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Wal-Mart’s nickname should be Inequality Inc.

Consider this:

⋅ Six heirs of the company’s founder control more wealth than 41.5 percent of all American families combined—or 48.8 million families.

⋅ From 2007 to 2010, the wealth of the six Walton family heirs went up from $73.3 billion to $89.5 billion while the country’s median family wealth plummeted by 38.8 percent.

No, what’s good for Wal-Mart is not good for America.

As the Walton family accumulated its fortune over decades, our country became more economically polarized and a culture of discontent began brewing.

But we didn’t reach a boiling point until Occupy Wall Street made inequality a major political issue in the months before the 2012 presidential election. Thanks to the Occupy movement, our political lexicon now defines the ruling elite like the Waltons as the “1 percent,” who are using their economic and political power to amass a greater share of the economic pie, and the rest of us as the “99 percent,” whose wages are stagnating and falling; pensions are inadequate or nonexistent; employer-provided health care is disappearing, and union representation is at its lowest level in 97 years.

Wal-Mart and Our Declining Standard of Living

The low-wage Wal-Mart business model has a lot to do with our declining standard of living, according to a recent report by the Democratic staff of the U.S. House Committee on Education and the Workforce.

The 19-page report, “The Low-Wage Drag on Our Economy: Wal-Mart’s low wages and their effect on taxpayers and economic growth,” tells the story of how the retail giant has profited by paying its employees paltry wages and passed along a hefty tab to taxpayers to cover worker benefits, including health care. The report updates the committee’s excellent 2004 study, “Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart.”

“While employers like Wal-Mart seek to reap significant profits through the depression of labor costs, the social costs of this low-wage strategy are externalized,” the report says. “Low wages not only harm workers and their families—they cost taxpayers.”
The report takes a look at Wisconsin to get an idea of Wal-Mart’s cost to taxpayers. In the state, Wal-Mart has 100 stores, including 75 Supercenters that employ about 300 workers each. Each Wal-Mart store with 200 employees costs taxpayers $420,000 a year, according to the report.

Many Wal-Mart employees rely on Medicaid for their health care because they can’t afford to pay for the company plan. Based on state Medicaid data, which tracks the number of beneficiaries by employer, the report estimates that Wal-Mart workers cost Wisconsin taxpayers up to $904,542 per year, or $3,015 per employee. The bill rises to $1,744,590  ($5,815 per employee) once other government benefits (e.g., child care subsidies, the Earned Income Tax Credit, school meals, nutrition assistance, Food Stamps, low-income energy assistance and housing help) are factored in.

Because of insufficient access to comparable data, the report fails to come up with a nationwide estimate of the cost to taxpayers. But clearly, as the country’s largest employer with 1.4 million workers, Wal-Mart imposes a tremendous financial burden on our public sector.
 

“Wal-Mart is the nation’s largest private-sector employer, yet they pay such low wages that many of its workers are unable to provide their families with the necessities of life,” said Rep. George Miller (D-Calif.), senior Democrat on the committee. “The labor policies of Wal-Mart, and those of companies that emulate its low-road approach, end up leaving taxpayers holding the bag.”

A Business Model Based on Inequality

Yet, what’s worse is the low-wage model itself--and its impact on our economy. Wal-Mart, of course, has become an economic powerhouse by keeping its wages low. As noted by the report, its workforce is larger than the populations of 96 countries. Its total revenue of $469 billion in 2012 was more than that of Norway.

The Wal-Mart business model is based on inequality. The company’s policy of anti-unionism, low-wages, part-time employment and poor benefits is the polar opposite of that of many employers of the post-World War II era.

So, Wal-Mart’s emergence as our economy’s business model reflects the growing economic divide that began in the early 1970s, when productivity growth and wages stopped moving up together. Since then, employers have increased their share of the fruits of productivity by holding down wages. And the consequences are devastating for working families.

In the third quarter of 2012, corporate profits were $1.75 trillion, the greatest share in history. For the typical U.S. family, the 2000s were a “lost decade” in which incomes dropped. And the top 1 percent pocketed 93 percent of the income gains of the recovery. Income inequality is at its highest since the Great Depression.

As the report points out, the decline in wages has mirrored the erosion of organized labor’s power. The report describes the revival of the labor movement as vital to the growth in the share of our country’s income by workers in the future. The government can encourage that process by changing labor law to make it easier for unions to organize new members, and unions themselves should move away from the service model and pour a significantly greater share of their budgets into organizing.

Government-supported measures to stimulate wage growth, apart from encouraging unionization, include hiking the federal minimum wage, creating jobs through infrastructure development, fighting wage discrimination against women and addressing high unemployment.

Raising the minimum wage to $10.10 an hour would add $33 billion to the gross domestic product and create 140,000 new jobs within three years, according to the report. Higher wages would in turn, of course, stimulate an economy that for most people isn’t working.

