

It's tax rebate time, and no one is hungrier for the tax rebate checks arriving in mailboxes today than Wal-Mart. The retailer is advertising tax-rebate sales and has offered to cash the checks for free -- all in hopes that consumers will spend their newfound money at Wal-Mart stores. But spending your tax rebate at Wal-Mart won't stimulate the economy -- and here's why:

• Despite bringing in over $378 billion last year, Wal-Mart repeatedly underpays its American workforce. More than 80 wage & hour lawsuits, including a recently certified class action lawsuit in California, are currently pending against the company. Plus, it faces more than 200 discrimination lawsuits for unfair promotion practices, pay discrepancies and other issues, including the nation's largest workplace gender discrimination lawsuit. By failing to fairly compensate its employees, Wal-Mart cheats states out of income tax revenues.
• Wal-Mart also pays poorly. While the company seeks to benefit from the government's rebate payout, Wal-Mart's low wages means store employees have little or no disposable income to spend to stimulate the economy. Think about what even a small raise for Wal-Mart's 1 million+ workers would mean nationally, or what it would mean to your city or town if everyone at your local Wal-Mart got a raise.
• Wal-Mart sources the vast majority of its products from countries overseas, meaning most of the cost of a given Wal-Mart product doesn't go into the U.S. economy. Rather than boosting the U.S. economy, Wal-Mart has played a major role in exporting U.S. manufacturing jobs to countries with low labor and environmental standards. Meanwhile, the company has embraced unions in its Chinese stores and has negotiated with them to raise Chinese salaries. Apparently, what is good enough for China is not good enough here at home.
• Wal-Mart underfunds its health care plan and cuts corners whenever possible, forcing many of its employees to postpone care, thus decreasing their productivity and increasing the eventual cost of their treatment. In desperation, many of them rely on state-sponsored care and drain yet more funds from American communities. That means when Wal-Mart employees end up in emergency rooms, it's U.S. taxpayers who end up footing the bill. If Wal-Mart were truly interested in stimulating the economy, it would begin to adequately fund its health care plan and take care of its own Associates.
• Wal-Mart routinely dodges state and local taxes, meaning money spent at a Wal-Mart store won't end up in your community. Wal-Mart actively works to challenge property tax assessments and creates complex real estate arrangements to obscure how much taxes the company owes. When Wal-Mart dodges its tax burden, it takes precious revenues away from cities and states to pay for roads, schools and other services. In turn, individual taxpayers are forced to pay more to make up the difference (which takes more money out of their pockets) or get by with less.

With its low price focus, Wal-Mart may appear to help the U.S. economy. But, the reality is that with its poor wages and benefits, massive China sourcing and tax avoidance, Wal-Mart makes its workers and the communities where it operates poorer.

As our nation's largest employer and most financially-successful company, Wal-Mart is a singular American institution. It occupies a unique position in our world by virtue of its size, reach and responsibility for the livelihoods of millions of workers and the needs of billions of consumers. And with such overwhelming influence comes certain moral responsibilities. It is the acceptance or rejection of those responsibilities that determines greatness.

For the time being, Wal-Mart has rejected those responsibilities and because of that choice, the money spent there does nothing of what it could to strengthen our economy. Higher salaries, quality affordable healthcare and paying what they owe like any good American, are just three things Wal-Mart can do tomorrow that will make them a company worthy of our money.

Comments

[racom]

For all the walmart apologist, do some reading and see if you still want to be their defender.
Look at the pay scale for walmart workers:
http://www.payscale.com/research/US/Employer=Wal-Mart_Stores,_Inc/Hourly_Rate
http://www.workerscompinsider.com/archives/000601.html
A multi billion dollar company subsidized by tax payers:
http://www.thirdworldtraveler.com/Corporate_Welfare/WalMart_Welfare.html
From the NYT on tax payers paying for health care for walmart employees:
http://www.lintonsouthharpeth.com/html/states_vs_walmart_over_health_.html
Work for walmart? You may need welfare! From 2005.:
http://www.alternet.org/story/22298?page=entire
HHS Poverty Guidelines 2005:
http://aspe.hhs.gov/poverty/05poverty.shtml

[Rule Of Law]

This is great stuff--Thanks!

