FC NOW: The Fast Company Weblog
August 3, 2004
The Wal-Mart You Don't Know
Last December, Fast Company senior writer Charles Fishman wrote about The Wal-Mart You Don't Know, whose relentless push for lower prices has crushed many of its suppliers and forced them to send jobs overseas. Today, San Francisco Chronicle staff writer George Raine reports on a new study, which shows that employment practices at the retail giant cost California taxpayers about $86 million annually in public assistance to company workers.
Released by the UC Berkeley Labor Center, a research institute, the study estimates that low wages force employees to accept $32 million annually in health-related services and $54 million per year in other assistance, such as subsidized school lunches, food stamps and subsidized housing.
Naturally, Wal-Mart questions the study, saying the authors undervalued the wages and benefits that the chain's employees receive. The study estimates that Wal-Mart workers earn $9.40 an hour on average compared with $15.31 for unionized grocery workers -- a difference of 39 percent. Wal-Mart, however, says its Bay Area workers earn an average of $11.08 an hour, and that statewide its workers earn an average of $10.37 per hour.
The study also claims that Wal-Mart workers are half as likely to have health benefits as union grocery workers; Wal-Mart counters that 90 percent of its employees have health insurance.
While only Wal-Mart knows the truth, the company is certainly on the defensive after months of negative press and a gathering of legal storm around charges of employment discrimination. FC Now readers: What do you think is behind Wal-Mart's yellow smiley face? And do you think it's worth Wal-Mart's while to defend itself?
Posted by at August 3, 2004 3:03 PM | Category: human resources |
25 Comments
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A great deal of money, greed, and lots of people dependent on them (kind of like the old company towns that basically held their employees/citizens hostage).
A stick it to the employee attitude that we've got you right where we want you is what's behind that smile. I'm proud to say I've never entered a Wal Mart and never will.
Get over it guys. Wal*Mart is doing what all good businesses do: become more competitive and benefit the consumer. If you don't like it, then you don't like capitalism.
Unionized grocery stores (I worked for a large one when I was in my teens) in reality are but marginally better (if at all) than Wal*Mart when it comes to employee wages and benefits. The stranglehold that the unions have over those companies stiffles innovation and is an iron curtain that keeps employees from moving into management. How can that be good for the employees?
I agreed with Ernie. Wal mart is practising free enterprise.
What's behind the smile is a company that still believes in giving people their money's worth. They may not pay their employees as much as a union job, but then again neither do Taco Bell and McDonalds. Those who feel underpaid or mismanaged still have the freedom to work elsewhere. Why is Wal-Mart in the crosshairs? Probably because those of dissenting opinion are motivated to scrutinize a hugely successful company that practices conservative values.
What's behind the smile is a company that still believes in giving people their money's worth. They may not pay their employees as much as a union job, but then again neither do Taco Bell and McDonalds. Those who feel underpaid or mismanaged still have the freedom to work elsewhere. Why is Wal-Mart in the crosshairs? Probably because those of dissenting opinion are motivated to scrutinize a hugely successful company that practices conservative values.
You can just tell that Wal-Mart is guilty of something by the commercials they air. They don't even bother promoting their products anymore; they are obsessed with their reputation. entertainment news
I think people should try reading about Walmarts history before making comments now. Walmart started in small towns and was beaten down their entire way to where they are now. They were unable to get distributors, or even get into leases, and were even trodden on when they tried to go public. This is a company that has strived for excellence, started small and has created a great company. They are able to beat everyone now, because it has taken decades for them to get it done right. More companies should look at Walmart and see how it is done right as opposed to crying foul.
What would our economy look like if lower prices were pursued by all businesses to the same degree as Walmart?
Could we maintain our standard of living if the factors of production were to become so efficiently fluid across the globe? (A major element of Walmart success is arbitrage of global production costs)
Does Walmart have an allegiance to any country? Does their philosophy eventually work them into a global monpolistic player by default? Who can compete with such a system? What impact do they have on allocation of natural resources?
Some of these might sound pretty far out there, but the stories of companies who have fallen into dependency on Walmart volume to later be crushed when they couldn't or wouldn't drop prices further seemed pretty far out several years back.
Irrespective of its history, Walmart is a little scary for the future.
I agree that Walmart is a tribute to capitalism as it's been pursued by many corporations but with less success. Walmart epitomizes the greed that drives many of us and it is successful because that same greed drives us - as consumers - to get the most for the least regardless of the indirect "costs". But I think this too will pass - just like brutal "colonialism" evolved to a more collaborative co-existence for many nations. We just need more examples of corporations that model "social capitalism" proving you can be successful while still being a responsible citizen of the world. I don't - and never will - shop at Walmart. It's my contribution to "social capitalism".
