Wal-Mart versus The Middle Class

[curious]

Here is an article that I think explains pretty well one of the core problems with the current economy and what our policies allow and encourage. I'd be interested in your thoughts.

I hope you'll at least read the whole linked column with an open mind, and don't assume automatically that this is an "anti-business" view.

In my opinion, this should not be a "liberal vs. conservative" issue, and the Democrats have been almost as good at ignoring it as the Republicans over the last 20 years.

http://www.signonsandiego.com/news/o...1e26golds.html

James O. Goldsborough
The San Diego Union-Tribune

January 26, 2004

Excerpt:

One way to look at President Bush's amnesty plan for illegal immigrants is through the lens of Southern California's grocery shutdown. Employers such as Wal-Mart, already under investigation for hiring illegal immigrants and other malpractices, will use amnestied workers to drive wages and benefits down still further.

The grocery business is living on the edge, and not just in California. Traditionally, grocery workers have been able to make a decent living. The wage of full-time unionized clerks averages around $15 an hour – $25,000-$30,000 annually, depending on hours worked. In addition, workers have had health care benefits.

At these levels, grocery clerks survived in this region despite its high real estate prices. Often they had long commutes, especially if their stores were in affluent suburbs, but for decades these workers were as much a part of America's solid middle class as service workers anywhere. They owned houses, raised families, took comfort in belonging to America's company-based health care system.

Along comes Wal-Mart, the world's largest business, whose revenues equal an astounding 2 percent of U.S. GDP and whose power rivals that of the great trusts of a century ago. Specifically, Wal-Mart resembles the Great Atlantic and Pacific Tea Company, which in its heyday owned 80 percent of the supermarket business, until Washington used the trust laws to whittle it down to size.

Wal-Mart plans to open 225 supercenters this year alone. That includes new stores and expansions of existing stores to add grocery departments directly in competition with Safeway (Vons), Ralphs and Albertsons, stores currently involved in the strike-lockout. Forty supercenters are planned for California in coming years.

Wal-Mart has the distinction of having four of its Walton owners ranked among America's 10 richest people, according to Forbes. The Waltons do especially well because their employees do especially poorly, with clerks earning, on average, 40 percent less than unionized workers, and receiving either marginal health care coverage or none at all.

The chain keeps its prices low and owners rich. Last year the five Walton heirs saw their net worth increase from $94 billion to $102 billion.

Wal-Mart's remarkable growth raises this question: How will blanketing the nation in supercenters affect our communities?In 1948, the A&P's abuses were flagrant enough that the government used the Robinson-Patman Act to enjoin the company from using price discrimination to drive smaller grocers out of business.

But antitrust vigor has faded in our globalized world, allowing mastodons to stroll the Earth again. Happy with low prices, Wal-Mart customers don't connect those prices to the demise of neighborhood stores, the influx of illegal immigrants or the use of foreign suppliers to replace U.S. companies.

Antitrust law once saw its goal as "the organization of industry in small units that can effectively compete against each other," as Judge Learned Hand wrote in U.S. v. Alcoa, 1945. Today, we have moved away from that view, but to where? Wal-Mart has replaced the A&P as the grocery leviathan changing the face of whole communities. Is this right?


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[Liberty]

I just love class warfare, don't you?

[curious]

Originally posted by Liberty:
I just love class warfare, don't you?

I'm glad you read it with such an open mind. [img]tongue.gif[/img]

[Liberty]

Well, try this for an open mind.

No one has to go work at Walmart. They do it by choice.

The fact is that opportunity abounds in this country. Whether you accept the challenges involved is up to you, not the family of Sam Walton.

.

[Buckley]

I was happy to see that the left is now becoming the party of nativism. What has that guy got against Mexicans anyway? I wonder what he would propose what these illegal immigrants should do. If the economy is so bad that they are willing to leave home for the USA, there must not be much in the way of opportunity in Mexico.

Moreover, I wonder why he does not consider the social cost of not having Wal-mart. Walmart provides inexpensive products for a huge segement of our population, provides jobs for thousands, and is very active in the community. I also loved how he refered to "goon squads." Nothing like an open-minded fellow de-humanizing a group he does not like, eh?

For the record, the labor movement hardly created the "middle class," whatever that means. Hard work created our prosperity.

Finally, various advancments have enabled businesses like Walmart be successful, possibly to the detriment of locally owned mom and pop grocery stores. What would be better, let this new economic trend force a change via subtle economic pressure or to prop up mom and pop stores with subsidies and other inefficient government programs?

-Buckley.

[reagan_youth]

Well, here is a first. I agree with curious on this one.
Around a week ago I posted an article about the programmers losing their jobs to India.
I think it is almost funny that the upper middle class is finally waking up to what the lower middle class has been saying for quite some time.
I started an organization at church that feeds 300 homeless a week. Because of that I get to research the qualifications for government aid.
Here is the problem with the Wal-Mart mentality that is going on in America.
If you make less than $30,000 as a family you will be given handout after handout. Then, at tax time you will be given another entitlement.
When you pay your $1.62 for your toothpaste at Wal Mart instead of $2.09 at Safeway you might think you are getting a bargain. I say, think again.
Your tax dollars are supplementing that low price.
Why? Because the guy who used to make $16 an hour is now at Wal Mart at $9. Who picks up the tab for his kids medicaid? Who picks up his kids free lunch at school? Who pays for his food stamps? What about the earned income tax credit that he gets?
YOU DO! So, enjoy your cheap toothpaste.
Safeway and union jobs may not be the answer. However, Wal Mart is not the solution either.
Free markets are not always the answer. I stand by that statement. There are times that the free market would sell our country down the river. This is one of them.
The BILLIONS that are going to China from Wal Mart will help no-one in the future. Think Chinese people will be buying the Ford made in Michigan? HA! They will take our technology, pay their workers $1 an hour and make the Festiva over there.
If I am so wrong, why has the balance of trade (or lack thereof) gotten worse every single year with China?

r_y

[curious]

Originally posted by Buckley:
I was happy to see that the left is now becoming the party of nativism. What has that guy got against Mexicans anyway? I wonder what he would propose what these illegal immigrants should do. If the economy is so bad that they are willing to leave home for the USA, there must not be much in the way of opportunity in Mexico.

