How the big-box stores threaten national economy

(Rochester Business Journal)

Big box stores are becoming increasingly common across our nation and right here at home.  This type of approach to retail business is a major threat to the wages, benefits, health care and livelihoods of workers across the country and around the world.  Mega retailers, such as Wal-Mart have an effect on everyone’s standard of living.  Wal-mart in particular is leading the race to the economic bottom in wages and health care. 

In 2003 Wal-Mart had $ 9.1 billion in profits, a figure that is double the profits of its leading competitors, combined – this according to the company’s own annual reports. Wal-Mart CEO H. Lee Scott received a double-digit pay increase in 2003, a 26 percent jump over the previous year. Including the value of stock received, Scott's pay package zoomed to $12.44 million. Unfortuneately, most of his 1.3 million Wal-Mart employees are paid so poorly they can't even afford health insurance.

The average wage for a Wal-Mart employee is about  $9.64 an hour for a full time worker according to Business Week. Keep in mind, full-time workers comprise only about two-thirds of Wal-Mart's workforce, and are frequently scheduled for as few as 34 hours weekly. At $9.64 hourly, working 34 hours a week, a Wal-Mart employee earns only $17,043 per year, well below the $18,850 federal poverty guideline for a family of four in 2004.

According to the AFL-CIO, For every $1 wage loss, a local economy losoes an average  total  of $2.08 as less money circulates through the community at large.   If union grocery workers' wages were slashed to match the wages of Wal-Mart workers, their communities would lose an average of between $1.6 billion and $3 billion annually.

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 United Food and Commercial Workers Union, would mean a $2 pair of socks would cost $2.01.

While two thirds of workers from our nation’s largest companies receive health care coverage at work,  less than half of Wal-mart workers share that luxury according to an October 2003 report from the AFL-CIO .

There is no questioning the efficiency and market savy of our nation’s largest retailer.  Walmart – by all accounts has transformed the entire industry in a way that will make economic history.  Unfortunately, Sam Walton’s vision for community and worker focused values has been lost by his successors. 

What possible sense could be made of a company that doesn’t take responsibility for the people who built it?  How can a company thrive by starving it’s own customers?   As the largest corporation in the world, Wal-Mart has a responsibility to the people who made it the success it is today.  Yet, Wal-Mart jobs offer low pay, health care that is out of financial reach, little or no other benefits.

As these big box stores grow, natural wages decline. In areas where Wal-Mart increased its share of the retail food market by 20% or more 1998-2002, cashiers’ wages fell 40%-31% below the national average increase.

By maintaining poverty quality employment opportunities, the Big Boxes also  impoverish 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 mega stores like Wal-Mart  transform family-sustaining, middle-class retail jobs into lower-paying jobs that often leave workers unable to pay bills.

So many in our community don’t understand that we as taxpayers are subsidizing these big box stores.  When workers don’t earn enough to sustain themselves, our tax dollars kick in with support through food stamps, housing subsidies, WIC, Child Health Plus and many other programs.  We are paying for the benefits low wage retail workers receive and we’ve been doing it for a very long time.

As for the global economy, big box retailers pressure their vendors to lowering  their prices more and more each year.  The demands force manufacturers of electronics, toys, clothing, auto parts, and grocery suppliers to reduce their workers , decrease wages and benefits, and move to third world nations. 

Locally, new retailers like Walgreens come into Rochester with the expectation of our investment in their merchandise without so much as an ounce of respect for the economic health of the community.  Even the  foundation of their stores is laid with cheap labor from out of town. 

The one part of the equation that seems consistently to be overlooked is values.  There was a time in Rochester, not so long ago when a young person could start a job and expect to have that same job when he retired.  Not so anymore.  Today, jobs are disposable and at the lowest wrung of the economic ladder, one minimum wage opportunity is no different from the rest. 

Our society no longer rewards hard work or loyalty.  Today, jobs go to the lowest bidder without regard for quality, safety, or fairness.  Big box retailers pay what the standard will bear, which in retail is pretty low.  Every person working hard for a living earns the right to a decent wage, affordable health care and a voice on the job.  But the greed of big box retailers provides other companies a license to chip away at the rights of working America, influencing everything from wages to working conditions.  These big box stores are transforming America from a secure middle class country to one of extremes: those struggling to survive at the bottom and the rich getting richer at the top.