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The Enemy Within

By Leocthasme

I usually don

I usually don’t write about particular companies or send out articles on particular entities.  Well yes, I send out all sort of things on Dubya, and some of the antics of Republicans in general, but rarely do I pick on a particular company or corporation.

Well, this one needs picking on, and I dug around to look for a lot of reasons to pick on it..  It is a major cause of unemployment, low wages, and tax burdens to communities and even states.  It is a major cause of our ever increasing debt to China and other countries that sell us goods.  And, such legislation as passed and is being passed in congress like NAFTA and CAFTA - the deals that are supposed to help free trade or bring better trade deals to the US - are actually costing us jobs, and breaking our national treasury.  And, just recently, it has caused the loss of jobs of several hundred Union Employees in just my area alone.  A number of grocery stores employing UFCW members have lost their jobs because these outlets can no longer compete and most have closed their doors.  This is not only a local loss but it has an impact on the entire area and even the state of Texas because now  fewer dollars are being circulated throughout the area and the loss of jobs means less revenue to the state in lost taxes and spendable income.

Wal-Mart and its ‘Everyday Low Prices’ don't come cheap.

In fact, each Wal-Mart store employing maybe 200 or so workers costs taxpayers approximately $420,750 annually in public social services used by Wal-Mart’s workers whose low wages and unaffordable health insurance mean most of them are among the working poor. That's the finding of Everyday Low Wages: the Hidden Price We All Pay for Wal-Mart, a report by the minority staff of the U.S. House of Representatives Education and the Workforce Committee.

In Arkansas, Wal-Mart is #1 in Children of Employees on Publicly

Funded State Health Care Rolls   March 17, 2005 report.

Health care and other public assistance for Wal-Mart employees costs

Arkansas as much as $16 million annually

Studies in MA, CT, GA, TN,  WV, WI, WA show states also footing

the bill for Wal-Mart’s employees

Retail giant, Wal-Mart, headquartered in Bentonville, tops the list of companies in Arkansas with employees and their children on the state Medicaid program for uninsured children and adults, the Arkansas Democrat-Gazette reported.  Arkansas joins a growing list of states reporting Wal-Mart as the #1 or a top corporate beneficiary of their public health programs.

“Despite the fact that Wal-Mart makes enormous corporate profits, the company is stingy when it comes to its employees’ health care benefits,” said AFL-CIO President John J. Sweeney.  “When its employees must join public health rolls instead of getting affordable health care on the job, Wal-Mart is shifting the cost to taxpayers, cheating workers and consumers alike. That’s simply wrong.”

Although the nation’s largest retailer does offer health care coverage to its employees, waiting periods, to receive such coverage are long.  Part-time employees cannot get family coverage and the cost is too high to afford.  According to a fall 2003 AFL-CIO study, the insurance premium for Wal-Mart family coverage was as high as $250 per month, a prohibitive expense for many of the retail giant’s low paid workers. 

According to the Arkansas Democrat-Gazette story, “Wal-Mart Stores Inc., with 3,971 of its 45,106 employees on public assistance, topped the list.  By contrast, at Triad Hospitals Inc. the state’s seventh largest employer   only 3 of its employees were on public-assistance rolls.

Georgia, Tennessee, Washington, Massachusetts, Wisconsin, West Virginia and Connecticut have also reported that Wal-Mart employees, and their children are a disproportionately large share of their state healthcare costs.

Currently, 26 states have introduced legislation to require the states to disclose which employers are shifting health care costs to taxpayers.  Championed by members of the National Labor Caucus of State Legislators, these laws are designed to help measure the costs to state health care programs when large and profitable employers such as Wal-Mart skimp on coverage.

A 2002 Georgia state survey showed that 10,261 of the 166,000 children covered by Peach Care for Kids (a Georgia state health program) had a parent working at Wal-Mart. That’s 14 times the number for the next highest employer, Publix Grocery Stores, with 734.