While Walmart may have an average wage of $9.40 per hour alot of their employees make minimum wage.At companys like Cosco the minimum employees make is over 10.00 per hour.This to me shows that competitive companys can afford to pay their people a decent wage.
$9.40 per hour! That is a premium compared to the average STARBUCKS employee who makes $7.00
Call it free enterprise or capitalism but how can billion dollar companies profit off employees who live below poverty. Who gives a rip about health insurance if you can't even afford rent.
Does anyone really believe that Wal-Mart is primarily concerned with their consumers? Please! If they were they wouldn't be very good executive leadership. Their primary concern is to themselves and then to their share holders. Wal-Mart owners are all in the top 10 richest Americans in the US list (I believe they are numbers 5-9). Creating and maintaining a great company is one thing but doing so but not only exploiting your employees but also eliminating all competition with predatory pricing techniques border on illegal. Wal-Mart can surely afford to pay its employees more and give them health care but that would make it so the owners have one last 0 at the end of their net worth.
Imagine what it would be like in this country if every employer viewed their "associates" as necessary evils the way Walmart does. Henry Ford thought it was good business to pay his workers enough to be able to afford the cars that they were building. It assured him of a customer base to draw from. If Walmart continues to drive the wage scale down, where will they get their customer base from? Every time we spend a dime at Walmart, we are shopping ourselves right out of jobs and lowering ourselves to the level of the Third World countries that produce the products that Walmart sells. It's as plain as that. If we, the consumers of this country would accept a 2% increase in the prices of Walmart goods, They could pay their "associates" $3 more per hour and keep the same margins that they have now. I've done the math and it's a fact.. Unfortunately, stock holders would never allow that to happen. They aren't concerned with anything but their portfolios. And just as unfortunate is the fact that we, the great people of America aren't getting any smarter. The continual "dumbing down" of our society insures that Walmart's practices will go on and we will reap what we sow.
Averaging wages skews the numbers. Doing so lumps the big wages in with the small and may give one the illusion that people are, on average, making more than they really are. What's the median wage at Wal-mart?
It is true that Wal*Mart offers its employees a less than spectacular wage & benefits package. It is also true that Wal*Mart offers products at a significant discount wich in turn hurts the small local business owner. Free enterprise is what made America what it is today. Some person took the initiative to start a company, worked hard and turned it into a multi-million dollar industry. Look at examples such as Hallmark, Starbucks, and even Microsoft. Granted the pay scale for these companies is in a different league that Wal*Mart. However; Wal*Mart is doing something that is badly needed in this country. Giving willing people jobs.
How many time do you drive down the street and see someone on the corner with a sign stating "Will work for food?" That is precicely what Wal*Mart employees are doing. Working. They may not be paid well, but they are in fact getting paid. Wal*Mart employees are earning a legitimate wage and paying taxes. If it were actually easy we could all quit our jobs and apply for federal assistance.
Each of us has our own opinion about large corporation. Any business owner, large or small, will tell you it is about the bottom dollar. "Am I making money?" If not your easiest form of profit control is your employee base. Lay them off, pay them less, do whatever it takes to make a buck.
I for one am not a Wal*Mart shopper, but the business creates jobs and offers affordable product for those who need affordable product. Can you say effective marketing? Isn't that the basis of capitalism?
Lisa's point is well made. I think that, in general, the readership of FastCompany and those of similar context, have become more aware of how connected things really are in the business world. Our perspectives change over time as we learn and understand more. The ideal and principal that a company should be able to do all the right things for the right reasons and still manage to grow and prosper is the benchmark we have grown to prefer to hold and compare company's to. We've also become less tolerant o f past "misdeeds".
Capitalism, in and of itself is not whats at issue, but rather how a company elects to manage it's operations in order to prosper and grow. If it's based on shady deals, corrupt accounting practices or less than fair wage practices, then perhaps it's best that the company either clean up it's act or face severe consequences for doing so. Whatever they may be.
We've also become more demanding in expecting companies to promote the overall well being of it's workforce and of the communities in which it resides or affects.
There are obviously very strong and varied opinions on this as well as other issues both now and on similar issue throughout history. What stands out in all these issues is the watershed moment when society, as a whole, forced a change within a system no longer able to sustain itself into something more ideal.
Hopefully, these changes will eventually lead to the perfect world, free of greed and hate where everyone is uniquely fullfilled and is able to reach their full potential. Keep the dream alive. We're not there yet but we keep getting closer.
