November 22, 2012

Walmart update

Berkeley Blog
 Robert Reich -  In the 1950s, over a third of private-sector workers belonged to a union. Today fewer than 7 percent do. As a result, the typical American worker no longer has the bargaining clout to get a sizeable share of corporate profits.

At the peak of its power and influence in the 1950s, the United Auto Workers could claim a significant portion of GM’s earnings for its members.

Walmart’s employees, by contrast, have no union to represent them. So they’ve had no means of getting much of the corporation’s earnings.

Walmart earned $16 billion last year (it just reported a 9 percent increase in earnings in the third quarter of 2012, to $3.6 billion), the lion’s share of which went instead to Walmart’s shareholders — including the family of its founder, Sam Walton, who earned on their Walmart stock more than the combined earnings of the bottom 40 percent of American workers.

Despite decades of failed unionization attempts, Walmart workers are planning to strike or conduct some other form of protest outside at least 1,000 locations across the United States this Friday – so-called “Black Friday,” the biggest shopping day in America when the Christmas holiday buying season begins.

At the very least, the action gives Walmart employees a chance to air their grievances in public – not only lousy wages (as low at $8 an hour) but also unsafe and unsanitary working conditions, excessive hours, and sexual harassment. The result is bad publicity for the company exactly when it wants the public to think of it as Santa Claus. And the threatened strike, the first in 50 years, is gaining steam.

The company is fighting back. It has filed a complaint with the National Labor Relations Board to preemptively ban the Black Friday strikes. The complaint alleges that the pickets are illegal “representational” picketing designed to win recognition for the United Food & Commercial Workers  union. Walmart’s workers say they’re protesting unfair labor practices rather than acting on behalf of the UFCW. If a court sides with Walmart, it could possibly issue an injunction blocking Black Friday’s pickets.

What happens at Walmart will have consequences extending far beyond the company. Other big box retailers are watching carefully. Walmart is their major competitor. Its pay scale and working conditions set the standard.

More broadly, the widening inequality reflected in the gap between the pay of

... Consumer spending is 70 percent of economic activity, but consumers are also workers. And as income and wealth continue to concentrate at the top, and the median wage continues to drop – it’s now 8 percent lower than it was in 2000 – a growing portion of the American workforce lacks the purchasing power to get the economy back to speed. Without a vibrant and growing middle class, Walmart itself won’t have the customers it needs.

Most new jobs in America are in personal services like retail, with low pay and bad hours. According to the Bureau of Labor and Statistics, the average full-time retail worker earns between $18,000 and $21,000 per year.

But if retail workers got a raise, would consumers have to pay higher prices to make up for it? A new study by the think tank Demos reports that raising the salary of all full-time workers at large retailers to $25,000 per year would lift more than 700,000 people out of poverty, at a cost of only a 1 percent price increase for customers.

And, in the end, retailers would benefit. According to the study, the cost of the wage increases to major retailers would be $20.8 billion — about one percent of the sector’s $2.17 trillion in total annual sales. But the study also estimates the increased purchasing power of lower-wage workers as a result of the pay raises would generate $4 billion to $5 billion in additional retail sales. This seems like a good deal all around.

Economic Policy Institute - Between 2007 and 2010, while median family wealth fell by 39 percent, the wealth of the Walton family members rose from $73 billion to $89 billion…In 2007, it was reported that the Walton family wealth was as large as the bottom 35 million families in the wealth distribution combined, or 30 percent of all American families. And in 2010, as the Walton’s wealth has risen and most other Americans’ wealth declined, it is now the case that the Walton family wealth is as large as the bottom 49 million families in the wealth distribution (constituting 41 percent of all American families) combined.

3 comments:

ofladrt said...

There will always be a gap between rich and poor but in order to have a sustainable economy wages must parallel productivity. Continuing the current widening gap between productivity and wages will result in a few having almost all of the wealth, and very little demand for goods and services. That makes it pretty tough for entrepreneurs.

Anonymous said...

Maybe the gap would be less if poor people were smart enough to stop making the Waltons richer.

Anonymous said...

Maybe the gap would be less if poor people were smart enough to stop making the Waltons richer.

I used to think that way too. Then I tried to buy some warm cotton sweats to wear when working at home (I'm down to 2 pair of Levis, they're both in poor shape, and the style is no longer made).

It turned out that Walmart was the only place that sells the boring, grey cotton sweats that are good for exercise rather than making a fashion statement. All other stores -even the ones allegedly devoted to athletics- offered only the high-priced designer-label pseudo-sweats.

So I buy them from Walmart. It's irritating, but I'm damned if I'll buy something I don't want AND pay more for it just to avoid shopping at Walmart.