And, in 2004, a University of California at Berkeley Labor Center study found that in California alone, the reliance of Wal-Mart workers on public assistance programs cost the state’s taxpayers $86 million annually. Health-related expenses made up $32 million of that number.

“Wal-Mart is hitting its employees with a one-two punch that keeps them in poverty, substandard wages, and stingy benefits.  And, taxpayers are picking up the tab,” continued Sweeney.  “Wal-Mart’s employees and consumers deserve better.”

With annual sales of more than $250 billion, Wal-Mart netted $9.1 billion in 2003 profits, more than twice the profits of its leading retail competitors combined, according to the company's most recent annual reports. Wal-Mart CEO, H. Lee Scott, received a double digit pay increase in 2003, his salary and bonus payments jumping by 26 percent over the previous year. Including the value of stock received, Scott's pay package soared to $12.44 million. But many of his 1.3 million Wal-Mart employees are paid so poorly they can't even afford health insurance.

Wal-Mart’s employees, more than 70 percent of them women, are paid an average $9.64 an hour if they are full-time employees, according to Business Week.  Yet full-time workers, who comprise less than two-thirds of Wal-Mart's workforce, may be scheduled for as few as 34 hours weekly.  Even at $9.64 hourly, working 34 hours a week, a Wal-Mart employee earns only $17,043 annually, well under the $18,850 federal poverty guideline for a family of four.

While 66 percent of workers at large U.S. firms get health coverage on the job, fewer than half of Wal-Mart workers do, an October 2003 AFL-CIO report finds.

Wal-Mart's virulent anti-union policies prevent workers from winning family-supportive wages and benefits.  Unionized workers in the retail food industry make more than 30 percent more in hourly wages than their nonunion counterparts, according to a 2002 report by the Institute for Women's Policy Research.  Yet when new employees start at Wal-Mart, they must first watch a video warning them against joining a union, according to author Barbara Ehrenreich, who chronicled her experience working at Wal-Mart in Nickel and Dimmed: On (Not) Getting by in America.

By keeping its workers in poverty, Wal-Mart also impoverishes entire communities when many residents have less to spend on goods and services, they can't support community merchants and everyone's income and spending eventually drops.

Big-box retailers and super centers such as Wal-Mart transform family-supporting, middle-class retail jobs into lower-paying jobs that often leave workers unable to pay bills.  In the top 100 cities where Wal-Mart's share of the grocery industry grew more than 20 percent between 1998 and 2002, the number of cashier jobs fell as much as 2.3 percent.  And every time Wal-Mart expanded its market share by 1 percent in the grocery business, retail food cashiers' wages dropped an average 5.5 cents per hour, according to an analysis by the United Food and Commercial Workers.  With big-box retailers and super centers tending to convert communities' union-scale retail jobs to fewer, lower-paying retail jobs, the difference in overall compensation, including wages and benefits, is "as much as $8 an hour," according to an October 2003 report prepared for the city of Los Angeles

If union grocery workers' wages were slashed to match the wages of Wal-Mart workers, their communities would lose between $1.6 billion and $3 billion annually.

For every $1 wage cut, the local economy loses a total $2.08 as less

money circulates through the local economy.  If Wal-Mart paid each

employee $1 an hour more, it could maintain its profitability level by

increasing prices a mere half penny per dollar.

That, according to the UFCW, would mean a $2 pair of socks would now cost $2.01  A very paltry sum which would be an immense help to Wal-Mart’s workers.

When Wal-Mart comes to town, consumers often pay more than they save. Not only does Wal-Mart ask taxpayers to subsidize the building of its giant retail stores, Wal-Mart pays its workers so little they regularly are forced to use emergency rooms and public services at taxpayer expense.  First, the company usually asks for massive public tax subsidies and exemptions to build one of its big-box stores. Over the past 20 years, taxpayers have contributed at least $1 billion in subsidies to Wal-Mart stores and distribution centers, as well as to developers of shopping centers anchored by Wal-Mart Stores, according to Good Jobs First, a nonprofit research group.  Next, Wal-Mart makes taxpayers pick up the health care tab for its employees. While 66 percent of workers at large U.S. firms get health coverage on the job, fewer than half of Wal-Mart workers do.  As a result, Wal-Mart workers are forced to use emergency rooms and public services for their health care needs.

