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Walmart & Delaware
Land Use
Corporate Responsibility
No to DSTP and Three Tiered Diplomas - 4/22/04
Living Wage Legislation for NCC: An Idea Whose Time Has Come
Let's Stop VX From Coming to Delaware 4/5/04
View On the Expansion of NCC Council
Patriot Act
A Breath of Fresh Air for NCC Government 3/4/04
Walmart & Delaware
The Walmartization of Work & Buying
Over recent years, Walmart has gone from being a non-presence in Delaware to being more and more noticeable. With three discount stores, four Supercenters and one subsidiary (Sam’s Club) now in the state, Walmart is showing Delawareans how it has become the world’s largest retailer: through aggressive expansion. Yet as the saying goes, Delaware residents “ain’t seen nothing yet.” Walmart currently is building a regional distribution center in Smyrna and a new store on Centerville Rd. near Prices Corner.
By becoming a major presence in Delaware, Walmart is reinforcing its status as an economic empire whose tentacles reach everywhere. It operates 3,200 facilities in the United States and more than 1,100 facilities in other nations.
Walmart’s rise to power has been built on five key factors.
1. Low wages and bare bones benefits packages for its workers.
2. Militant anti-unionism.
3. Launching price wars that drive competitors out of business.
4. Forced overtime for employees.
5. Low prices.
Although Walmart’s claim to fame is that it gives the consumer what she/he wants for less money than she/he would pay elsewhere, what Walmart doesn’t admit is that it derives its strength from, and helps to feed, economic trends that negate the price savings consumers sometimes find at its stores.
Walmart’s reputation on Wall St. as a model contemporary company is based on its unflinching commitment to making profits no matter how hard it must be on its workers to do so. Fortune magazine’s 2003 selection of Walmart as the nation’s Most Admired Company was the corporation’s reward for establishing itself as a leader in wage reduction, shrinkage of worker rights, and running competitors out of business. Its employees make $3 less than the retail average and are fired if they show an interest in unionization. Retail Forward, a consulting firm, has estimated that for every Walmart Supercenter that opens two other local businesses close. According to the firm, 2,000 businesses will go under as the result of Walmart over the next 5 years.
Walmart & the Economic Climate in the Nation & Delaware
In Delaware as well as nationally, over recent decades economic trends have developed an economy characterized by increasing pressure on the poor, the working class and the middle class.
Some of the most important of these trends are:
1. Replacement of better-paying manufacturing and semi-skilled jobs with lower-paying service and retail jobs. As the 2000 census showed, this trend is alive and well in Delaware. The number of Delawareans holding lower-paying service and retail jobs continued to rise over the last decade whereas the number of people working at better-paying manufacturing jobs continued to decline. This is why the income gap between Delaware’s highest earners and lowest earners has increased by 39 percent the last two decades. Walmart’s 3,225 jobs in the state (and the promise of more to come) represent this downward trend in wage levels, since the jobs are low-paying, averaging between $7.50 and $8.50 per hour. Walmart not only pays low wages, but in doing so, and in muscling out its competition, it destroys higher-paying jobs in other area stores. Studies show that for each Walmart job created in a community, 2-5 other jobs are eliminated. A majority of Walmart employees earn sufficiently little so that they’re eligible for food stamps.
2. A weakening of benefits packages, most noticeably in the areas of pensions and health care. As pro-corporate thinking continues to dominate the economy, in a variety of industries benefits are shrinking, health care co-pays increasing and, in some cases, workers have even lost their pensions. Walmart is a trendsetter in these areas, developing a benefits vision that rolls back the gains of previous eras. Its health plan, for instance, has (a) premiums that are as high as 20% of a worker’s annual income and (b) larger co-pays than most company health insurance programs require. Only 38 percent of Walmart’s workers can afford the company’s health insurance. As far as pensions go, the company offers its employees no formal schedule of guaranteed pension payments.
3. More work for no extra pay. In the auto industry it comes under the rubric of kaizen, a Japanese word meaning “continuous improvement.” In an office environment, it is frequently called “efficiency boosting.” But whatever its name, and in whatever industry it’s found, it means one thing: doing more work with no improvement in pay. Walmart has proven itself a pioneer in this area, establishing itself as a model for how other companies can extract unpaid labor from workers. One of Walmart’s methods of doing this has been the use of “off the clock” productivity -- i.e., forcing employees to work overtime without pay. Another method has been break-skipping -- i.e., requiring employees to work through their regularly scheduled coffee breaks. As a result of such practices, in 2002 an Oregon court found Walmart guilty of violating employee rights by illegally withholding pay. Walmart has settled similar cases out of court in other states.
