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November 19, 2012 at 1:55 PMComments: 12 Faves: 1

Lower Prices, Lower Wages: The Destructive Genius of Walmart

By Kyle McCarthy from SLN More Blogs by This AuthorFrom the Culturology Blog Series

Who Wants to Trample Aunt Wanda?!?!

Black Friday has never appealed to me. Everything about it just feels wrong and a little perverse. I can't think of a more appropriate example of greed and excess in a country with an extensive history of both. I'm not particularly a huge fan of large retail stores to begin with (might have something to do with the fluorescent lighting... or the inhumane working conditions of the Third World sweatshops they exploit), but just thinking of all those people jostling, pushing, punching, and prodding for prime position through the narrow aisles leaves me slightly nauseated.

As if large corporate retail stores aren't bad enough on their own, Black Friday comes along every year to further advance the "big box store" agenda. The event is especially concerning considering how completely antithetical it is to the holiday immediately preceding it. The same mild-mannered individuals reflecting on their good fortune and gratitude during the pre-meal blessing become greed-driven vultures within hours of digesting their Thanksgiving smorgasbord. Peace and goodwill toward men are temporarily replaced with vicious spite directed toward fellow shoppers worshiping the almighty price drop. Naturally, this brings us to Walmart and their culture of consumption.

The Walmart Way

The general assumption about Walmart is that, since they are offering quality goods at affordable prices, we should be ecstatic about the unbelievable bargains at their stores. Sam Walton founded Walmart in 1962 with a business plan built on buying bulk items at cheap prices and selling them for low prices. However, the stark reality is that we're all paying a hefty price for these amazing savings. Basically, Walmart is able to keep their prices low, while collecting massive profits thanks to huge markups on goods produced with cheap labor overseas. Everyone wins right? Not so fast, grasshopper!

Assembly Line

Walmart has become a global force to the extent that the company aggressively influences manufacturers to outsource jobs to foreign countries such as China in order to keep costs low. This, obviously, results in massive, wide-spread job loss for United States citizens, while also putting American businesses in a precarious position.

Walmart flexes their tremendous corporate muscle to create a culture of “Pull Production” that affords them the ability to dictate the manufacturer's production and the price at which their goods will be sold. This is a drastic shift from the traditional method of production that has served as this country's economic paradigm for generations, "Push Production" - an antiquated and declining business paradigm that places the manufacturer in control of dictating production volume, quality, and retail price.


Walmart is able to control the means and cost of production of their suppliers in America due largely to their close relationship with foreign markets predicated upon poor labor conditions and wages (i.e. China). During the 1980's, the retail giant preached a staunch “buy American” position, but when the economy began suffering in the early '90s, their stock prices plummeted. Suddenly, they began importing exceptionally high volumes of shockingly inexpensive foreign goods, and they've continued to rely on Asia to fuel their profits ever since.

Foreign Reliance

By conducting nearly 80% of their business with Chinese companies, Walmart creates an enormous profit margin that has made them increasingly dependent upon foreign markets. They pressure various American manufacturers to begin producing goods overseas with the implied threat that, if they continue to manufacture in America, the costs of their products will be too high and Walmart will no longer carry their products. This means that many American businesses must either outsource their production entirely or become multi-national in order to remain viable.

China

The bottom line here is that American manufacturers simply cannot compete with the infinitesimal production costs ($.50 an hour is a common wage in China) that are ubiquitous throughout many foreign markets. Walmart's insistence on conducting the bulk of its business with China is one of the primary reasons why Clinton's free trade agreement with that country has been a colossal failure. The United States imports far more from China than we export, and the items that we do export are generally raw materials for the Chinese to use to manufacture goods to sell back to us. This has created a massive trade deficit with China to the tune of $282 billion in 2011.

The simplest way of expressing the failure of the free trade agreement is that Americans have the incomes to buy Chinese products, but the Chinese don't have the incomes to buy American products. With the current state of affairs however, this state of affairs may soon be inverted, and Walmart seems to be a big reason for that. As Larry Mishel, President of the Economic Policy Institute in Washington D.C. stated in a 2004 Frontline special on PBS, “The dynamics that create lower prices at Walmart... are also undercutting the ability of many, many workers to earn a decent wage.”

Take This Job and Shove It

Walmart plans on opening its doors for Black Friday savings at 8 pm Thursday evening - much to the chagrin of their 1.4 million employees. As a result, it's estimated that there will be over 1,000 worksite actions over the holiday weekend protesting the working conditions at Walmart, including low wages, long hours, healthcare-related issues, and employer intimidation and retaliation for employees speaking out about their concerns.

Revolution

According to Casey Hoag, a campaign communications specialist for The United Food and Commercial Workers International Union (the union representing Walmart employees), "These nationwide actions are stemming from employee frustrations. The average associate makes $8.18 an hour. Walmart make $16 billion in annual profits and executives bring home $10 million each...Surely Walmart can stop contributing to the growing problem of income disparity and start listening to the concerns of their employees." To put this further into perspective, a $10 million annual salary equates to roughly 4,800 dollars per hour... compared to $8.18 an hour for a cashier. This discrepancy cannot be rationalized.

So... In summation, Walmart is the leading contributor to an alarming trade deficit with China. Walmart has successfully shifted the manufacturer/retailer relationship paradigm in their favor, and, by underselling their competition thanks to unfair trade practices, they eliminate the need for small business.They force manufacturers to bow to their pricing and production demands, thus shutting down numerous American companies and leaving thousands unemployed. The unemployed then turn to father Walmart to give them a menial, meaningless job with scant wages, ensuring their dependence on the cheap products that their employer peddles. After accomplishing their global domination/destruction, they can't be bothered to pay their employees a decent wage with a fair working schedule and an affordable insurance plan. Hooray for Walmart!