Capitalism has been used often on the different posts but remember the prerequiste set by Adam Smith in order for it to work, should be connected in his book "The Theory of Moral Sentiments". People, the players, should be moral and rational. Capitalism is a utopia set opposite of Communism.
Capitalism has been used often on the different posts but remember the prerequiste set by Adam Smith in order for it to work, should be connected in his book "The Theory of Moral Sentiments". People, the players, should be moral and rational. Capitalism is a utopia set opposite of Communism.
It's intriguing to see the argument laid out here. Businesses do not exist to provide jobs, do community service, or make the world a better place. They are vehicles for producing a livelihood for their owners, whether the owner is a sole proprietor or a body of share holders. In other words, businesses exist to make money by acquiring something at a smaller value than what they sell it for. If a business's clientele is large enough that one person cannot do it all, people will be hired in proportion to the number of customers the business needs to service. This is how jobs are created.
This is how wealth is created. And wealthy people are often the most charitable, giving millions, and in some cases billions to worhty causes.
Not all of the jobs will pay the same because not all the skills of all the workers will be equal. Some will have more talent or experience that the company buys, and for which they will pay more. A person who stocks shelves is only being paid for his brute strength, the ability to lift and put things on shelves. That's a commodity that all able bodied workers possess so it is an abundant resource, and will always be bought for less than someone who has been trained in accounting, or has management skills. These skills are less common, and will be bought at a higher price.
The trick here isn't to demand more money for a menial job, or to insist that companies, through the force of unions and laws unfriendly to businesses, raise the wages they pay. It's to improve your skills as an individual so you can sell your services for more.
Do you want a better paying job? Learn skills that command more money. And don't make excuses about the cost of higher education. 90% of what I know learned at a public library, on the internet, and by buying and reading books I thought were important enough to own. Dave Thomas, the founder of Wendy's fast food restaurants never graduated from high school. Bill Gates never graduated from college. Both men however were educated in their respective fields.
10 years ago I knew little about computers. Today I am proficient in Windows, and Microsoft's Office Suite. Currently I'm learning Linux and Mac OS X, and studying call center management. I don't have a college degree, but with my earning potential increased by my own studies, I can afford one and I'm planning on pursuing one. I have spent hundreds of hours improving my English, my writing and speaking skills. In the last ten years I've read hundreds of books, many on management, business, and computers, so that when I apply for a better than minimum wage job I get it. In the last ten years, I've never worked for less than 12 dollars an hour. Because of what I know, what I took the time to learn, I have commanded fees as much as $175 an hour for my expertise. I'm not special or more intelligent. Anyone can do it.
This outcry of anger against Wal-Mart, and corporate America reminds me of a conversation I had with a young man who worked for me once. He bemoaned his wage (he was making $7.50 an hour), and I told him he needed to work harder. His answer: "When they pay me $10.00 an hour, then I'll give them $10.00 an hour worth of work." Try as I might I couldn't make him understand that until he proved he was worth $10.00 an hour he'd never get $10.00 an hour. You always have to give more to get more. That's a lesson that life has to keep teaching each new generation, but the last couple of generations, it seems refuse to learn it.
Walmart reminds me of the chicken and egg theory -which came first. The store that sells at lower prices or the consumer that wants to buy at lower prices.
I believe that, initially, Walmart's concept was good (to many it is still darn good), provide a variety of goods at lower prices than the competition. The problem is that the competition is slowly dying out -- so what seems to be low prices now may one day be the only prices.
Could it be that Walmart will all have us in their low price vise-grip?
I live in a small town, and I have always shopped the local establishments. If I needed something they didn't have, then it was a trip to the bigger city or shop on-line -- then along came Super Walmart and I, like so many others, were pulled in by their convenient by-it-all-here-at-lower-prices offer.
I hate it, but I shop at Walmart, and until the competition can beat Walmart at their own game, Walmart will continue to grow and be a larger Monopoly than Ma Bell ever was. Except someone needs to tell Walmart, the larger they are, the harder they fall.
Walmart Image...The Illusion of Clean....Thanks Mom!
It will be posted...the article...the start of a book...at www.walmartassociatescentral.com
Or if in a hurry on www.livejournal.com/users/walmartauthor
It really hasn't changed it's image and all of it is "The Illusion of Clean"
Regards,
Julie
Julie Doering Pierce..."The Walmart Way" Not Sam's Way...Walmart XIII AD
Check out the website www.walmartassociatescentral.com
The Walmart Way Not Sam's Way is now availible for purchase at online book stores...amazon...etc.
yall people are crazy walmarts the best