A 2001 study commissioned by the city of Barnstable, Mass., found big-box retailers such as Wal-Mart annually depleted the town’s revenues by $794 per 1,000 square feet due to higher road maintenance costs and greater demand for public safety services.  Elected officials in Cathedral City, Calif., gave Wal-Mart $1.8 million in tax rebates 10 years ago. Last year, when the city finally began getting its full $800,000 in annual sales taxes from the two stores, Wal-Mart decided to close them in 2005 and build a new super center in nearby Palm Desert.  Cathedral City officials learned Wal-Mart was moving out after reading about it in the newspaper at a time when the city already had a $3 million deficit. t

Recognizing the huge costs taxpayers bear when Wal-Mart moves into an area, communities have begun standing up to the giant retailer. In Franklin, Wis., a coalition of union, consumer and environmental activists in July 2004 won passage of a ‘size ordinance’ covering retail stores that stopped development of a proposed 184,000-square-foot Wal-Mart super center selling groceries as well as other goods. In Los Angeles, activists won passage of a city ordinance in August 2004 requiring retailers such as Wal-Mart to pay for economic analyses showing whether proposed super centers would eliminate community jobs, depress wages or harm neighborhood businesses.

“They are not good neighbors their low-wage jobs have no health care,” says Cathedral City Mayor Pro Tem Greg Pettis.  He advises other local leaders letting Wal-Marts into their community is “the biggest mistake” they can make with public money.  Whenever a new Wal-Mart opens, small businesses—from dress shops and pharmacies to hardware, auto supply and music stores—close their doors and good jobs disappear. According to the city of Los Angeles’ 2003 report on big-box retailers such as Wal-Mart, Big box retailers and super centers often can result in the reduction of consumer choice due to their tendency to cannibalize competing retail businesses.

While Wal-Mart kills family retail businesses and pushes out jobs that pay well, it also forces suppliers to relocate their plants overseas to meet its low-price demands.  “Wal-Mart has the power to squeeze profit-killing concessions from vendors,” wrote business reporter Charles Fishman in the Dec. 2003 issue of Fast Company magazine: “To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.”   “Suppliers are just as much under the gun to deliver costs savings as are Wal-Mart's non-union, part-time workers,” Jeffrey Rubin, chief economist and chief strategist at CIBC World Markets, wrote March 8, 2004, in the Toronto newspaper, The Globe and Mail.

Wal-Mart is the single largest importer of foreign-produced goods in the United States, and the majority of its private-label clothing is manufactured in at least 48 countries around the world and almost none in the United States.

At the same time, Wal-Mart is the single largest importer of Chinese goods, buying some $12 billion in merchandise in 2002, nearly 10 percent of all Chinese goods sold in the United States. Through November 2004, the United States was running a $147 billion trade deficit with China  By supporting foreign-made goods on such a massive scale, the company that trumpets its All-American image is creating incentives for corporations to destroy good jobs in the United States.  Those low-cost goods at Wal-Mart ultimately come at a high price: lost jobs, lower wages and unsupportable U.S. trade deficits.

Lost Jobs Through Importing Foreign-Made Goods

Such a huge trade deficit undercuts domestic manufacturing and destroys good U.S. jobs because the nation is importing, on a large scale, products that had been produced domestically. The company says its inventory of products made in China was expected to hit $18 billion last year, the second consecutive year the inventory grew by more than 20 percent.  More than 70 per cent of the products sold at Wal-Mart are made in China, according to the China Business Weekly.  More than 80 percent of the 6,000 factories in Wal-Mart's worldwide database of suppliers are in China. If Wal-Mart were a separate nation, it would rank as China’s fifth-largest export market, ahead of Germany and Britain.

