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Justice Grace Vineyards blog. Where politics, social justice, and wine intersect.

The Walmart Shell Game

First they came for the Socialists, and I did not speak out--
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out--
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out--
Because I was not a Jew.
Then they came for me--and there was no one left to speak for me

Pastor Martin Niemoller, 1946


I am reminded of this haunting quote from Pastor Martin Niemoller, when I consider the current state of the economy and labor markets around the world. I know the use of this quote, which has become a passionate cry worldwide about the horrors of political apathy, may at first seem an overreach.

Two observations: over the past 40 years, there has been a steady and severe erosion in the wages, benefits, and financial security of the working class, which has engulfed more and more job categories and plunged a staggering 46+ million Americans into poverty. Secondly, while the Occupy movement, and recent Walmart worker strikes have stirred some measure of public outcry, the response of most of the US middle-class while the assault on worker's rights and living conditions proceeded unabated for decades, has been shockingly quiet.

The courageous worker-led strikes/ actions at nearly 1,000 stores of our nation's largest retailer (and largest food retailer), Walmart, on Black Friday, are nothing short of monumental. As former Secretary of Labor Robert Reich points out, the 40 year attack on worker's rights and wages were made possible, in part, by the precipitous decline of labor union power and representation. As the number of private sector workers enrolled in unions has plummeted, so too has worker bargaining power; and with it wages, benefits, and in the past year, even an offensive led by Wisconsin Governor Walker against what the UN long ago deemed a universal human right: the right to collectively bargain.

It wasn't always so. Leading up to the turn of the 20th century, the working class was united, enraged, and active. Sidney Lens, writes in The Labor Wars: “...in the quarter of a century of enormous economic growth from 1881 to 1905, there were 38,303 strikes and lockouts, involving seven and a half million workers.” Violence was common in those days, and joining a strike risked more than your family's sustenance. Their courage earned all workers an eight hour workday, a spotlight on child labor, better wages and working conditions, and restored some sense of human dignity.

In the past few months at Walmart, workers brilliantly decided that, as a first step perhaps,  rather than embark on the colossal task of winning union representation at the nation's most notorious anti-union corporation (which could take years), these heroic and fed-up workers would simply organize themselves organically. They rallied together under the banner OUR Walmart. They quickly appealed to consumers directly with their pleas for an end to chaotic “just-in-time” scheduling, safer working conditions, more hours, better wages, access to affordable healthcare, and an end to corporate retaliations for simply speaking out. Walmart's goliath legal team has thusfar struggled to use anti-union labor laws to prevent OUR Walmart's actions.

Not only is their organizing choice remarkable (and effective), but they have also chosen to enlist consumers directly, via a tactic which I believe to be dramatically underutilized: boycotts. Consumer spending is by far, the biggest driver of the US economy. As such, consumers wield enormous power-- but they don't use it effectively as an agent of change. In fact, consumers collective apathy in doing so only emboldens corporate exploitation and entrenches old actions which have gone unaccountable.

Tired of waiting for large corporations to do the right thing?

Profiting via exploitation (people or the planet) in the ongoing race-to-the-bottom is common across all industries: see recent revelations at Apple/ Foxconn, Hershey's use of child labor, Gap/ H&M, Abercrombie garment workers, Wall St./Big Banks, Ikea's use of forced labor in the '80's, Hyatt Hotels, Lonmin mines, BP's history, and CA farmworkers to scratch the surface.

As consumers, you don't have to wait for years while executives avoid accountability, and legislators pass the buck-- you can effect change immediately! Simply stop spending any money at these institutions. How powerful would the banks “too big to fail” be if consumers withdrew all of their checking/ savings/ mutual fund and retirement account assets?

Businesses have both fixed and variable costs. The more fixed costs are, as a percent of total expenses (i.e. big-box retailers), the greater the power of the consumer can be to effect the change they desire. Simply put, if only 20% of revenues decline (which may require less than 20% of the customers to act), a company with high fixed costs would see profits plummet at a far greater rate. Want to get the company's bonus fixated executive's attention? Stop shopping there!