Wal-Mart is an economic beast that must be tamed.

Originally posted to www.thenewcrossroads.com on Sun Jun 23, 2013 at 06:07 PM PDT.

Also republished by Money and Public Purpose and In Support of Labor and Unions.

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Comment Preferences

  •  What Were They Like In 1980 Just Before Our (17+ / 0-)

    nation rededicated itself to encouraging this business model across as much of the economy as possible? And how were the family doing back then?

    The red line here shows how their class, the top 400 families, had their wealth explode 6-fold beginning with Reagan and ending before Bush. As the 99% gained nothing.

    Image Hosted by ImageShack.us

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Sun Jun 23, 2013 at 06:19:34 PM PDT

  •  I would rec for the title alone, but your (11+ / 0-)

    diary is also excellent. Thank you.

    You can't scare me, I'm sticking to the Union - Woody Guthrie

    by sewaneepat on Sun Jun 23, 2013 at 06:28:04 PM PDT

  •  Employees and taxpayers the world over (14+ / 0-)

    subsidize their low prices and profits. And customers and shareholders make it possible,

    Add the median effective tax rate, healthcare costs (20%?), education costs, and other things guaranteed in Denmark & Sweden, we pay MORE for LESS. Somebody's gotta pay the billionaires. They don't grow on trees. ☮ ♥ ☺

    by Words In Action on Sun Jun 23, 2013 at 06:36:07 PM PDT

  •  I often wonder (15+ / 0-)

    What will $89.5 billion buy that $73.3 billion won't get you?

    Apparently there's no such thing as "enough" for these people.

    If the pilot's good, see, I mean if he's reeeally sharp, he can barrel that baby in so low... oh you oughta see it sometime. It's a sight. A big plane like a '52... varrrooom! Its jet exhaust... frying chickens in the barnyard!

    by Major Kong on Sun Jun 23, 2013 at 06:39:11 PM PDT

    •  It's About Shares in Society Not Possessions. (5+ / 0-)
      Recommended by:
      phonegery, psyched, achronon, ciganka, splashy

      Don't even think about trying to buy Microsoft or ABC at such a level of poverty.

      And all that would get you, if you could become somebody, is influence in one sector.

      Of course you could totally wipe out American public education if you had a mind to, at that level.

      If you had a trillion, the reasons that you got the trillions would likely not be satisfied with just one. And I don't mean that in the sense of a sick appetite, I mean it because of what wealth at that level means with respect to society, and things that people with such wealth want to and can do with, for or to society.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Sun Jun 23, 2013 at 08:00:09 PM PDT

      [ Parent ]

    •  Power (0+ / 0-)

      That's the bottom line. It's a numbers game they play, with the money keeping score.

      That's why they all have to be heavily taxed, so they can continue to play their "game" without the rest of us suffering from it.

      Women create the entire labor force. ---------------------------------------------------------------------------------------- Sympathy is the strongest instinct in human nature. - Charles Darwin

      by splashy on Mon Jun 24, 2013 at 12:36:02 PM PDT

      [ Parent ]

  •  They should pay a 75% tax at this point. (8+ / 0-)

    No excuses. All the super rich should start paying a bunch more in taxes. They should pay for the wars and bank bailouts.

    What is so unnerving about the candidacy of Sarah Palin is the degree to which she represents—and her supporters celebrate—the joyful marriage of confidence and ignorance. SAM HARRIS

    by Cpqemp on Sun Jun 23, 2013 at 06:41:34 PM PDT

    •  That would have netted only $14 billion in taxes (1+ / 0-)
      Recommended by:
      psyched
      From 2007 to 2010, the wealth of the six Walton family heirs went up from $73.3 billion to $89.5 billion
      for this four year time period at 75%.

      However, Wal-Mart cost the US economy $300 billion elsewhere since 1980.  But someone can argue that Wal-Mart saved consumers that same $300 billion through lower costs and they would have a valid point.

      This is a tough issue.  They are certainly no monopoly but behave as one.

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Sun Jun 23, 2013 at 07:03:15 PM PDT

      [ Parent ]

      •  What you "save" you get in lower quality (4+ / 0-)
        Recommended by:
        phonegery, psyched, ciganka, freerad

        their stuff is not the same stuff cheaper it is really cheaper stuff, which is one of MANY reasons I won't shop there.

        One of the other reasons is that you don't save what you think you would save.  Once they drive out the competition, they raise the prices like any good monopoly.

        "I watch Fox News for my comedy, and Comedy Central for my news." - Facebook Group

        by Sychotic1 on Sun Jun 23, 2013 at 07:34:59 PM PDT

        [ Parent ]

      •  that $300 billion in lower costs... (0+ / 0-)

        That $300 billion in lower costs was extracted by their suppliers, who in turn extract it from their own workers and suppliers.... ad infinitum.

