Sunday, October 29, 2006

Don't Wal-Martize America

I don't often agree with the columnist Paul Krugman, but, he has hit on one aspect of the American economy that I can't help but agree with. That is the Wal-Martization of America is not a good thing and not sustainable. I don't blame everything on Wal-Mart but instead it is the practice that they seem to have perfected. That is to use your herculean buying power to hammer your suppliers for the lowest costs often forcing them to alter the way they do business in order to get costs down. They are forced to cut back on employees, drop health care and benefits and cut corners in order to compete with third world suppliers. While you may say that this is good for Americans because it offers goods at the lowest possible price consider these quotes from Mr. Krugman's article:

"last year, an internal Wal-Mart memo conceded that 46 percent of its workers’ children were either on Medicaid or lacked health insurance. Nonetheless, the memo expressed concern that wages and benefits were rising, in part “because we pay an associate more in salary and benefits as his or her tenure increases.”
"The problem from the company’s point of view, then, is that its workers are too loyal; it wants cheap labor that doesn’t hang around too long, but not enough workers quit before acquiring the right to higher wages and benefits. Among the policy changes the memo suggested to deal with this problem was a shift to hiring more part-time workers, which “will lower Wal-Mart’s health care enrollment.”
“say Wal-Mart executives have told them the company wants to transform its work force to 40 percent part-time from 20 percent.” Another leaked Wal-Mart memo describes a plan to impose wage caps, so that long-term employees won’t get raises. And the company is taking other steps to keep workers from staying too long: in some stores, according to workers, “managers have suddenly barred older employees with back or leg problems from sitting on stools.”
Barring older emplyees from sitting on stools hardly seems consistant with WalMarts ads that show the smiling senior citizens greating customers.

Unions have often been the resistant force to this kind of employer treatment but since the 1970's the employers have worked to roll back the power of unions and have illegally interferred with union organization while the National Labor Relations board turns the blind eye.
Labor unions have done more than anything to establish the middle class in this country and they are quickly being squeezed out in the search for lower labor costs. Where does that leave the middle class? Excuse me if I don't get excited hearing about the Dow-Jones setting new heights. Often their record setting after-tax profit margins are at the cost of fewer workers being more productive for lower wages and reduced benefits. The secret to America's success has always been the sharing of the rewards by the people that actually produce those products.
Don't outsource, don't treat American workers as though they are just another commodity to be had at the lowest possible price. Don't destroy the American middle class.

3 comments:

KEvron said...

wow. point for point, total agreement.

KEvron, ibew

Bryan Saxton said...

Agreed.

coboble said...

I have a theory, that anytime the employee of a company, or the employees dependents, need a government subsidy; the government is indirectly subsidizing the employer.
The subsidy helps allow the employee to continue to be available, in that community, to work for that employer.

I don’t know the solution. Employers could be taxed more if they have a significant number of workers who fall into this category. However this could cause companies to be reluctant to hire employees with larger families, which would not be a good side effect.