[racom]

Last night Independent Lens on PBS had a very real look into the China manufacturing industry. Children, 14 to 17 years old working 12 to 18 hour days 7 day weeks, for about $70 and Walmart was cited by one worker. Don't support child labor, don't buy from walmart!

[dadw5boys]

At most the tax rebate checks will allow business to sell off existing stock and make a descent quarter before many close their doors or reorganize to keep the doors open. WRITE OFF DEBT IN OTHER WORDS.

[Dunnage]

Just figure this out? How would you like to work for Walmart?

[FreedomCorpse]

Walmart's business model is America's economic embolism. Its total effect will soon (within just a few more years) become readily apparent to all the naysayers who actually live in this country and are not wealthy (> couple mil) with tremendous economic pain and real suffering. It would be great if I was wrong.

[Rule Of Law]

What I object to most about them is their shirking of their civic responsibility in re taxes and lack of support for the communities they take so much from. That, and their use of their massive purchasing leverage that has forced so many US companies to outsource their product manufacturing in order to be considered by Walmart. That cascading effect has caused at least as many jobs lost, as Walmart may have provided, and a general lowering of the standards for working class people.

Some of their prices, some of the time, are a value,--though you can match or beat them elsewhere--but I've seen what they've done in our little town and they are an implacable corporate Vice that squeezes the life from small towns, especially. I just don't have any use for a bully, corporate or playground.

[Jess27]

Everybody should start calling the workers and shoppers of walmart unpatriotic because that corporation's practices are disgusting.

[BillKen]

Where are all the corporate patriots? They all want to have the benefits of being a corporate citizen but
when it comes to helping the country the message is go screw yourselves. THANKS CORPORATE AMERICA, YOUR LOYALTY MAKES ME WANT TO VOMIT. Semper Fi

[Reio2288]

Wal-Mart and stores like it ABUSE the american worker !!!! Yet no one cares "cuzz its cheap"......IS IT....IS IT REALLY CHEAP ...... Places like Wal-Mart need to be shut down !!! They abuse workers so much and pay so little that THIS IS hurting EVERYONE. No its not me and no its not you but the effects can be seen nationwide. Do yourself, your fellow americans and the country some good. Stop blaming the government for the poor economy and start blaming big business. Want to really help the country with your rebate ??? Visit a small local mom&pop business, stop sucking up to blood sucking big business. If every Wal-Mart in america closed every man woman and child would be better off

[racom]

I bought three copies of the DVD, 'The High Cost of Low Prices' and loaned them out to any one who would watch it. I left one at the Costco store where I shop and it circulated for months among the employees. I do not/will not shop walmart. The family members who inherited the walton fortune are worth about $20 billion each and still will not support the communities or their employees. They might be wealthy but they are extreme lowlifes!!!

[Sumocat]

The main problem with Wal-Mart in regards to economic stimulus is that it maintains its own mini-economy. When you go to most stores and spend money, part of that money goes to the employees, who then spend most of that money elsewhere. Same thing happens at Wal-Mart, except a bigger chunk of employee spending goes back to Wal-Mart. A guy who works at a tire place can't spend all his money on tires, but a guy who works at Wal-Mart can buy tires, groceries, clothing, small appliances, etc. before leaving the store to go home. Sure, most of his money goes to housing expenses. But of the remainder, a large percentage gets funneled back into Wal-Mart. By keeping their workers' wages low, they ensure most of them can't afford to shop anywhere but Wal-Mart (not to mention it's already more convenient for them). Wal-Mart employees form a reliable customer base for the retailer, effectively turning much of their employment expenses back into revenue. In this way, Wal-Mart maintains its own mini-economy, which benefits Wal-Mart, but limits its benefits to the surrounding economy.

