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Walmart, the Most Powerful Company in the World, Admits that Protests and Strikes Lead to Wage Increases

Workers threaten to walk out on Black Friday, the biggest shopping day of the year. Speedbump in Walmart's race to the bottom?



For the first time ever, a strike is taking place in America aimed at the most powerful company in the economy: Walmart. Workers at Walmart stores across the country, as Josh Eidelson reports, are threatening to walk out on Black Friday, the biggest shopping day of the year. These labor actions are coming on top of earlier labor actions at Walmart’s warehouse contractors linked to “non-payment of overtime, non-payment for all hours worked, and even pay less than the minimum wage.”

The possible strike could be very significant, because the target of the strike is the most important driver of the race to the bottom economy. Walmart is massive – the company is the largest private employer in the US, with more than 2 million employees. The average American household spends $3500 at Walmart, and in 2006, the company alone represented 2.3% of the American GDP. The company is so powerful that when a Walmart Supercenter comes into your community, the entire community’s  obesity rate increases. It is also, as  New America scholar Barry Lynn has argued in  End of the Linea force that has reshaped the American corporate world.

Though known for suppressing wages, I found evidence that the company is willing to change working conditions with sufficient pressure. According to St. Louis Federal Reserve President William Poole, the last time there was significant labor unrest at Walmart, in 2006, the company raised wages at 700 stores. Poole, like many at the Fed, regularly spoke with Walmart executives, and they gave him unvarnished views about their business practices because they believed (as did Poole) that the information would be used solely for macro-economic forecasting.  On  March 27-28, 2006, Poole said that his Walmart contact told him the company would not raise wages, and was planning on moving their work force increasingly towards part-time employment. Poole was interested in this because of its bearing on inflation. “Wages,” he said, “and these are for hourly workers, are absolutely flat – no increases whatsoever in the last year and no increases planned going forward.” Poole continued, “About 20 percent of their associates are part time and that they are going to be increasing that share to 40 percent so they can staff at peak times and get more productivity out of their workforce.”

Just two months later, Poole offered some very different and shocking news, “My Wal-Mart contact also said that “Wal-Mart is in the process of raising starting wages in about 700 stores. This is the first time in eight years of talking with him that I’ve heard any comment like that. He said that some of the raises are part of the Wal-Mart, I’ll call it “Social/political” agenda because of all the controversy about Wal-Mart.” The FOMC transcripts are as close as we’re going to get to internal corporate dialogue without discovery or leaks. The reason I found this information is because Walmart has become a significant presence at the Fed; forecasters at the key Federal Open Market Committee meetings increasingly rely on what the retailer tells them about the economy. Now, FOMC transcripts aren’t released for at least five years, so we don’t know whether this strike is registering with those high level policymakers. But the last time there was a far less aggressive  union-backed attack on Walmart‘s business practices, it did.

As for the strike, it is potentially one of the biggest stories of the year, a genuine challenge to the current economic order. Walmart has set the tone for the global economy, becoming a massive trading empire on the order of the British East Indies Trading company. Walmart has, as  New America scholar Barry Lynn argued in  End of the Linereshaped the American corporate world. The key to Walmart’s dominance is the way that it electronically tracks all of its merchandise through an enormously efficient supply chain – the data Walmart has about who buys what and when is incredibly valuable to manufacturers. Beyond that, the size of Walmart – eight cents of every dollar spent on retail in the US goes through the company – means that selling at scale in the US means selling through Walmart. In order to sell there, though, Walmart walks into your company and dictates how you are to manufacture, price, and package your product. As Lynn writes: