Wal-Mart Gets Greedy

With 300 of its contract cleaners having been hauled off by immigration authorities, with a truckload of files seized from its corporate offices in Arkansas, and with a federal grand jury in Pennsylvania listening to wiretaps of its executives' phone conversations, Wal-Mart's red, white and blue image is fast fading to mop-bucket gray. 

The Bureau of Immigration and Customs Enforcement (ICE) caught Wal-Mart red-handed as it contracted to have the overnight cleaning of its stores done by undocumented workers. Federal officials have told the Associated Press that company executives knew what the contractors were up to. 

Wal-Mart has responded by declaring that it will now scrutinize the documents of every single one of its employees (hasn't that been done already?), and the company most certainly will be shocked, shocked! if it finds more deportable people among them. 

The Washington Post reported that the Wal-Mart raids were part of an aggressive enforcement campaign by the newly beefed-up ICE (formerly the Immigration and Naturalization Service). The Post story ended with a lament by Elizabeth Stern, an immigration lawyer who got to the heart of the matter: "That's the wrong attitude when you are trying to foster a national economic recovery."

It's an open secret that U.S. business has become hooked on the profits generated by illegal immigration. In its remorseless drive toward Always Low Prices, Wal-Mart, it appears, is no exception. It's hard for a company to resist the temptation offered by a large pool of workers willing to put in long hours for minimum or sub-minimum wage, with no overtime pay - workers whose fear of deportation ensures that they'll do whatever is asked of them.

As you doubtless have noticed, most everything sold by your local Wal-Mart was manufactured far beyond U.S. borders - also by contractors paying low wages to often-desperate people. Unlike manufacturing firms, retail chains like Wal-Mart can't pump up their profits further by moving their operations overseas. But now that Wal-Mart is the nation's biggest private employer, with 1.3 million workers worldwide (triple the number employed by #2 McDonald's), it is able singlehandedly to drive retail wages down to a level it can be comfortable with.

Through its sheer bulk (and with a little help from its cleaning contractors), Wal-Mart is having the same negative effect on retail-sector wages that companies in China and Mexico have had on U.S. manufacturing wages. Currently, the most obvious effect is being seen in the grocery industry.

But Wal-Mart's PR slogan "Our People Make the Difference" does capture a truth. Based on the company's profit and employment figures, I calculate that each employee generates more than $11.20 in new wealth for every hour she works. The average U.S. employee is paid an average hourly wage of $7.50, and the balance -- about $3.70 -- goes back to Arkansas as profit. (The actual hourly profit is higher, because the average wage of employees in the growing number of overseas stores is lower.)

If a little over half of that hourly profit, say $2, were shifted to the workers who generated it, the average wage would rise to $9.50, which is considered a living wage in most U.S. communities. That could happen if Wal-Mart decided to be satisfied with being the world's biggest corporation and stopped its headlong expansion.

Now that $7.50 wage is an average, not a minimum. Hundreds of thousands of Wal-Mart workers are paid less -- so much less that some cannot even obtain the bare necessities of life for their families without government assistance.

We don't know how many contract workers are cleaning Wal-Mart's stores, distribution centers, and corporate offices each night across America. But their number is dwarfed by the million-plus people on its official payroll. You'd think that Wal-Mart would be satisfied to pay a relatively few cleaners the same bare-bones wages it pays its cashiers, stockers, and greeters. But its executives, taking Sam Walton's penny-pinching philosophy to its extreme, have found a way to pay cleaners even less, via the contract system. 

Wal-Mart spokespeople claim that they have forbidden their contractors to hire workers who have inadequate documents. If so, they must have wondered at the seeming miracle the contractors had managed to pull off. How could they have convinced people to work in a Wal-Mart store for even less than the stingy Wal-Mart wage? Now we know how, and it seems likely that the company's executives have known all along that it was no miracle.

All wages affect all others, through something like a gravitational force. It pays for corporations to rely on dollar-a-day workers when the job can be done overseas or on too-cheap-to-be-legal contract workers when the work is to be done within our borders. At the next level, when businesses find it necessary to hire employees directly for U.S. jobs, the Wal-Mart wage is fast becoming the center of gravity.

Tough living-wage laws and anti-sweatshop treaties would accomplish what immigration crackdowns cannot, while curtailing the exploitation of workers who live life on the run. Wal-Mart and the other corporations that benefit from the lack of such laws would howl, but don't feel sorry for them -- they can afford to pay more.

Stan Cox (t.stan@cox.net) works in Salina, Kansas as a plant breeder and writer.