Is Wal-Mart Good for the American Working Class?

No, and There's No Help in Sight
E-mail debates of newsworthy topics.
June 28 2006 2:47 PM

Is Wal-Mart Good for the American Working Class?


Dear Jason,

No, I don't think you've located "where and why we differ." I'm all for government spending to help the low-wage poor. Earned Income Tax Credit, universal health insurance, housing subsidies—bring 'em on! And higher wages too! To cite Samuel Gompers' famous one-word answer to the question of what the working class wanted: "More."

In fact, I think it's ridiculous to expect employers to provide health insurance, if only because people change jobs so frequently. We all—freelance writers as well as Wal-Mart associates—need health insurance that is not attached to our jobs. Until that glorious day arrives, though, I'll be biting at Wal-Mart's ankles to protest their health plan, which is financially out of reach of half their employees. (True, some may have insurance through a spouse, but I've met plenty of Wal-Mart associates who don't have insurance and can't afford the $100+ a month employee contribution for the company's plan.)

But surely you must have noticed that we have not been going in the direction of expanded government benefits. Medicaid was savaged in the latest federal budget. Section 8 housing vouchers? Get in line. In some cities the waiting list is tens of thousands long. As for the EITC, the IRS has been chipping away at that by freezing EITC refunds under suspicion of "fraud." Besides, in 2004, the median income of those who claimed EITC was about $12,000 and the median refund was under $4,000—not exactly a boost into the middle class.

Now let's put aside the class war for a moment, along with the strange question of whether Wal-Mart should be "amoral" or "nice," and try to look at this from Wal-Mart's point of view. Yes, I am willing to slip into H. Lee Scott's executive suite and helpfully review the viability of his business plan, which has been to push down wages—along with his suppliers' profits—to achieve prices within reach of the masses.

Since Wal-Mart is both the nation's No. 1 retailer and No. 1 private employer, a big test of viability would be whether Wal-Mart workers (and similarly paid employees of other firms) can afford to buy Wal-Mart merchandise. Remember when Henry Ford I raised his workers' wages to $5 a day so they could buy Fords? That approach worked pretty well for almost a century.

There are signs now that Wal-Mart may be beginning to be priced out of the reach of its own employees, who, as you have stressed, Jason, are hardly the poorest of the poor. I was surprised, in my brief stint as a Wal-Mart associate, that our ladies' wear was too costly for many of my co-workers. (In Nickel and Dimed, I told the story of a woman who could not afford a $7 polo shirt of the kind we were required to wear.) If you earn $7, $8, or even $9 an hour, you're not buying new clothes anyway; you're going to Goodwill or consignment stores. As for the offerings of Wal-Mart's Electronics and Lawn and Garden departments: For my co-workers, these weren't even on the distant horizon.

Then there are Wal-Mart's sagging Christmas sales. Christmas is of course a retailer's defining moment, and in the last two years, Wal-Mart desperately slashed its "everyday low prices" even lower as the holiday approached. But both in 2004 and 2005, Wal-Mart's Christmas take was disappointingly low (Target and Costco did better, as did luxury stores like Nordstrom). Now who buys, or even contemplates buying, their Christmas presents at Wal-Mart? Not me, Jason, and probably not you. It's the $7-10 an hour crowd that dreams of Christmas shopping at Wal-Mart, and for the last two years, there hasn't been much under their trees.

So, I would have to advise H. Lee that the Wal-Mart plan may not be sustainable: If you underpay people enough, in the absence of adequate and reliable government subsidies to compensate for their meager wages, they're not going to be able to buy your stuff. And you know what? I suspect H. would be ahead of me here. There's been a lot of scuttlebutt recently about Wal-Mart trying to re-image itself and appeal to more upscale consumers.

What is it that we really differ over? We both want higher wages and more generous government social programs; we both voted for Kerry; we're both in the upper-middle class or pretty close. The difference, I think, lies in our mental ZIP codes. Where you see some unfortunate, but not really all that bad, numbers, I see human crises, and I see them in my extended family and my network of friends as well as in the letters I get from readers: The car that gets you to work breaks down and is going to cost $200 to repair. The baby gets sick so you miss a day's work and face the possibility of losing your job. Your back goes out and you can't scurry around the floor picking up tossed merchandise any more.

You're screwed, in short, and, until we all pull together and fight like hell for a better deal, there's no help coming.

Bye, now. I've enjoyed the debate.



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