Thursday, July 06, 2006

Walmart: The Evil Empire...

Let me start out by saying that I am not completely anti-capitalism. I think if a business is run well, with a product that people want to pay for, that business should prosper and grow.

I also believe that employers should act responsibly toward their employees. Share holders and CEO's may have their place, but a few should not be allowed to become wealthy on the backs of the many people struggling just to survive.

I think what WP said about walmart representing the worst of what America is is true. We (as a large "powerful" nation) have the capability to do so much good, yet we have 37 milllion citizens who live below the poverty line (that's as of 2004 so it is probably even higher today). Again, as of 2004 46 million Americans were without health insurance. We as a nation seem to be closing our eyes to the people right here on our own soil who are not making it, and it is only going to get worse if we continue living the way we do.

Do I blame walmart for all of these problems? No, but I do believe that Walmart and other big box stores (yes, I do think other big box stores are also bad, but walmart is the biggest, and therefore the "baddest") share a large part of the problem. Getting rid of all the big box stores would not solve everything, but it would be a good start.

What's Wrong With WalMart?

In 2004, there was a report released by the Committee on Education and the Workforce (of the US House of Representatives). The report said that low wages at walmart end up being subsidized by federal taxpayers because the walmart wage is not a living wage (and I would say that this applies to any store which does not pay a living wage).

"A typical Walmart Store with 200 employees cost federal taxpayers $420750 per the following ways:
$36000 a year to pay for free and reduced lunches for walmart families
$42000 a year in housing assistance
$125000 a year in federal tax credits and deductions for low income families
$100000 a year for additional child tax credits
$108000 a year for federal health care costs of moving into state children's health insurance programs
$9750 a year for additional costs of low-income energy assistance

Now, I completely support government programs to help those who are needy, but I don't support big businesses getting wealthy while employees are being supported by the government. You might say that the employees should get more education and find better jobs so that they didn't have to work at walmart. I would tell you that that is a very egocentric view of the world. You or I, or anyone reading this post might be in a position where getting a good education and looking for a decent paycheck is standard. That's just what we do, because that's what our parents did. That's the kind of life we were taught to work for. Not everyone is so fortunate, so to apply our natures onto everyone is not realistic. Not everyone lives the kind of life where higher education is considered. You live the way you are taught to live, and very few people have the wherewithal to overcome their lifestyle-imposed limits.

Walmart sells cheap stuff. The cheap stuff has to come from somewhere. According to a frontline PBS documentary, As the single largest customer to most of its suppliers, Wal-Mart openly uses its bargaining power to negotiate lower prices from suppliers. Specifically, in its negotiations with suppliers, Wal-Mart requires that prices go down from year to year. If a vendor does not comply with Wal-Mart's request for reduced prices, they risk having their entire brand removed from Wal-Mart's shelves in favor of a lower-priced competitor or a less expensive store brand. This can put pressure on suppliers to shift jobs to factories in third world countries or reduce the quality of the product. Here's an interesting article on walmart's effect on US manufacturers.

We love to buy cheap stuff. The cheaper the better. We shop around to get the cheapest price on our food, our clothes, and everything else we buy. I myself am guilty. I love a good deal. It scares me a little though, that for a "good deal" we are destroying our economy. I will not shop at walmart. I try to limit shopping at any major big box (except costco, because they are responsible employers).

I encourage everyone to shop locally. Support the small locally owned businesses, sure you may not be able to buy as much, but at least you'll be able to sleep at night (and your pajamas will be much better quality).


Tyler Farrer said...

Let me see if I understand. Walmart is bad, at least in part, because they contribute to fewer people getting health insurance. Walmart also crushes local businesses by providing cheaper prices-The small businesses can't compete.

The NCHC says that less than two-thirds of small business offer health insurance for their employees. So, if Walmart goes away, and the local business survive, we still have a problem of employees going without insurance.

Is it a bigger problem that health insurance costs are so high?

Thanks for the interesting post!

Allie said...

Health Insurance is only part of the problem with walmart. Obviously health insurance in this country is major problem with or without walmart.

Walmart is not a small business and the so "not being able to afford health insurance coverage for their employees" does not apply to them in the same way as it might apply to small businesses. It is understandable when a small business is not able to provide a group health insurance plan. It is reprehensible for a company who makes so much money and should be able to take care of their employees but chooses to make the shareholders more wealthy instead.

Costco is a good example. It can be done. Businesses can make money and be responsible employers.

Allie said...

It is, in my view, appropriate for the government to step in and help people who are employed by companies who are not able to provide health insurance benefits.

It is not appropriate, in my view, for people working at HUGE, wealthy companies to have to depend so much on government help.

Tyler Farrer said...


Good responses. I'll reply to them later.

I just thought you'd be interested in this commentary on a Walmart tax that has been tried in Maryland, and has been pushed across thirty states. The attempt to pass this tax, nationally, failed.