        The secret to prosperity is in fact a high-wage/high-cost economy with some (but not too much) inflation, similar to what the USA had from 1945 till 1980.  The austerity measures being  proposed by today's Very Serious People are in fact the polar opposite of the economic strategies used to build the American economy during the 1945-1980 era.  We had an activist federal government, unions were strong, we had protectionist trade policies, we had high marginal income tax rates at the top of the scale, etc., etc.

      •  But, they would have behaved differently (0+ / 0-)

        If they could deduct larger wages for their workers, then they would raise wages.

        The point is to get them to do the right thing, for the wrong reasons, because those are the only reasons they will respond to.

        Women create the entire labor force. ---------------------------------------------------------------------------------------- Sympathy is the strongest instinct in human nature. - Charles Darwin

        by splashy on Mon Jun 24, 2013 at 12:38:21 PM PDT

        [ Parent ]

    •  It's Never Been Proven That Democratic Society (4+ / 0-)
      Recommended by:
      psyched, ciganka, Cpqemp, splashy

      can survive at such low top marginal rates.

      We were at 90+ % top marginal rate until about 5 years before the end of the period when the share of national wealth in the hands of the 99% was increasing and that of the 1% was declining. We dropped it in the mid 60's and the American masses hit their all-time economic high water mark barely a few years later.

      Between earned income, cap gains, all forms of income, the income taken home has to be intensely braked at the point of a small number of millions per year, at best.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Sun Jun 23, 2013 at 08:04:07 PM PDT

      [ Parent ]

    •  Cpqemp - I may not be reading this correctly (4+ / 0-)
      Recommended by:
      psyched, ciganka, Cpqemp, llywrch

      but I think the appreciation in the net worth of the Waltons' is due to the appreciation of their stock in Walmart. The appreciation isn't income and therefore isn't taxed. They are appreciated capital assets. No tax is owed until the assets are sold and capital gains income is realized. We have no federal wealth tax in the US and it would take a Constitutional Amendment to initiate one, like the 16th that established the income tax.

      "let's talk about that"

      by VClib on Sun Jun 23, 2013 at 08:58:12 PM PDT

      [ Parent ]

  •  Meijer stores in Michigan are just like Walmart. (6+ / 0-)

    Meijer also pays low wages, is anti-union (only some of its employees can belong to unions), minimal benefits, and relies on part-time workers so they don't have to pay benefits.

    Walmart actually copied the hypermarket or supercenter concept, combining groceries and department store goods, from Meijer. Meijer began his grocery stores in 1934.

    People in the west Michigan area think that Meijer is a step above Walmart, but it isn't since Fred Meijer died. Some blame his sons who are trying to compete with Walmart. Meijer stores operate under the same low-wage business model and treat their employees just as poorly.

    How do I know?  My husband is a greeter at one of the Grand Rapids area Meijer stores and his manager goes to our church. There has been a huge amount of hiring in the past month - hiring of PART-TIME employees - who are limited to a total of 24 hours weekly. Employees are scheduled at a hodge-podge of days and hours that are so irregular that it is hard to plan appointments or other activities. Older full-time workers are allowed to keep their full time jobs. It isn't clear what will happen when they quit or retire.

    After my husband worked for Meijer for one year, which he began at minimum wage, he got a 10 cent an hour raise. Really. As a greeter he is not allowed to join the union, nor does he get paid sick days. Employees are frequently written up for minor infractions such as the time my husband called his boss to report he would not be at work due to a blizzard. He was scheduled to work the overnight shift and wasn't sure he could get there, let along get back home after work. Who shops in a blizzard and needs a greeter at one in the morning anyway? My husband was "written up" and this stayed in his file for 6 months. He was also written up when he was admitted to the hospital for blood clots in his leg.

    By the way, I don't shop at either Walmart or Meijer.
     

    Liberal (from Webster's Dictionary): tolerant of views differing from one's own; broad-minded

    by 50sbaby on Sun Jun 23, 2013 at 08:09:15 PM PDT

  •  Walmart: consume as much as you can at the (4+ / 0-)
    Recommended by:
    tardis10, psyched, ciganka, JayRaye

    cheapest price.  Strip the earth of natural resources to make the Walton family super duper rich and keep us in alot of cheap junk and over consumption.

  •  It all started when the conservatives took over (0+ / 0-)

    The strongly liberal folks dropped out of politics because they were being beaten, arrested and killed for trying to stop the right wingers.

    I know many that started working on things like alternative energy generation, alternative ways to live, and alternative ways to learn. They are the ones that had all that ready when things really started to fall apart. Hopefully it will help.

    Women create the entire labor force. ---------------------------------------------------------------------------------------- Sympathy is the strongest instinct in human nature. - Charles Darwin

    by splashy on Mon Jun 24, 2013 at 12:31:09 PM PDT

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