[therealredstateblues]

That is what is known as the "company store" model

[therealredstateblues]

And that Walmart workers can't even afford to shop there - they go to the dollar stores

[missjabez]

Actually, you can get the $4 presciptions at Kroger and possibly Target now, too. Mr. Nassar's statements about Wal-Mart do not surprise me. I lived in Arkansas for years and I know the whole spiel about them. They really screw over their employees.

[Chemwiz]

They do? Are you an employee? I see people who work there and look happy to work there. They get paid much more than min wage too.

You lefties get brainwashed by the money mongers like Mike Moore and Al Gore.

[racom]

Just no explaining a conservative idiot. You can not show me one employee at walmart that makes a living wage, not one. Living wage would be covering all the basics, including health care, retirement program, education for children, etc. Not One!!! Oh yea, we are speaking of employees that work for wages, not management!!! We know that Lee Scott, president, has a salary of $1,400,000 with a total yearly compensation package of $31,600,000, so spare us the sordid details of upper management greed.

[FarOutFish]

I am retired and live on less than eleven hundred dollars a month Social Security. My rent is 435-dollars a month. That doesn"t leave me much to spend on luxuries like food. If it were not for Wal-Mart"s low prices there is no way I could survive. Then again I could become Kafka"s "Starvation Artist" and make a good living by not eating.

[FreedomCorpse]

Your situation is not unusual, many people are in the same trap. Unfortunately, when walmarts over-reach sufficiently crushes their competition, they will raise prices to their own liking because there is no competition anymore. The Japanese did the same thing with computer memory chips years ago to crush the competition and take over the market.

[racom]

Not only killing competition but in many cases they, in time, find the store un-profitable, close it and leave the community with no shopping. Disgusting corporation that deserves no business.

[sangsue]

Walmart takes high paying insurance policies out on their janitors and clerks. That means, they're worth more dead than alive. Does anyone but me find that disgusting?

[slemay]

Like most large organizations, Wal-Mart has plusses and minuses for the societies in which it operates. For Wal-Mart, the pluses include lower-priced goods (not necessarily the lowest), efficient logistics that has forced other firms to get better, and employment for people who might not be employed otherwise. Wal-Mart treats employees in its logistics operations (distribution centers, transportation) better than it treats store employees. It also trains them better. Store employees get little good training, but people in the DCs often benefit.

Wal-Mart bears little blame for exporting jobs overseas. Automation and productivity improvements caused most of the losses in manufacturing employment in the U.S.. We've seen a 17% drop in manufacturing employment in seven years, but so has most of the rest of the world, including (with minor recent upturn) China.

Wal-Mart's minuses include its weak human resources record, the destruction of some small businesses in communities where it operates, its tax avoidance and real estate strategies, and the weak levels of service the stores offer.

I've taken informal surveys of my college students for years. Most don't like to shop at Wal-Mart--but they still shop there. In some ways, that sums the company up.

[Rule Of Law]

Let's take these one at a time: Once more with feeling...

"...employment for people who might not be employed otherwise."

That's like saying, without Microsoft none of our computers would work because there would be no OS software. The truth is, that without MSFT there would be dozens of options, many many of them better, and more affordable. Without Walmart, there would be more competition leading to greater efficiencies and More employment opportunity. If you believe the market is self regulating,

"Automation and productivity improvements caused most of the losses in manufacturing employment in the U.S."

And these improvements took place OFFSHORE because the capital requirements were far less than in the US. In order to provide the products for Walmart's distribution chain at THE PRICE WALMART DEMANDS as the world's largest retailer, manufacturing had no choice but to go where the most expensive part of any product--Labor--was the lowest. The purchasing power they wield has created a wave of manufacturers abandoning America.

And, at my school, the students generally boycott Walmart just on the basis of it's human rights abuses. They are more inclined to buy fair trade and organic, and support socially aware corporations, not bullies.

[racom]

Remarkable students and a great response, keep telling the walmart story and save America.

