Thursday, July 20, 2006

Remember the workers!

You know, Wal-Mart has been trying hard to look less exploitative in the last couple of months, and I was beginning to think that maybe public pressure just might have worked this time. But here's the ruling that knocks down the Maryland bill that would have forced Wal-Mart to meet a minimal standard of corporate decency, and the news is not good.

Rollback Ruling Favors Wal-Mart

Maryland wasn't asking for much, and they weren't unfairly picking on Wal-Mart. The big box store dumps thousands of workers onto public health roles while other large corporations do their part to take care of their workers.


The Bard said...

We can debate the merits of Wal-Mart another time, but as a legal matter, this case is a slam dunk. ERISA (a complex and boring federal law) governs employee benefits. It preempts all state laws, just like federal environmental laws and antitrust laws trump. Period. Those who want to change the law have to talk to Congress.

Also, your contention that this law is not aimed at Wal-Mart is facially absurd and self-contradictory. The law was written so that it only applies to Wal-Mart. It was drafted by people who said it was aimed at Wal-Mart. How can it not be aimed at Wal-Mart?

And before getting to upset about "dumping workers," perhaps we should take a look at how much Wal-Mart pays in taxes.

Monica said...

Right off, let's establish that there is more to be considered in this issue that how much Walmart pays in taxes. In the value proposition of having or not having Walmart, there are many, many more factors to be considered than money.

I don't have any arguments with the court's application of ERISA. The law was doomed from the minute the Maryland legistlature passed it. But I think the law did take the necessary steps in the arena of public opinion to highlight one more area in which Walmart is a really crummy corporate player.

You are flatly incorrect to assert that the law was written to apply only to Walmart. The Washington Post reported on April 6, 2005 that "the bill did not aim solely at Wal-Mart. Johns Hopkins University, Giant Food and defense contractor Northop Grumman Corp. have enough employees to fall under the bill's requirements. But all meet the 8 percent threshold for for-profit employers or the 6 percent mandated for nonprofits."

The law was written to apply to every corporation that had more then 10,000 employees (thereby having the necessary economies of scale to purchase health care without going out of business), but lo and behold Walmart was the only one that was treating its workers badly enough to be affected by the law. Even if you leave any notion of corporate citizenship and decency aside, there is still the documented fact that Walmart dumps thousands of workers onto public health rolls, and the states ought to be able to do something about that. Perhaps that means that ERISA has to be amended in some fashion, or perhaps there's another solution, but Walmart should have to carry its fair share of the load.

Take a look at for documented reasons to hate Walmart. Please bear in mind that not every argument that they advance will stand, but there are enough legitimate ones to convince me that something needs to be done about Walmart.

mel said...

Well, being a libertarian-leaning almost-free-market capitalist, I'm dying to argue with you here, Monica. :) But unfortunately I haven't had time to do any research to back up my opinions, and I know better than to argue w/ a debate person w/o having any evidence! (I did a lot of reading on Wal-Mart for my OCP group project, but that was over a year ago and I've forgotten most of it now.)

One small picky point... I think there's a difference between a law being "aimed at" a specific entity and its being "written to apply only to" that entity. Maybe it "applied to" other corporations, but I'm pretty sure it was "aimed at" Wal-Mart.

I do enjoy reading your posts about stuff like this, even if I disagree--you always have a different perspective than I do (blame it on my being a business major), and once in a while I actually change my position a bit b/c of your input. :)

Just out of curiosity, do you shop at Wal-Mart? :)

snowman said... makes for great evidence :-)....but the fact is walmart takes people off of welfare/medicaid, not putting them on...i'll fax you the card....

Monica said...

OK, couple of things.

Mel, you're right that the law was targeting Walmart, but I thought it was important to point out that it didn't apply only to Walmart. There's a really big difference between the two.

Do I shop at Walmart? Unfortunately, yes. I hate it, but with Chris in school and the debt piling up, we don't have a whole lot of options. That said, we have a Sam's card, but I try very hard not to shop at Walmart (Sam's is marginally better to its employees), and every time I use the Sam's club, I grit my teeth and wish we could afford to walk away.

So...I'm a very conflicted concerned citizen. I really hate Walmart and its business practices, but for the moment, I can't do anything other than poke my conservative friends :-) and wish for the day when I can shop elsewhere.

Monica said...

Oh, and Snowman...welcome to the blog! Please feel free to introduce yourself to us. :-) It's always nice to have a framework for comments.

mel said...