4. Loss of unionized jobs. On an average, unionized workers make at least 11.5 percent more than non-unionized workers. In terms of benefits, the gap between unionized and nonunionized workers is even greater. Such realities are the basis for corporate anti-unionism, which has grown ever more sophisticated over recent decades. Consequently, the percent of the workforce that is unionized has shrunk from over 25 percent in 1953 to less than 13 percent today. Walmart, with its anti-union policies and non-unionized workforce, is a model of corporate power unhindered by union protection (e.g., better pay and benefits, workplace rights, etc.) of its workers. Wherever Walmart goes, it preaches its philosophy of low wages and no unions. Because of the company’s willingness to cut corners on these issues and other matters pertaining to worker rights, the National Labor Relations Board has been forced to file approximately forty complaints against the company for violating workers’ right to organize.
5. A dramatic increase in the number of people holding low-pay part-time jobs that provide either no benefits or inadequate benefits. Walmart, which is currently the U.S.’s largest employer, specializes in using part-time employees rather than full-time ones in order to keep labor costs down.. In order to cover up this policy, Walmart has defined a full-time Walmart worker as someone who works only 28 hours per week. The employees in the company’s largest job category -- sales associate -- work an average of 32 hours weekly. Workers in the second largest job category -- cashiers -- average 29 hours per week. Thirty percent of Walmart’s workers put in less than 28 hours per week.
Fighting Back
The struggle against Walmart is not merely a struggle against a single company. It is a struggle against a way of doing business that wreaks havoc on communities by placing downward pressure on wages and benefits, destroying other businesses, and proclaiming that “profits before people” is the corporate world’s answer to Muhammed’s “Do not mistreat the poor” and Jesus’ Sermon on the Mount.
The way to fight Walmart locally is to fight not only its physical presence but also to fight its philosophy wherever that philosophy is found.
Resisting the Walmartization of the New Castle County and Delaware economies must include the following actions.
* Supporting the right of unions to organize nonunionized workers.
* Fighting for living wage legislation.
* Demanding fair payment for all overtime.
* Developing a new “we the people” political vision that prioritizes community needs over corporate needs
* Battling to achieve affordable health care for everyone
* Creating grassroots methods for preventing superstores like Walmart in their efforts to drive smaller local businesses into the ground
* Forcing local government not to give Walmart and similar stores special tax breaks and other concessions, but rather to give those tax breaks and concessions to small businesses.
* Prevent the building of new Walmart facilities in New Castle County and the rest of Delaware.
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APPENDIX: Additional Facts
(from the Center for Labor and Community Research --http://www.clcr.org/publications)
"Made in America": Despite PR campaigns touting its American products, 50% to 60% of Walmart’s merchandise is made overseas. Walmart accounts for nearly 10% of all imports from China. The company has a division designed specifically to seek out the cheapest goods globally and then to oversee the purchasing of those goods for sale in Walmart stores. This practice exerts worldwide downward pressure on wages and working conditions.
Supercenters: Walmart has plans for hundreds of these centers, which are massive all-in-one, combination stores that include a variety of departments: retail, food, automotive repair, hardware, electronics and pharmacies. Walmart Supercenters represent a growing threat to the grocery industry. .
Buildings: Walmart currently has about 3,400 stores and is constantly looking to upgrade or expand. Because of its philosophy of continual expansion, Walmart presently owns 400 vacant stores nation-wide, which are difficult to resell because their size and layout make them unsuitable for the businesses of other retailers. This pattern of abandoning buildings has strewn innumerable communities with eyesores or dangerous sites which local governments must police or tear down. This problem is exacerbated by the fact that Walmart overbuilds in new areas in order to drive out competitors, only to abandon some of its stores once the competitors are gone.
Supplier Relationships: With its huge size and push to cut costs, Walmart exerts tremendous pressure on its suppliers to do the same or lose business. This means that suppliers find themselves in the bind of having to produce more while earning less. Consequently, Walmart is the largest engine driving manufacturing abroad and lowering wages at home.
Distribution Centers: In its drive to keep costs down, Walmart has developed its own distribution centers as it is currently doing in Middletown. While these centers have a reputation for efficient turnaround of products, Middletown will experience a tremendous increase in truck traffic, impacting the quality of life for area residents. As in its other retail stores, Walmart’s distribution center employees are not unionized.
Community Impact: When Walmart enters a community, shoppers typically make fewer purchases from other stores, especially clothing, drug, hardware and, now, grocery stores. Although the Walmart stores are touted as job generators, the losses to other businesses are often overlooked. One study of the San Diego area showed that widespread presence of the big-box Walmart stores would lower local wages by $105 to $221 million per year, increase public health care costs by $9 million per year and lose pension and retirement benefits of between $89 and $170 million per year. Another report showed that a typical Walmart with 200 employees would cost the Federal government over $400,00 per year or over $2,000 per employee because of supplemental (i.e., government) health care and food stamp costs necessitated by Walmart workers’ low wages. Similar expenses can be expected at the state level.