I recently shared a short story in an attempt to lightly illustrate modern consumerism. It was a bit dramatic, but it flushed out of the mind and rolled off my fingertips fluidly, so it must be how I really feel. Now, it shouldn’t be a surprise that I find the corporation Walmart to be a soulless existence of a company with a goal so one-sided it actually falls of the track and plows through society with its momentous cars of market share. For the sake of simplicity, and for that fact that I could care less, I am intentionally misspelling Wal-Mart. Seriously though, the company is enormous. Every hour, of every day, consumers spend $36 million of their hard earned dollars at Walmart. Of every dollar spent in the U.S., 8 cents of it is at a Walmart. That’s 8 percent of all national expenditure – of any sale made for anything in the U.S. Walmart earns nearly $34 thousand of profit per minute. That’s more than an average hourly employee earns there in a year. They have over 4,000 stores, worldwide, and approximately 90% of all Americans live within 15 minutes of a Walmart.
Annually, Walmart earns $405 billion, near 2 or 3 in the U.S. It’s not just metaphorically massive- one Walmart Supercenter is about 197,000 square feet. That’s about 100 times an average home. Every week, 100,000,000 people shop at Walmart. This is just under 30% of the total U.S. population. Walmart has an economy greater than some developed nations. It would be ranked 19th in the world if it were a country.
So what if they are a successful company? They provide affordable, abundant goods and services to everyone in the world. I don’t blame people for shopping at Walmart. The economy is tough, money is tight and people need to save as much as they can. People need to know just how dangerous this corporation has been to the country. Walmart has been the frontrunner of corporations that have taken advantage of free trade and lax corporate tax policies to create an economy that is heavily unbalanced. They are the epitome of unpatriotic business practice, and lack any sense of a moral compass.
First and foremost, Walmart is a for-profit business that thrives in the realm of capitalism. They will market anything that can be sold to a consumer, whether it’s a necessary commodity, luxury good, or complete trash that just looked shiny out of the corner of one’s eye. They have combined all the sources of necessary consumerism into one giant store, and then dumped whatever else they could onto every remaining empty shelf. You can go to Walmart and buy groceries, clothes, electronics, furniture, toys, auto maintenance, eyeglasses, prescription drugs, pet food, pet accessories, even pets. Everything that was once in several different stores in several different locations is now under one roof. Not that they weren’t before; Walmart expanded efficient shopping to the extremely unnecessary. It has contributed to a society of overconsumption. Greater accessibility of a good or service paves the way for excessive consumption. Think about it: if you go to a restaurant, and they give you a large portion, you will most likely eat as much as possible, even though you are already full half way through the meal. It is still unclear whether it was our own desire for efficiency and cheapness that necessitated a monstrosity like Walmart, or if it was Walmart that introduced us to this lifestyle. Did we seek out the drug, or was it peddled to us? I would hypothesize that the founder of Walmart, Mr. Walton, saw an opportunity for massive profit and has ignored the dangers to society all along the way.
Massive profits Mr. Walton got, indeed. The Walton family beneficiaries, all six of them, control a collective fortune of $102 billion dollars. Put into perspective, this is greater than the combined wealth of the bottom 30% of Americans. Walmart is so profitable it can afford to pay their CEO nearly $20 million in compensation, compared to the average CEO pay of $11.4 million. On average a store manager, one of over 4,000, makes about $150,000 a year. The average store manager in the retail sector makes $49,000 a year, and for supermarkets it’s $68,000. Maybe they deserve it, though. The company is one of the most profitable, why shouldn’t the CEO make more than average? Ignoring the fact that the average CEO pay is astronomical and has skyrocketed above the curve in the last 40 years, it’s customary to pay higher for greater performance, right? Perhaps in the business world of the past 40 years, but that doesn’t make it right.