U.S. Jobs Shipped Overseas

Between 1989 and 2003, the ever-increasing U.S. trade deficit with China has led to about 1.5 million jobs that either moved overseas or never were created in this country as production shifted to China, according to a report released Jan. 11, 2005, by the U.S.–China Economic and Security Review Commission (USCC), a congressionally appointed panel. The pace of job losses has picked up since China joined the World Trade Organization in 2001, with about one-third of the total, or 500,000, occurring in the past three years.

Lower Wages for U.S. Workers

By supporting foreign-made goods on such a massive scale, the company that trumpets its All-American image is creating incentives for corporations to destroy good jobs in the United States.  As the world’s largest company with sales of $256 billion last year, Wal-Mart exerts a strong downward pressure on wages, and not only for its own workers.  Its sheer size and buying power gives it the ability to influence wage rates of its competitors and suppliers, including manufacturing and construction companies.  Wal-Mart pressures its suppliers through a policy that says the price Wal-Mart will pay and will charge shoppers must drop each year for basic products that don't change. To survive in the face of the retail giant’s pricing demands, suppliers have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.

By purchasing such a large amount of goods produced in China, Wal-Mart indirectly supports continued workers’ rights abuses by Chinese authorities.  A report in The Washington Post shows how Wal-Mart pits suppliers against one another and squeezes them for the lowest price. As a result, the report says factories respond with longer hours or lower pay. And the workers have no options because China forbids independent trade unions.

When Wal-Mart sought to build a super center development the size of 17 football fields on 60 acres in Inglewood, Calif., voters rejected the move in April 2004 in part because of the massive environmental and land-use exemptions Wal-Mart demanded. Wal-Mart devastates community resources in other ways as well.  A delegation of activists from Inglewood went to Wal-Mart headquarters in Bentonville, Ark., on April 5, and attempted to deliver a letter to company CEO Lee Scott. The letter calls for a legally binding community benefits agreement that will protect the rights of the Inglewood community and guarantee living wage jobs, affordable family health care, fair pension benefits, job training and advancement, freedom from retaliation and basic rights on the job

Giant “big-box” stores such as Wal-Mart often “destroy attempts to create pedestrian-oriented communities and a sense of place and pride in low-income neighborhoods by use of unattractive building architecture and site layouts featuring huge expanses of black-top parking lots,” according to an October 2003 city of Los Angeles report on super centers.  Wal-Mart super centers often drive out neighborhood supermarkets and small businesses, creating urban blight and driving down property values.

Big-box retailers such as Wal-Mart typically are at the edge of town, resulting in long commutes to buy groceries, adding to increased traffic and air pollution, according to the Sierra Club.  When a Wal-Mart closes, the vacant property drains value from surrounding commercial and residential areas. According to the Feb. 20, 2002, The Dallas Morning News, Wal-Mart has vacated stores in hundreds of communities as it builds new super centers and Sam’s Club membership warehouse stores. Few non-retail stores need the size of the space vacated by Wal-Mart, and real estate brokers say Wal-Mart will not sell or lease empty stores to what it considers competition. Controlling sprawl generated by Wal-Mart and other big-box retailers may not only protect the environment but also create good jobs, according to a recent Good Jobs First study that looked at 155 metropolitan areas. The nonprofit group found that, over a 10-year period, construction activity in cities with managed-growth polices was worth $100,000 more per new resident than in those that did not try to manage growth.

