Photo Credit: Ron Dauphin via Flickr, Creative Commons license.
As appearing in Real Change News (8/22/2012):
Despite vocal opposition from local unions and community groups, a new Walmart shopping center opened in Bellevue’s Kelsey Square in June, reigniting debate over the big box retailer’s presence and pushing residents to reconsider the question: Who wins and who loses when Walmart comes to town?
According to a report released by Puget Sound Sage, Bellevue workers and residents will be the clear losers. The report finds Walmart depresses local wages and drains customers from local retailers while not actually increasing consumption. The result is a loss of $13 million of net economic output and $14 million in lost wages over 20 years when a Walmart moves in.
But what’s bad for local business seems to be good for Walmart’s bottom line. The company reaped $15.7 billion in profits last year, propelling the wealth of the Walton family, whose relatives started Walmart, to astronomical levels — more than that of the bottom 40 percent of Americans.
Walmart officials argue they give consumers what they want — everyday low prices — but rock-bottom prices have a steep cost, as America’s manufacturers can attest.
For suppliers, doing business with Walmart is like being stuck in a vice. Joe Allen Jr., profiled in a recent report by the advocacy nonprofit Demos, is a retired apparel manufacturer. During the ’60s, ’70s and ’80s, Allen built his company’s success through efficient production and fair wages, until Walmart stepped in.
“I could see that if you’re going to be a player in the apparel industry you’re going to have to sell Walmart: they were just too big a user. … You don’t negotiate prices with Walmart because they can just tell you what they’re going to pay and that’s it. You got to make it cheaper than you did last year.
“People didn’t start importing from overseas because they wanted to. They did it because they had to, to survive. Those that didn’t join in the club are not around anymore.”
The 2003 article, “The Wal-Mart You Don’t Know,” was printed on the progressive media website Fastcompany.
In it, Steve Dobbins, ceo of Carolina Mills, a 75-year-old North Carolina thread, yard and textile company and supplier to Walmart, explained, “Sure, it’s [Wal-Mart’s prices] held inflation down, and it’s great to have bargains. … But you can’t buy anything if you’re not employed. We are shopping ourselves out of jobs.”
Dobbins found out the hard way. His company shrunk from 17 to seven factories and laid off half of its workers to keep its contract with the multinational retailer, which demanded lower prices by threatening to turn to cheaper imports. Soon, Dobbins found that even if he offered his United States employees no pay, he still could not compete.
It’s a trend that has been replicated across the country to devastating effect.
The earlier mentioned Demos report explains how Walmart’s race to the bottom is fueling a full-scale transformation of the manufacturing industry in America, and driving down wages for millions of American workers:
“As America’s biggest company, Walmart wields tremendous market power. Walmart could use this might to help build up the American economy, offering good jobs to its own employees, encouraging contractors to do the same, and helping to strengthen u.s. manufacturing through its relationships with its suppliers. Instead, Walmart has wielded its market power to eliminate good-paying manufacturing jobs and lower labor standards in the retail sector and throughout its entire supply chain.”
The problem doesn’t start and stop with Walmart, however. If we want America to return to prosperity — with higher employment and good jobs — we need policies to rebuild our economy from the bottom up.
It starts with having public policies that increase access to education and public investment to improve American infrastructure. It means having trade policies that encourage investment here at home, and having enforceable standards for human rights, labor rights, the environment and financial regulation.
That’s how American middle-class prosperity began. It’s how we’ll find our way back.