Consider Sam’s Club, Walmart’s sister company and their competitor Costco. The Walton’s pay their employees at Sam’s Club slightly more than they do at Walmart. They can afford to, because on top of goods and services sales, they also charge a membership fee. Additionally, the starting wage for Sam’s Club employees isn’t far off from Costco’s employees, with Costco paying $11 per hour compared to Sam’s Clubs $10. However, in five years at Sam’s Club, you end up with a wage of $12.50. At Costco, you can expect to earn about $19.50 per hour, plus bonuses twice a year totaling $2,000. Costco provides great benefits on top of this, and experiences very low turnover rates. They create this environment of well paid employees by rejecting Wall Street investor’s demands to minimize worker pay and expenses to maximize profits. As a result of providing for his employees, the CEO of Costco, James Sinegal, earned a compensation totaling $550,000 in 2011 before retiring. This is 95% below the average CEO pay. Would you say that’s low? He seems to have a perfectly comfortable life given his pay, and at the end of the day he could go home knowing he is both providing adequate pay for his employees and a contributing to a healthy economy. I should also mention that even though Costco does not partake in the same practice of Walmart or Sam’s Club, of minimizing worker compensation to the point of anorexia in an effort to maximize profits, they are still a profitable company. Costco is ranked 29th in the U.S. for revenue, and posted a profit of $12 billion in their last fiscal year, just $3 billion short of Walmart.
Now, of course Costco and Walmart are not apples to apples comparison. After all, Walmart has far more employees, greater liability and rely on much larger sales than Costco. It still illustrates the misconception that the business practices of Walmart are not only acceptable, but necessary to be profitable. They are not; it’s just how business has been run in order to maximize profits. After all, there is one goal in business. It’s not to care for employees, or strengthen an economy. The goal in business, in a free market and capitalistic society, is to make money.
One may be surprised to see that hourly wages at Walmart are actually competitive. Competitors like K-Mart and Target pay wages very close to that of Walmart. I would hypothesize that Walmart’s competitors treat their employees better, and provide better benefits. This is slightly corroborated by the fact that Target provides benefits for an employee working 20 hours a week, to Walmart’s 24 hours. Target may even limit their employee’s hours, just like Walmart, in an effort to avoid paying benefits – I don’t know for certain. What I do know, is even though Walmart is a perfectly profitable company, they not only continue to minimize but further reduce employee compensation. They have set goals to increase their part time workforce by 100% in an effort to reduce operating cost, as this would enable them to withhold benefits. This may happen at other companies, but it happens at Walmart the most. Hourly employees are compensated on average 14.5% less than comparable employees elsewhere, yet perform the same functions, and have the same skills. Yet, this is known to many people, and we trick ourselves into accepting this as the baseline for business practice. After all, Walmart does provide millions of jobs. If Walmart didn’t exist, these jobs wouldn’t exist. If someone can’t survive on a part time Walmart income, they could get another job. These are the reassurances we tell ourselves, and they couldn’t be further from the truth.
Walmart did not create the demand for what they sell. They may have influenced some demand by marketing crap no one needs, but people would still need food and clothing, among several other commodities. If Walmart didn’t exist, the jobs they provide would still exist. The economy would demand these jobs exist, and they would at other supermarkets, retail and grocery stores. In fact, Walmart has such a large share of the market that one simply can’t find another job in a similar capacity because they aren’t available. It’s hard pressed to find another part time job to supplement your income in any capacity, let alone in a market that is dominated and dictated by your sole employer. If by chance you do find another part time job, Walmart imposes other restrictions that would make it difficult on your schedule. Walmart requires some, if not all part time employees to be on call 24/7 in an event they are needed to cover gaps in their resource schedules. So if someone calls in sick, they expect you to be available if they request you to work. So, finding another part time job, or quitting your job at Walmart to get another job at a competitor is not as simple as it sounds.
