Wal-Mart Licks Its Wounds

Poor Wal-Mart just can't seem to catch a break. There they are, the monks of Bentonville -- who, according to company legend, share hotel rooms on business trips rather than drive up the price of pantyhose -- toiling away to make the good life affordable to the impecunious masses. And what do they get? Nothing but grief. The Democrats are running against Wal-Mart in the fall congressional elections, and not just the wild-eyed progressive ones. Centrist Hillary Clinton returned a $5,000 donation from the company, citing its inadequate health benefits, and Joe Biden just attacked it because he doesn't see "any indication that they care about the fate of middle-class people."

Then Andrew Young, the former civil rights leader-turned-Wal-Mart-flack, pulled a Mel Gibson, lashing out at the company's small business, ethnic, competitors: "I think they've ripped off our communities enough. First it was Jews, then it was Koreans and now it's Arabs; very few black people own these stores." Wal-Mart quickly distanced itself from the remark, as did Young himself. He stepped down from his Wal-Mart job, though he has not yet followed Mel's example by seeking counseling from leading Korean fruit vendors.

The Young meltdown aside, Wal-Mart blames its troubles on the unions it has worked so hard to bar from its stores. They're so touchy, those unions! They take offense just because the Wal-Mart orientation for new hires includes a 12-minute video on the evils of unions, portraying them as little better than extortionists. They get all bent out of shape every time a union sympathizer is fired by Wal-Mart on some trumped-up charge like using profanity or being discourteous to customers. They jump up and down when Wal-Mart is caught making its associates work overtime for no pay, or locking them into the stores at night.

But the cruelest blow to Bentonville is a sudden decline in profits -- down 26 percent in the second quarter of '06 -- the first decline in 10 years. Wal-Mart blames, first, the failure of its attempted expansion into Germany, where apparently folks don't cotton to smiley faces and people greeters; and second, high gas prices in the USA. According to the New York Times, Wal-Mart CEO H. Lee Scott "hinted that those [gas] costs seemed to be prompting consumers to shop less frequently." There's one big advantage to the little Jewish-, Korean- or Arab-owned shop: Usually, you can walk to it.

The profit drop suggests a deep contradiction in Wal-Mart's seemingly altruistic goal of bringing abundance to the American working class. According to Wal-Mart defenders, those low prices hinge, not only on improvements in productivity, but on the low wages and benefits offered to Wal-Mart's workers. In other words, you've got to squeeze one part of the working class -- the 1.3 million Wal-Mart employees -- to fill the shopping carts of the others. How much the employees are squeezed is hard to determine: Wal-Mart claims to pay an average of $9.68 an hour, which doesn't sound all that bad. But Wal-Mart has a record of falsifying data on employee hours to conceal unpaid overtime work, so why should we believe them about anything?

There were signs, even before the recent profit drop, that Wal-Mart was beginning to be priced out of the reach of its own employees. I was surprised, in my brief stint as a Wal-Mart associate, that our ladies' wear was too costly for many of my co-workers. (In Nickel and Dimed, I told the story of a $7 an hour associate who could not afford a $7 polo shirt of the kind we were required to wear.) If you earn $7, $8, or even $9 an hour, you're not buying new clothes anyway; you're going to Goodwill or consignment stores. As for the offerings of Wal-Mart's Electronics and Lawn and Garden departments, for my co-workers, these weren't even on the distant horizon.