It was interesting to find out that there were some other organizations to which that Maryland law applied--hadn't heard that before. Just wanted to make sure, though, that we were defining our terms and not using "aimed at" and "applies to" interchangeably. :)

Hey, if you hate Wal-Mart, please share that with others and try to pressure Wal-Mart to change their practices--I'd much rather see that happen than see government meddling with businesses any more than they already do! If enough people get fed up w/ Wal-Mart and start shopping elsewhere, eventually Wal-Mart will have to change. Although I haven't done the research, I suspect this is already happening--your original post indicates something to that effect. And if I remember correctly, at least as of last summer, Target was looking pretty threatening to Wal-Mart!

FWIW, as an almost-grad student, I really appreciate the fact that Wal-Mart is cheap. (I suspect that many low-income people--not limited to those who are employed by Wal-Mart--are as well.) :)

The Bard said...

Mel, thanks for your clarification on the "aimed at" point. Your point about low-income workers is also right on. It is low and middle income people who do most of the shopping at Wal-Mart. They are the ones who benefit from the low prices because saving a few bucks to them is much more important than saving a few bucks to a wealthy person. Those low prices are connected exist becase Wal-Mart keeps its costs, including labor costs, down. Yes, their sales are huge, but if you look at the profit margins, the margins are not that big.

I find it ironic that it is usually the wealthier people who gripe about Wal-Mart's business practices. All of us might like higher wages for workers, but the fact remains that lower pay is better than no job, especially for uneducated workers and when coupled with low prices. Here in Chicago, the City Council just passed one of those "living wage" laws demanding "big box" retailers to pay in the neighborhood of $12 per hour. Over the last few years, the "big boxes" have opened a few stores, and have been in negotiatons to open more, in the city, where the poorer people need the jobs and access to cheaper goods more. Since the law was passed, the spokesmen for Target, Walmart, & Best Buy have all said they are ending their inter-city expansion plans and sticking to the suburbs because the wage requirements throw their profit margins off and make opening stores--stores that could benefit many people--unprofitable, especially when coupled with the risk of opening stores in higher-crime, lower-income areas.

That said, I also agree with Mel that I applaud people who work together as private citizens to encourage change rather than turning to government coercion.

Two more points. First, let me as a conservative needle Monica back and say that her "dumping workers on the public heath roles" presupposes that the government should provide health care to everyone.

Second, the figures I have seen vary, but the average american saves about $1000 a year because of shopping at Wal-Mart and lower prices from companies trying to compete with Wal-Mart.

Monica said...

The average American may very well save $1000 up front from shopping at Walmart, but how much does the average low income worker lose because Walmart can keep the standard wage low? There is a price to be paid somewhere along the line for super-low costs.

A job with low wages is better than no job only if it isn't self-perpetuating. There has to be a chance to learn and move up, or all you have is at-will serfdom. Come on David--that's the line that people who run sweatshops use to justify them. Their workers would be begging in the streets if the sweatshops weren't there. Fine. But the only way you can possibly justify a sweatshop being in existence is if it's a starting point for a quick move up the wage scale. If it's self-perpetuating, we have serious issues with that.

So, you might say, if they don't like working at Walmart, they can go get another job. After all, it is at-will employment; they don't have to stay. But the choice to leave is meaningless choice when you don't have any skills that would allow you to get a different/better job.

Whose fault is it that they don't have skills? It's everybody's fault in varying degrees: it's the fault of the public school system, it's the fault of their parents (or lack thereof), it's their own fault for not taking responsibility, it's our fault for not reaching out to help.

Will the big box stores stop building stores in the inner-cities because of the living wage requirement? I highly doubt it. I'll admit upfront that I can't verify this, but ny guess is that their highest profits come from their inner-city stores, because if you can afford to live in the suburbs, you can afford to shop somewhere other than a big box store, and you probably prefer to shop somewhere else, and the labor force in the suburbs isn't content with low wages. Plus, there's a growing movement among suburbanites to keep Walmart out of their neighborhoods. There's a book that you need to read about what makes stores decide where to go, and I've forgotten the title, but I'll find it and post it up here. It's a really excellent dissection of the impact of employers on the economy and what makes them decide where to build. The author is coming from a capitalist viewpoint and isn't picking on any particular industry, so he very nicely fillets them all. :-)

As far as public health goes, I absolutely will not back down from my position that there must be a safety net, and it needs to be better than the crapshoot system that we have now. I don't pretent to know all the components that would make up the best system, but I do know that what we have right now is not good enough. There are far too many people without health care, and even the most pragmatic among us must admit that that's not good for society. It's actually more costly for people not to have health care than it is for the government to provide a few basics.

zack said...