Moreover, I wonder why he does not consider the social cost of not having Wal-mart. Walmart provides inexpensive products for a huge segement of our population, provides jobs for thousands, and is very active in the community. I also loved how he refered to "goon squads." Nothing like an open-minded fellow de-humanizing a group he does not like, eh?

For the record, the labor movement hardly created the "middle class," whatever that means. Hard work created our prosperity.

Finally, various advancments have enabled businesses like Walmart be successful, possibly to the detriment of locally owned mom and pop grocery stores. What would be better, let this new economic trend force a change via subtle economic pressure or to prop up mom and pop stores with subsidies and other inefficient government programs?

-Buckley.

I don't think the author has anything against Mexicans. He is talking about the larger issue of companies driving down wages by hiring desperate illegal immigrants (or "guest workers") at lower wages, thus eroding the basis of our own workers' standatd of living.

Businesses can reach a point where they become too big and powerful and arrogent. And by driving out competition, they create a situation where the positive benefits of competition for workers and consumers erode or disappear.

And you are oversimplifying when you say the liberals only see the remedy is "subsidies" etc. If a gang of big bullies in a schoolyard is beating up all the otehr kids and stealing their lunch money, don't you think at some point something ought to be done to at least control their behavior for the sake of the other kids?

And, as I have noted before, many on the left do not see this merely as a question of "more regulation." Rather it ought to include looking beyond the fact that one can buy a cheaper shirt at Wal-Mart to the reasons why that shirt is so cheap, what the effects on society are and how we might as individuals and groups make choices that don't contribute to this trend towards monopolization.

It's not only the "mom and pop" stores that are getting hammered by the likes of Wal Mart. Other chains also get driven out of business as Wal Mart uses its clout to control supplies and artificially lower prices until they drive away competition and have the market to themselves.

And for the record, the labor movement alone did not raise the average standards of living of people (enlarged the middle class). But it did have a lot to do with it, along with the contributions of business growth.

The point is this ultra-laissez faire "let the market be the only economic control" inevitably leads to monopolistic situations, and polarizes the structure of classes if it is not balanced by other factors. By ignoring or denying that reality we will (perhaps are) slipping back into a new Gilded Age of monopolistic trusts and robber barons, while average folks find their options increasingly limited.

Good free enterprise conservatives ought to be as concerned about that as us whacky liberals.

[curious]

Originally posted by reagan_youth:
Well, here is a first. I agree with curious on this one.....

Regan youth,
Well, if you agree with me it means you're right for a change.

I'm just kidding.

But seriously, I agree 100 percent with your post. The problem is real, and transcends the usual political labels and positions.

We may ultimately disagree on how to solve it in specific terms (or maybe we'd even agree on that) but we can at least deal with it if we acknowledge that the problem exists.

And, as you rightly pointed out, it actually adds fuel to the "liberal agenda" when more and more workers are forced to turn to public social services because of unemployment or falling wages and benefits in the private sector.

(Believe it or not, most liberals would prefer to see people be economically self-sufficient too.)

IMO all sides of the political spectrum will need to start thinking "outside the box" of rigid ideology if we are to really tackle these problems.

[reagan_youth]

That would be why I call for the SNOSL program.
Subsidize Now Or Subsidize Later.
If we grant the argument that the free market will create the above situation AND we grant that we live in a society that does not like to see street urchins beggin on the street then we are left with a dilemma.
My solution:
Subsidize the American worker NOW! Why wait to pay for their lunches with some bloated program? Why pay for their medicaid bills in the future?
Instead, subsidize that American worker who WILL be making $9 an hour if we do nothing. Give that worker $6 an hour from the treasury and let them pay for a private sector HMO. Let them pack their kids a lunch from the paycheck that they bring home.
Sound un-American? Sound like big government? Not a chance. Actually, just smaller big government than you get with the Wal-mart'ization of America. The big government you fear is ALREADY here! I see it everyday with the people I work with.
Now if you want to argue for street urchins or for having old people dying destitute then we can debate that. But please understand that you already have in place a safety net that is growing and growing and growing from the people that Wal Mart and its mentality are displacing.

r_y

[Buckley]

IMO all sides of the political spectrum will need to start thinking "outside the box" of rigid ideology if we are to really tackle these problems.

One part of this is abandoning the anti-capitalistic mentality. Just because a business is big does not mean that it is bad.

As for Walmart, most people who work there are working their way up the ladder, not necessarily at Walmart, but in the general workforce. I wonder if anyone has done a study to see how many people work their as their primary career for twenty+ years. I am sure not many, and many who do stick around long enough will work their way into management jobs that pay very handsomely.

I don't think the situation is as grave as you are making it out to be Reagan Youth and Curious. Remeber, the work force is not static. People change jobs, move on to higher paying jobs, and learn how to provide for themselves. Attacking Walmart is not a good starting point to fostering a good economy.

-Buckley.