Hey Michelle and Barack: Walmart and Amazon Are the Problem, Not the Solution

The Obamas are proving singularly inept at choosing appropriate venues to highlight their initiatives. In June 2011 Michelle invited giant retailers, including Walmart, to the White House to launch her effort to persuade the country’s largest retailers to move into inner city “food deserts.” She later visited a Walmart in Springfield, Missouri to applaud its corporate expansion into urban areas. 

My colleague at the Institute for Local Self-Reliance, Stacy Mitchell, chided Ms. Obama, “If you were to rank the factors that have contributed to the disappearance of neighborhood grocery stores over the last two decades, Walmart would be a pretty formidable contender for the top spot.” 

Walmart has captured 25 percent of the nation’s grocery market and in 29 metropolitan areas commands a 50 percent share. It has almost saturated rural and suburban America and now wants to massively move into urban areas. That is not sitting well with many of its targeted neighborhoods. Ms. Obama’s advance team should have been aware that a vigorous, sustained protest against Walmart moving into a historic downtown neighborhood was ongoing in Springfield. Only a few days before Ms. Obama’s visit the City Council ultimately approved the Walmart by a vote of 5-4.  The outcome may have been less an endorsement of Walmart than an effort to avoid embarrassing Michelle.   

Mitchell noted that 1400 small and independent food stores had opened between 2002 and 2011, many of them serving inner city neighborhoods.  “Independent grocers should have been at the center of this announcement,” she insisted. “After all, independent food retailers, including co-ops and farmers markets, have been instrumental in the success of the only program so far to make a real dent in the problem (affordable, nutritious food in inner cities) the Pennsylvania Fresh Food Financing initiative. Of the 93 stores created or expanded by the initiative to date, almost all are independently or cooperatively owned.”

Ironically, eight months after Ms. Obama praised Walmart for bringing affordable food to Springfield, a Walmart in Ohio was discovered collecting food donations for its own employees.  Walmart workers survive in large part because their inadequate pay is supplemented by public benefits (e.g. food stamps, welfare, Medicaid). A May 2013 report by the Democrat staff of the U.S. House Committee on Education and Workforce estimated these benefits cost taxpayers $3015 per worker, or about $1.50 an hour for a full time employee.

Under extreme public pressure and to ward off unionization, Walmart recently announced it is boosting wages by about $1 per hour for about a third of its US workforce. In 2013 Stephen Gandel of Fortune magazine calculated Walmart could have increased salaries by more than $5 per hour without negatively affecting its stock price.

Walmart not only pays its own workers little, it drives down domestic wages overall or forces domestic suppliers to relocate abroad by compelling them to match prices offered by low wage foreign suppliers.  

While the workers suffer, the Walton family, owners of 50 percent of Walmart stock have become the poster children of inequality.  In 2014 the family received dividends of about $3 billion, three times the cost of Walmart’s recent modest wage increase. Since 2007 the six heirs to Walmart’s cofounders Sam and Bud Walton have seen their wealth more than double to $148.8 billion. They now earn as much as 42 percent of American families combined!

In mid 2013 President Obama flew to an Amazon warehouse in Chattanooga, Tennessee to celebrate that company’s creation of middle class jobs. It was a bizarre choice. His advance team must have known of the increasingly public infamy of Amazon warehouses. In 2011 reporter Spencer Soper in the Allentown newspaper the Morning Call, described the brutal working conditions at Amazon’s Allentown, Pennsylvania warehouse during the early summer of 2011. Fifteen workers had collapsed from heat exhaustion. “Calls to the local ambulance service became so frequent that for five hot days in June and July, ambulances and paramedics were stationed all day at the depot.” Amazon apparently found it cheaper to pay for ambulances than to install air conditioning.  A 2012 story in the Seattle Times described a similar Dickensian situation at Amazon’s Campbellsville, Kentucky warehouse.

Amazon and its owner Jeff Bezos not only believe they owe nothing to their workers, they insist they owe nothing to the country. In an interview with Fast Company, Bezos confessed he had "investigated whether we could set up Amazon.com on an Indian reservation near San Francisco."  The idea was to get "access to talent without all the tax consequences." He ended up setting up shop in Seattle. And for almost 20 years he took advantage of a loophole in the law that allowed him to avoid paying sales tax for online purchases, giving Amazon a 6-8 percent price advantage over Main Street stores right out of the gate.  As for paying corporate taxes Jim Hightower comments, “Through a convoluted system of inter-corporate payments, a major portion of Amazon's global revenue is funneled into the tiny Grand Duchy of Luxembourg. There, its tax rate is shriveled to barely five percent!”

A few weeks ago President Obama hit the trifecta for maladroit event planning when he made a speech promoting an expansion of unregulated trade at Nike’s headquarters in Oregon.     

Nike is infamous for having pioneered the massive corporate outsourcing of middle class jobs to low-wage countries. Only 1 percent of its workforce resides in the United States while almost a million workers are in low wage countries.  Nike continues to hemorrhage domestic jobs. Former Secretary of Labor Robert Reich reports that in 2014 a third of Nike’s remaining 13,922 Americans production workers were laid off.  

When wages rose in China Nike switched most of its production to Vietnam, where wages are a third what they are in China.  In April, after Vietnam approved a modest 15 percent wage hike, foreign and local companies reportedly warned that any further wage hikes should be considered “very carefully” in order not to undermine the competitiveness of the Vietnamese economy.  

About the same time that Obama was standing in Nike’s headquarters the Institute for Global Labour and Human Rights, issued a report condemning Nike’s labor practices. The report’s author Charles Kernaghan observes, "Let’s be honest. For years, Nike has been exploiting the 330,000 Vietnamese workers, mostly young women, who are poorly paid and denied their most fundamental rights.” He likens Nike to "the canary in the coal mine…pointing us to what unfettered 'free trade' looks like, and what the world will look like under the Trans-Pacific Partnership (TPP)."

Kernaghan told the Huffington Post, “The fact that President Obama would … be at the side of Nike just doesn’t make any sense whatsoever.”

No it doesn’t.  Nor does it make sense that the President and the First Lady would commend Amazon for creating middle class jobs or Walmart for bringing groceries to urban neighborhoods.  Not if workers and communities matter to them as much as they do to those who won the White House for them.