A village can do more than just raise a child-- it can also raze a business.

For Walmart, there can simply be no reasonable doubt as to whether they have the economic means to provide work with dignity (despite the rhetoric to the contrary). In their last Fiscal Year ending January 2012, Walmart reported profits of $16 Billion, and more importantly, more than $10 Billion in Free Cash Flow1. For the past three fiscal years alone, the company reported $30 Billion in Free Cash Flow (i.e. taken to the bank). Interestingly, “Grocery” is by far the greatest single engine of revenues at Walmart's US operation, accounting for 55% of revenues (4 x greater than the second largest contributor). While earning these gigantic annual profits and cash flow, the employees who worked their butts off to generate such riches, earned on average $8.81 per hour, or $18,000 per year (pre-tax).

Apologists, for the relentless corporate desire to reduce wages and benefits as a percent of revenues, offer a few common justifications. This trend is a material and obvious reason the disparity between rich and poor has never been greater in this country, and more than 1:7 Americans finds themselves in poverty, so lets examine their argument:

By default, these wages are “fair”. The employees are “unskilled” and the “free market” has created a market clearing price to attract these workers. If they would only get a decent education they could easily improve their lot in life. They should stop whining and go to school!

Many of us are all too familiar with the many subsidies and trade barriers/ tariffs which interfere with the so-called “free market” across all industries, and create harmful incentives and distortions, leading to poor health, food insecurity, environmental devastation, and widespread hunger and poverty worldwide. The same shell game is evident in the labor market: over the past 40 years Corporate America has managed to pawn off the responsibility of decent wages and benefits from their own Income Statement to the taxes of the middle-class. As a 2004 UC Berkeley study highlighted, while Walmart workers earn poverty wages, they rely to a huge extent on public safety nets from financially desperate municipalities to cover the costs of healthcare, housing subsidies, and food stamps.

Those “benefits” are paid for by the middle-class taxpayer, whether they are Walmart customers or not. While the company receives attractive tax incentives to locate a store in an economically desperate town, Walmart pawns off expenses related to their employees living standards to those same cash strapped cities, states and taxpayers. Retailers in the US may not be able to outsource the humans who unload the cargo at the shipyard, repackage and haul the goods at the warehouse, stock the shelves, and take your cash-- but they have been outsourcing Corporate Responsibility and human decency for decades.

Let there be no doubt: it is only because of the current willingness of always-on-sale legislators to maintain this shell game for Corporate America, that Walmart is able to maintain poverty wages for its 1.3 million workers. Without the public safety net, surely out of desperation, tens of millions of workers all across America would be waging 20th century strikes. I wonder what the size and impact of those actions would be when news of such could spread immediately vs. the difficulties of 100 years ago when more than seven million people acted, largely via word of mouth.

The Bureau of Labor Statistics estimates that 7 of the top 10 fastest growing job categories over the next decade are low-wage ones. And as the National Employment Law Project makes clear in their 2012 report “Big Business, Corporate Profits and the Minimum Wage”, many of these poverty wage jobs are in the Food sector.

Farmworkers and domestic workers were hardly ever given any respect or rights to be taken away. But “they” have come for the miners, rail workers, garment workers, longshoremen, truckers, steel workers, auto workers, air traffic controllers, teachers, Food Chain workers, hotel workers, airline pilots, health care workers, postal workers and the strongest bastion of unions today: public sector employees.

Will they come for you?

Workers of the world unite-- you have nothing to lose but your chain-stores.

What can you do?

- Buy Local
- Sponsor a striker at Walmart
- Support unions and public sector employees in your community: find them and connect via social media !
- Show Up ! Walk a picket-line, and support boycotts by shopping at local businesses
- Wield the enormous power in your wallet: only spend/ keep money at businesses that embody your values (including Credit Unions vs. Big Banks)

1. “Free Cash Flow” is annual cash retained after capital expenditures, which are re-invested back in the business