[therealredstateblues]

I work in the automation industry, and we certainly are not being helped by the current state of trade and the economy

This right wing assertion that automation is displacing manufacturing jobs is a lie.

It is still cheaper to outsource to manual labor in the third world than it is to automate

And whole automated lines routinely get crated up and shipped to mexico and china

[PaulALondon]

Many well-off people dislike Wal-Mart, but lower income people love it. When a Wal-Mart opens, they want to work and shop there.

Wal-Mart sells a month's supply of 360 generic pharmaceuticals for almost every type of illness for $4. Chain pharmacies charge much more although customers often don't see it because their insurance pays. To make it possible for people to take the medicines they need and to lower healthcare costs, we need Wal-Mart to compete with the pharmacies.

Underwear, sweatshirts, and other garments in any store are likely to be produced overseas. At Wal-Mart the prices are incomparably lower than anywhere else I have looked.

Wal-Mart, to quote one comment in the New York Times, "did more to fight inflation than the Federal Reserve." Wal-Mart forces grocery chains, pharmacies and other competitors to hold prices down. This was important in the 1990s because it made low unemployment possible. It is important now as food and gasoline prices rise and working people are hurt.

Wal-Mart does not pay high wages, but it pays more than minimum wage even in states like California. It pays better than the little in-city stores that soak poorer customers, who can't get out to where Wal-Marts are located.

Champions of low-income Americans should pay more attention to why these people want to work and shop at Wal-Mart. Are those retailers that pay more than Wal-Mart actually hiring?

[Rule Of Law]

HI--I'm Sam Walton, and I approve this message!

[naturallight]

It is simple. Stop "sourcing products" in China. Source them in the USA, and we will not HATE YOU WALMART, anymore.

I think they also gloss over their primary customer-----illegal aliens.

[PaulALondon]

Sam Walton might approve my post but do you have anything substantive to say about Wal-Mart's 1) impact on inflation, 2) lower prices for generic drugs, 3) lower prices for underwear and other garments, 4) wages compared to the minimum wage, 5) wages compared to small stores in cities, 6) ability to attract employees and customers? Otherwise it is just a wisecrack.

[racom]

Are you aware that walmart has or had a practice of not providing health care for employees and telling them to go to tax-payer state provided services for their care? I second Rule of Laws comment!!! As far as 'ability to attract employees' after they have killed all competition and are the only place hiring at reduced wages what are working people to do, starve or work for the enemy?

[Sanity01]

C'mon folks. It's called free enterprise! Stock holders and investors expect a return. No one is forced to buy at Walmart and no one is forced to work there. However, there is a solution. You could open a store call L-mart and buy your inventory produced you want it produced . You can pay your employess as much as you want (above minimum wage) and go ahead and throw in all the health care you can afford. I'm sure that when you solicit for investors that all of thte Walmart stockholder will sell their stock to buy yours because your return will be so much greater. OR, we could have a State-run store. That's probably the way we should go. Get Real! I realize that there are some regulating that can be tightened with product standards and with labor abuses but return on investment is the name of the game.

[Rule Of Law]

They steal from your country, but that's ok with you?

[Sanity01]

What exactly have they stolen from my country?

[Cathexis]

No company is going to be able to compete with a huge organization that pays subsidixatiopn-level wages to US employees and uses vendors that pay 1/6th or less what US wage earners would earn.

You can call it what you like -- Free Enterprise or Sliced Bread -- but that doesn't make it good; and it does put this ocuntry on a path to 3rd-world economic status.

IMO, we have to stop worshiping labels (e.g., Free Enterprise) and start using our judgment and common sense again.

[FreedomCorpse]

free enterprise, yeah right. Fire the American workers and ship manufacturing to 3rd world countries and exploit the poverty there, then ship the crap back to the US to suck the economic life out of the nation and crush domestic competition at the same time. No one is forced to buy there except that their wages have been stagnant or declining for a decade because what walmart and all the other retail chains have done. what an asshat you are.