Sunday, January 22, 2006

Thinking About Wal-Mart

Yesterday, I attended this excellent conference, sponsored by the Center for the Study of Race, Politics and Culture and the Center for Gender Studies at the University of Chicago. I won’t summarize it, but here are some thoughts that it provoked:

  • When I first started hearing about opposition to Wal-mart in the 1980s and early 1990s, the issues were primarily about protecting small businesses, preserving the character of small town business districts, and preventing sprawl. The critique of Walmart was fundamentally against the model of “big box” retail—small is beautiful; the big box is ugly. There are still important issues related to where retail development is sited, what it looks like, how well it fits with the neighborhood, its impact on transportation, and its use of public subsidies. However, the focus of the anti Wal-mart campaigners has shifted, and protecting small business is now a tertiary issue. The big box has won. It is unstoppable, because it increases the efficiency of the retail sector and translates these efficiencies into lower prices that benefit consumers, especially low-income consumers. So now what Wal-mart critics want is a better big box—one that pays better wages and health care benefits, that treats its employees better, that allows union organizing, and (for the more ambitious campaigners) that doesn’t create pressure on its suppliers to reduce wages and benefits to hold costs down. They want Wal-mart to be more like Costco.

  • Anti Wal-mart campaigners have focused on keeping Wal-mart out of particular communities. Campaigners usually do seek to connect local campaigns to the broader fight for workers by imposing conditions on Wal-mart’s entrance to a community through a Community Benefits Agreement (CBA). A CBA can include a requirement to pay a “living wage” significantly higher than the general minimum wage, to provide health care benefits, to contribute towards neighborhood beautification, etc. I have a lot of sympathy for these efforts, but this approach is a tough sell when, as in Chicago, Wal-mart wants to move into neighborhoods that have little existing retail and few job opportunities, and when Wal-mart can locate in suburban communities right on Chicago’s border without facing these obstacles. They naturally lead to questions about why big box retailers face requirements that don’t apply to smaller retailers and other types of employers. Moreover, the focus on Wal-mart expansion into new communities seems more suited to a campaign to protect local small business than to a campaign to improve working conditions for workers at the big boxes. The current critique of Wal-mart as a bad employer cries out for broader efforts: to raise the minimum wage, to enforce labor laws, to establish a national healthcare system. Given the current state of our national politics, I can’t blame anti Wal-mart campaigners from focusing on local fights, but it doesn’t seem like a winning strategy. Moreover, broader-scale efforts are possible even without immediate prospects for national legislation. Rather than fight expansion of Wal-mart into particular communities one at a time, it would seem more productive to organize a boycott of existing Wal-mart stores, until the company meets specific demands, perhaps related to allowing unionization. Boycotts have been attempted, but the primary focus of the anti Wal-mart effort is organizing communities against Wal-mart expansion.

  • Wal-mart pursues a “low-road” strategy of lousy wages and benefits, accepting the costs of high turnover, high costs for re-training, “shrinkage,” bad employee morale, and poor corporate image. To some extent, this strategy arises out of Wal-mart’s corporate history, management style and preferences, and are therefore changeable—Wal-mart might be equally profitable with a strategy that treated its employees better. However, to a large extent, Wal-mart’s approach is dictated by its role as a retailer of low-end goods for whom low-cost is everything. For Wal-mart, in comparison to higher-end retailers such as Costco, it is less important to have high quality staff who are highly knowledgeable and helpful. Therefore, boycotts and community organizing can accomplish only limited objectives. A low-end retailer can follow a high road labor strategy only so far and remain profitable, if its competitors are taking a lower road. Which is why a decent minimum wage, enforcement of labor law, and creation of a national right to basic health care are so essential.