Rated R – Walmart

Just over a year ago I started the Rated R section. Yes, there was something racy about the choice of words that was intended to grab attention. There was also careful thought that went into that decision. I could have just called for flat out boycotts but I realized that they are not always practical. I do not want progressives to cut off their nose to spite their face. I also knew the day would come when I inevitably would put Wal Mart on the Rated R list, and today is that day.

For some time now Wal Mart has used the tag line “Save money, live better” in its advertising. What I want you to do is realize the true cost of doing business with Wal Mart and then limit your patronage to the lowest possible dollar amount. Wal Mart certainly does have low retail prices, however that does not represent the true cost of doing business with them.

One of the ways Wal Mart achieves its low prices is through an efficient distribution network. That is commendable. They simply built a better mousetrap and deserve to be rewarded for it. The problem is they have gone far beyond that to the detriment of America.

If you manufacture a product destined for consumers you need a way to get that product in front of them. The traditional way is to get as much retail distribution as possible. Wal Mart is America’s largest retailer. If you get your product on their shelves you have instant distribution. If you are a new venture launching a new product the prospect of Wal Mart wide distribution is very seductive! Wal Mart will ask for an exclusive. The temptation is simply too great to resist when you are operating on a dream and next to nothing in the bank – you take the deal. That is usually the beginning of the end. You will have initial success. Then Wal Mart will start to squeeze you on pricing. They will finally work you down to your breakeven point – and the rest is history. At that point you have no other distribution channel. You don’t work for yourself, you work for Wal Mart. You are out of business and some foreign outfit will produce a similar product at a lower price which will occupy what were once your slots on the Wal Mart shelves. The race to the bottom takes one more lap into descent.

A recent fire in a Bangladesh sweatshop illustrated this point complete with over 100 fatalities. Away from those “burdensome regulations” America places on business. The sweatshop was a locked down facility without emergency exits and those who did not burn to death leapt to it. This facility produced Faded Glory clothes – Wal Mart’s private label. Wal Mart’s excuse was that the work had been sub-contracted to that facility. I think President Nixon referred to that principle as plausible deniability. I know the Americans who lost jobs to that sweatshop weren’t responsible. American jobs lost, human lives lost- but hey, no burdensome regulations.

Domestically there is a cottage industry in the Los Angeles exburbs of warehouses that repackage imported goods primarily for Wal Mart in the U. S. market. They are not owned by Wal Mart and the workers are employees of temporary employment agencies that have been the subject to hundreds of charges from the California Department of Industrial Relations. The employment agencies constantly open and close and Wal Mart maintains plausible deniability. The net result: people are exploited, wages are driven down and the standard of living declines.

Wal Mart is America’s largest retail employer with approximately 2.2 million employees. To put that number in perspective it is over 1.8 million more than number 2 Target and about the total of numbers 2 through 10 combined. They can set the standards for compensation. What does Wal Mart do with that clout? According to a 2005 New York University study they pay their workers 28% less than those employed by other large retailers. Sounds like leading the way to the bottom to me. Demos just issued a report studying the economic impact of full time retail employees being paid $25,000 a year. That compensation would represent a major pay increase which would translate into increased consumer demand and all the economic benefits that go with it. In 2012 America when getting to $25,000 a year represents a major raise something is very wrong! Representative Alan Grayson cites a figure of over $1,000 a year that each Wal Mart associate costs American taxpayers in public assistance. How is that for a hidden cost of doing business with Wal Mart?

What does Wal Mart do with the profits your consumer dollar generates? Among other things it donates to Republican candidates and right wing causes that advocate things like abolishing the minimum wage and getting rid of those burdensome regulations like the ones that were not in place to protect the lives of those Bangladesh sweatshop workers.

When Wal Mart’s business practices drive jobs overseas, depresses wages, discourages benefit packages, fights unions, kills people, maims people, makes it tougher for your child to get a job, puts small businesses out of business, and funds the political campaigns of those who promote anti-working class policies can you afford to shop there any more than absolutely necessary?

I relied heavily on a Demos report entitled Retail’s Hidden Potential: How Raising Wages Would Benefit Workers, The Industry And The Overall Economy for this article.

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