One may further justify themselves in defending Walmart’s business practices by thinking that even though the jobs would be available elsewhere if Walmart did not exist, it’s still Walmart who are providing these jobs – it doesn’t matter what company exists, as long as they provide jobs. The fact is Walmart is damaging the economy. For every two jobs created by Walmart, three local jobs are lost. Walmart imports 80% of their merchandise from China. One study found this resulted in over 196,000 jobs lost in U.S. manufacturing between 2001 and 2006. Simply put, had Walmart not existed, far more jobs may be available than it has created.
When you are hired at Walmart, you are given an employee handbook. In this handbook are instructions on how to obtain government assistance for healthcare, food and other expenses. They encourage employees to get assistance from the government, even though they are employed, because Walmart does not want to provide proper wages, hours and benefits. They want to maximize their profits, and they take advantage of government subsidies to do so. If you think you are paying low prices at Walmart, you should consider what you are paying to the government to subsidize Walmart employees. 80% of all Walmart employees are on government assistance. This equates to $2.66 billion a year. Additionally, many Walmart employees don’t qualify for health benefits under the company’s plan, and when they do they often can’t afford the premiums, or the coverage isn’t acceptable – this is why Walmart advertises how to get Medicaid in their employee handbook. $1.02 billion a year in Medicaid is spent on Walmart employees. All this money comes from taxes - your taxes. On top of this, Walmart enjoys over $1 billion in tax breaks and other subsidies from the government. In all, Walmart costs taxpayers over $4 billion a year to exist. As they expand, this cost will increase, and more jobs will disappear. Perhaps if Costco followed suit with Walmart, they could get the government to pay for their employee’s benefits as well. We would accept this, too, because we fully support a company to be successful.
So many of us complain about having to pay taxes, and having to support those in poverty, yet many of the same people support businesses like Walmart that have pioneered extreme redistribution of wealth and dependency on government. Some forty years ago something out of the ordinary happened: productivity continued its upward climb without any change to slope, yet the rate of worker compensation increase fell flat. Prior to that, as productivity, or output increased steadily, so did worker compensation, meaning we were both hiring more people to work as we started producing more and paying them more as the economy grew. We created a system that was supposed to reward companies like Walmart to hire people and give them adequate compensation and benefits. Instead, these companies took the extra cash so willingly given to them and lined the pockets of their executives and investors. It’s no coincidence that executive pay sharply increased around the same time we started hiring fewer people and paying them less. Forty years ago, CEO’s were making 25 times that of the average worker. They are now making over 200 times that of an average worker. Over the last 40 years, worker compensation rose by 5.5%, while CEO compensation rose by 725%. The problem isn’t people being successful. In retrospect, a CEO could do a bad job and still get a raise. The problem is as more income is funneled into the hands of the few, it leaves very little opportunity for the average person to be successful.
“I don't believe in a law to prevent a man from getting rich; it would do more harm than good. So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.”
--Abraham Lincoln, March 6, 1860 Speech at New Haven, Connecticut
--Abraham Lincoln, March 6, 1860 Speech at New Haven, Connecticut
Is this about money? Do we really need to compensate a company’s leader as much as we currently do? What about the company as a business? A company in a free market, capitalist society exists to make money. How much money is enough? A billion dollars is an astronomical amount of money. The Walton family has over $100 billion to their name. Do you know what you would do with $100 billion?
I fear it is not about money, but about the power money enables one to have. In a sense, the wealthiest of this country are building barriers to becoming rich, so as to eliminate competition and amass as much power as possible, and they are letting the government help them. Imagine being able to dictate an economy to move one way or another; to be able to take a massive workforce and control what they make and how they live. Imagine being able to tell consumers where to shop and what to buy. You soon control the lives of millions of people. This is what a god must feel like.
http://www.statisticbrain.com/wal-mart-company-statistics
http://www.dailykos.com/story/2012/10/10/1141724/-Walmart-fuels-inequality-epidemic-taking-advantage-of-our-safety-net
http://www.glassdoor.com/Salary/Walmart-Stores-Store-Manager-Salaries-E715_D_KO15,28
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