Chances are, you know someone who works at Wal-Mart. Not only is Wal-Mart not a good neighbor, its corporate practices are less than friendly. In fact, millions of current and former Wal-Mart workers currently are seeking to win back their rights in court. Current and former female Wal-Mart workers say the company has discriminated against them in pay and promotion policies because of their gender. In June, a U.S. District Court in San Francisco gave class-action status to their lawsuit against Wal-Mart, making it  the largest class-action lawsuit in U.S. history representing 1.6 million women who have worked at Wal-Mart since 1998.  For the same job classification, women earn from 5 percent to 15 percent less than men, according to a February 2003 report by Richard Drogin, professor emeritus of Statistics at the University of California, Berkeley.  In 2001, this equated to nearly 40 cents less per hour for hourly workers or nearly $5,000 less annually for female managers, according to Drogin.  Wal-Mart balks at paying even the poverty-level wages workers have earned:   As of December 2002, 31 lawsuits in 30 states had been filed against Wal-Mart, claiming tens of millions in back pay for hundreds of thousands of workers forced to work off the clock or denied breaks.  In April 2004, the California Supreme Court declined to block class certification in a lawsuit alleging Wal-Mart Stores Inc. required some 250,000 employees to work off the clock. Workers say managers required employees to finish their work before going home and that Wal-Mart understaffed stores in order to make off-the-clock work mandatory for all practical purposes.

In June 2003, a National Labor Relations Board administrative law judge found Wal-Mart violated federal labor laws in 2000 by refusing to bargain over job changes it imposed on meat cutters in a Jacksonville, Texas, store after they voted for a voice at work with the United Food and Commercial Workers. After they sought to join a union, the skilled meat cutters were suddenly demoted to “sales associates” and all Wal-Mart stores eventually shifted to selling pre-cut meat.

When Wal-Mart interferes with its workers' freedom to form unions in order to keep wages and benefits down, it encourages other employers to follow suit. Such efforts have real and significant consequences. According to a report prepared for the city of Los Angeles, grocery chains cited “the labor polices of nonunion superstore retailers” as a factor in their demanding wage and benefit cuts from UFCW grocery workers who struck and were locked out in 2003 . And according to a 2002 report by the Institute for Women’s Policy Research, unionized workers in the retail food industry make more than 30 percent more in hourly wages than their nonunion counterparts.

Undocumented workers have been exploited at Wal-Mart. On Oct. 23, 2003, federal agents raided 61 Wal-Mart stores in 21 states and arrested 245 nightshift janitors who were undocumented workers employed by cleaning contractors. In an Oct. 25, 2003, New York Times story, one undocumented janitor said he had worked every night except Christmas and New Year’s Eve for 16 months and made approximately $6.25 an hour with no benefits. Following the October raids, nine Mexican immigrants who worked as janitors in New Jersey sued Wal-Mart alleging that it, as well as the contractors, failed to pay overtime, withhold taxes and make required workers’ compensation contributions. No federal charges were filed against Wal-Mart, but the company agreed to pay $11 million to settle claims stemming from the federal investigation. 

In early 2005, Wal-Mart launched a million-dollar advertising campaign in an attempt to silence its critics. The company bought hundreds of television ads, newspaper ads, and more to tell you what to think.

Rather than fight back with more slick advertising and giant ad budgets, we think there’s a better way to get the real facts out about Wal-Mart— a grassroots way that depends on you for success. Invite your friends to view the facts about Wal-Mart, and then see who accepted your invitations on an animated map that tracks your fact sheet as it spreads across the country.

Check out the Wal-Mart Fact Checker! launched the Fact Checker in February of 2005 and it's still going strong, with over 11,000 participants working to spread the word about Wal-Mart.



There are many interesting sites to visit to learn about Wal-Mart’s ongoing rip-off of its workers, its customers, and its ‘Everyday Low Prices’  which costs the communities in which it operates more than the ‘low prices’ are worth.   Here are just a few, but if you get into one or two you will be surprised to find thousands more linked from one site to another.

Information for this article was researched and compiled by Leo C. Helmer from United Food and Commercial Workers Union, SEIU Purple Oceans Org., AFL/CIO sites, and various news sources and stories.  

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Reader Comments

Name: Greg (Yopo) Email: Unlisted
Comment: Just finished reading your excellent article on Western Swing#comma# then went straight on to this one. Dang#comma# Leo! I just realized what Wal-Mart may ultimately turn out to be: America#apos#s new Company Store! You coulda used Tennessee Ernie#apos#s famous song on this page for background music#comma# #apos#though a lot of folks might have missed the irony.



Name: Clara Email:
Comment: Bravo, Leo!



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