The story appears in the Wall Street Journal(subscription required), but is summarized here.

This has nothing to do with your arguments, in this post, except to illustrate that a large number of people hold Health insurance to be a large part of the problem with Walmart.

Take note of this earlier analysis of the effects on Walmart employees that might be faced if Walmart started to pony up on Health insurance to avoid a tax penalty (see Table 3).

Keep in mind, I'm not trying to rebut your comments now. This is just interesting to see how some are trying to crusade for a good cause, but may make things worse for American workers.

Allie said...

Those are interesting links.

I don't understand why mandating higher health insurance would lower wages. Shame on walmart if that's what they would end up doing.

I don't really think a company should be forced to give benefits like that. I think that people in general should be aware of poor business practices and stop shopping accordingly.

Unfortunately, most people are just interested in the cheapest deal they can find.

Also, since it's hard to read emotion from writing, I will just add that I am enjoying this "conversation" and in no way "riled up" by it.

NatGo said...

I, however, am as mad as hell, and I'm not going to take it anymore.

Okay, I'm joking. But I don't shop at walmart or Sam's Club because the Walton foundation is working to eradicate public education. And I think that is UnAmerican.

But don't rasie a bunch of salient points to counter my argument, because I'm too busy to rebut them. And you won't change my mind.

Alice - don't post this if you think it detracts from the intellegent discussion you've been having. BTW, I love you, you brilliant woman.

Tyler Farrer said...

I think this is a lot of fun!

I do think that Walmart is a "responsible employer".

Let me say that I don't agree that because Walmart has more money that they should pay more than others pay in the same industry, for the same job. My company, which shall remain anonymous, pays a competitive wage. It's all based on local market forces. It is not based on whether the competition is larger, or smaller, in size or profits. That is how it works in capitalism. I don't think I could convince you that it should work this way, if you don't like capitalism.

I love capitalism for what it does for the little guy-me!

Natalie, I think what the Walton Foundation is doing is a different topic. I don't think the Walton Foundation is, at it's heart, Walmart. I do think that you should not donate to the Walton Foundation. This would be a great subject for another post, and I would love to hear more about it! I'm also glad that Allie posted your comment, because my earlier post regarding the Walmart tax was also off-topic.

Allie said...

I'm not saying that they should pay more than other companies. I'm just saying that they should pay their fair share.

If costco can do it successfully, why can't walmart?

Costco Vs. Walmart

Allie said...

And I agree with Natalie on the Walton Foundation.

If you don't want to support the Walton Foundation, you shouldn't support Walmart or Sam's Club, because they are ultimately the same people and the same money.

Tyler Farrer said...

My sources tell me that Walmart pays very well, and offers opportunity to move up in the company. Those that don't want to work for Walmart might consider the benefit packages offered elsewhere.

I know some who choose not to get insurance because of the expense. Sometimes it's expensive even if it is offered by a company--Correction, insurance is always expensive. I'm saying that those who choose to work at Walmart must like something about their compensation or they might look elsewhere. If there is no other job available then Walmart is offering them something that is better than unemployement. That, to me, sounds like a good thing.

I think it's alright for employees to lobby for better benefits. It's even better if they prove that they are worth more, by doing a good job. I just don't think Walmart rises to the level of 'evil', or 'anti-American' for their compensation package. What they do as a company is completely capitalistic, and American.

The Walton's lobbying is another issue entirely. Argue they are 'un-American' for that. There is more of an argument there.

Allie said...

I'm sure there are "sources" for whatever information we are looking for.

My "sources" tell me that walmart is not a good company to work for. But, as you said, any job is better than no job.

Honestly though, if you could choose between working for walmart or costco, which would it be?

Tyler Farrer said...

I wouldn't work for Costco because I hear that it is owned by China. :)

Just kidding. Let's dispel that myth right now. COSCO (China Ocean Shipping Company) is owned by China, and Costco was founded in Seatle and shows every sign of being American owned.

My point is that one can believe all sorts of things about a company that doesn't pan out when research is done.

My answer; it would depend on the job I was doing, and what compensation package I was offered. I have no qualms about working for a company that is rumored to be communist, or a company that may have been started by Darth Vader.

Allie said...

I know people who didn't shop at target for awhile (because it's owned by the french you know).


Tyler Farrer said...

In Australia they pronounce Target that way. When I lived there, we'd ask,
'What does that sign look like?', pointing to the store logo.

'A Target.'

'What is the name of the store?'



Thanks for not taking me too seriously!

C. Carico said...

I recommend "Nickel and Dimed: On (Not) Getting By in America" by Barbara Ehrenreich. It's a first hand account of working for Wal-Mart, Merry Maids, and as a waitress, house cleaner, and nursing home aid. A New York Times bestseller, it's informative and there's a good balance of humor as well.