Sam Walton Claus

Everyone wants to provide a nice Christmas for their loved ones - I get that. My parents always did their best to make Christmas mornings special for my siblings and me, and I know that they had to sacrifice a lot in order to provide for us, but this is what's expected in 21st century America. Entitlement is the norm. We live in a consumer-based society, and we value the accumulation of stuff. Therefore, Walmart and Black Friday represent a means to an end for millions of American families. I just wish this wasn't the case.

Presents

The gap separating the haves and have-nots has swollen to a vast chasm, and this void has been accomplished with a lot of help from massive retail outlets, the illusion of free trade, and our own apathy. I'm not qualified to distribute sanctimonious lectures on the evils of materialism (I like wearing Nikes and playing my Xbox as much as the next privileged white American male), but it's important that people are aware of the global damages that massive corporate entities are causing while we unwrap our gifts. The Walmart giveth and the Walmart taketh away, but who cares? As long as they continue to sell cheap socks, cheap ammunition, and a comforting fiction of the American Dream, Walmart will remain #1 in the hearts and minds of millions of Americans.

References:

http://www.pbs.org/wgbh/pages/frontline/shows/walmart/view/

http://lorton.patch.com/articles/walmart-workers-striking-over-black-friday-hours-6a62f966

http://www.ustr.gov/countries-regions/china

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12 Comments

  • This is devastating and amazing...

  • I wonder then, when will people figure out they hold the key to their own future? When will they figure out that protests and union strikes serve only to prolong their suffering? You want to end the tyranny of big box brutality? Stop shopping there...

  • Crazy isn't it, Dayton?

  • Seems simple doesn't it, Wollof? I think it's the same mentality as people who choose not to vote. People feel so insignificant, and they have no idea just how much influence they could really have if they opted to live conscientiously.

    Walmart, and other retail stores like it, represents a troubling socio-economic cycle, but we do have the power to stifle their domination. I'm eager to see how these worker strikes go.

  • Stopping shopping at WalMart is not a panacea for our woes. Let's say I don't buy my Hanes socks at WalMart anymore. Where will I buy them? Another big box mart. Why not buy American? Because I cannot afford hand-crafted, American made socks. Why not? Because we all have to make $20+ per hour (plus benefits) and then spend billions on marketing, packaging, and distribution networks that each have to add in their freaking cut.

    I don't consider myself materialistic, and I'm sure most people who know me would agree. However, I do not earn enough to afford American made clothes for my family, especially when the work ethic and sense of entitlement that most Americans have make for what is frequently no better a product.

  • This could be partially fixed by reinstating tariff taxes, and having representatives with spine/morals. Anything that is imported to the USA should have a tariff placed on it to make it equal to, or increase it's price, in comparison to American made products. It also (OMG!) raises federal revenue without punishing Americans with higher taxes!

    Of course that won't happen while Republicans, RINOs, NEO-Cons, Elitists, totalitarians, and Democrats are getting wined and dined in D.C.

    Every company in America is being bought up if they create the slightest bit of competition. Do we utilize Anti-Trust laws? NOPE, and I wonder why. So it doesn't matter where you shop. The money all goes to the same small group of global oligopolies. Welcome to the world of crony capitalism.

    The funniest part is that people think our current President is different, last week he signed the Monsanto Protection Act while everyone was distracted with the Gay Marriage supreme court hearings. Transparency in government? Wasn't that one of his campaign promises? Why is he doing the same thing Bush and signing bills behind closed doors under the cover of a majorly debated topic? Ohhhh I know I know! Cause even the great and powerful middle class champion from the most corrupt city in the nation (also with offshore bank accounts funded by big business), fighting for the have-nots can be bought off also! What a jackass right? The more powerful government is the more powerful big oligopolies become. The more regulations the government creates the more the big companies can pay to skate passed the regulations while the little guy is crushed by them. It's not just Wal-Marts low price that kill small businesses. It's Wal-Marts ability to utilize the government to cheat the system.

    Americans consumers can try any protest all they want. It wont fix anything. Cause even if it starts too guess who's coming to the rescue with a bailout! THE GOVERNMENT with our money.

  • I need to proof read my posts.

  • Some good points, Garchow, and some I actually agree with! I say we tax the $%#* out of foreign imports, but that will never happen. Wal-Mart has become basically synonymous with the American economy and no one has the guts to do anything about their power.

    I'm surprised to hear you argue for the implementation of anti-trust laws? Wouldn't that go against your libertarian leanings?

    As for the Monsanto Protection Act, while it has absolutely nothing to do with the blog posted, I must admit that I'm pretty disappointed in the fact that President Obama signed it. Not too happy about it right now.

  • Under free market circumstance I would say that I'm against Anti-Trust laws, but considering that crony capitalism has taken hold I feel they are necessary for use to break this hold. Anti-Trust Laws and minimum wage are products of crony capitalism.

  • so just curious - is it common sense to buy toilet paper or laundry soap at Walmart for $2 less than you can buy it at Meijer? I mean if Walmart purchased it from China then so must Meijer because it's the exact same thing just a lower price!

  • Yea Meijer is the same issue. There are no mom and pop general stores anymore (in my area at least),so there is no other choice. Every place is a big box behemoth.

  • Two things working for Meijer:

    1) They at least pretend to support local business by carrying more products made in the mid West.
    2) They're not powerful enough to impose "Pull Production" on their manufacturers (yet).

    Meijer isn't innocent in this debate, but they're not exactly Wal-Mart either. Cheap isn't the issue here, the fact that Wal-Mart dictates retail markets and influences federal and global economic policy is.

    Wal-Mart calls the shots, and the other big box stores act accordingly.

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