All arguments aside. Retail shopping can be a misuse of wholesale online...

mel said...

Monica, you say that "the choice to leave is meaningless choice when you don't have any skills that would allow you to get a different/better job."

It sounds like you're saying that these low-income, unskilled workers aren't going to be any better off at any other job--flipping burgers, perhaps, or cleaning toilets (and I suspect that anyone qualifed to work at Wal-Mart would be qualified for either of those jobs as well)--than they are at Wal-Mart. You haven't yet mentioned the low wages earned at these types of jobs--are they as bad as Wal-Mart? If so, why aren't people excoriating McDonald's or Burger King? And if not, wouldn't workers be better off in those types of jobs, even if there's still no potential for advancement? (And would that not mean that they do have a choice that's not completely meaningless?)

As much as I like the idea of health care being available to everyone, I just can't convince myself that the government should be the one providing it. From what I've seen (well, what I've read, anyway) of local, state and federal government, I'm quite certain that government is NOT the best way to go about doing something if you want it to be efficient and cost-effective. (If economies of scale comes into play, it may be different. And of course public goods such as national defense are a completely different story...) I'd like to think that there's some way that private organizations could work to provide health care for those who can't afford it; I'd even be all right with the government's supporting it in the form of tax incentives, or maybe even grants of some sort.

As a side note, I was told this weekend that a full-time garbage collector in Pittsburg makes $90k/year. How much skill can that require? Maybe you could start a program to get Wal-Mart workers jobs as garbage collectors... (Of course, that would increase supply w/o increasing demand, so the wage would most likely drop and then those people would be back in the same boat they were in at Wal-Mart... those pesky laws of economics!) =)

Erin said...

Hey Monica,

Thanks for tipping me off about this debate on one of my favorite subjects .

One of the other posters asked why people pick on Walmart as opposed to Burger King, McDonalds, or other large-scale, low-wage employers. The main reason is because Walmart is so much bigger than anyone else that it establishes business practices for everyone else by what it does. Walmart’s margin of profit may not be outrageous, but its gross earnings are – it makes $135 million per hour, 24 hours a day, 365 days a year. Because Walmart has so much money, and because they sell such a wide variety of stuff, they dictate business practices around the world, which can result in both positive and negative effects. If Walmart decides to sell organic veggies, the total number of organic farms quadruples as a result. If Walmart decides to buy all their clothes from sweatshops that employ child labor in third-world countries, than other retailers have to resort to similarly despicable practices to stay in business. So far, Walmart has tended more towards the negative business practices (union-busting, buying from sweatshops, no health care, poor treatment of women and minorities, poor environmental practices, etc.) because they make more money, and competitors have had to choose whether to follow suit or go out of business.

Who shops at Walmart? Well, since Walmart is the number one employer in 37 of the 50 states, common sense would suggest that a large number of Walmart customers are also Walmart employees. So Walmart has a captive audience in its huge labor force – keep the wages low enough and you have a guaranteed customer base. And it’s not just the low wages that force a captive audience. Walmart’s bread and butter business is rural America – they come into a small town, undersell everyone in town, and then raise prices once the former small business owners are wearing blue vests and stamping the trademark smiley face on people’s hands. Sure Walmart creates jobs for people, but particularly in small towns (where most Walmarts do business), it also eliminates jobs.
Walmart might pay a lot in taxes, but they cost the government a fortune. Walmart workers top Medicaid rolls in 16 states. In over 5,000 cases, Walmart has moved into a town that pays them subsidies only to move just past city limits once the subsidies run out and they have to start paying taxes.

In response to the points that working at Walmart is better than working nowhere (or no worse than working at some other minimum wage job) – people are better off living on welfare than trying to make it on a below-poverty-level Walmart job. At least with welfare, you have the guarantee of food, health care, and shelter. (Most Walmart workers won’t have to choose between welfare and work, since they probably depend on both sources of income.) This is a problem with the American minimum wage (and a debate beyond the scope of this discussion) – if someone works full time, they shouldn’t *have* to rely on government help to support their family. Walmart can afford to pay workers better, and it should do so.

Okay, that’s enough babbling for one night. Thanks to anyone who actually read through this whole post.

Monica said...

Reinforcements! :-) Thanks, Erin. You've phrased so nicely what I was struggling to pull out of my head.