MARXISM 101: THE CASE OF WAL-MART

MARXISM 101-- THE CASE OF WAL-MART [Political Affairs Archives]
By Thomas Riggins

Recently Wal-Mart and its critics have been doing public battle for and against the retailer’s practices. Wal-Mart even placed a major defense of its operations in The New York Review of Books (get the intellectuals on your side!).

Steven Greenhouse of the New York Times (“Business Day” 5/4/05) has an article (“Choosing Sides Over $9.68 an Hour: Parrying Its Critics, Wal-Mart Says Its Wages Must Stay Competitive”) which goes into this dispute in some detail. Lets see what Marxism can tell us about what is going on.

Wal-Mart has some 1.3 million workers (the largest employer in the US) who make, on average, less that $19,000 a year. Wal-Mart pays about $9.68 an hour vs. the national average retail wage of $12.28. It appears that there is room for improvement.

Like any good capitalist Wal-Mart wants to pay its workers as little as possible. It appears that tens of thousands of its workers can only live by supplementing their wages with food stamps and Medicaid. This amounts to a government subsidy worth billions of dollars without which Wal-Mart would have to pay its workers more.

Worker’s labor power is a commodity on the market as any other and its value is determined by its production costs. If the workers don’t have enough energy to show up to work Wal-Mart has a problem. If the workers are living off of food stamps that means the tax payers are helping Wal-Mart with its labor costs. That cost should be factored into the costs of their merchandise to find out what a person really is paying for a so-called bargain item they buy from the chain.

By the way, don’t blame Wal-Mart entirely. It is the nature of the beast to squeeze wages as much as it can-- the real blame lies with Congress and the state legislatures. Lawmakers won’t enact needed minimum wages and right to unionize laws to protect workers. They serve the needs of Wal-Mart and other corporations not those of the people unless their constituents force them to.

A coalition of labor union and academic critics, according to Greenhouse, are publishing a book this fall which will argue that Wal-Mart “has an obligation to treat its employees better.”

What does that mean-- an “obligation”? Is this a moral argument? Capitalism does not run on moral arguments, its runs on the economic laws of its development and motion. The system exists to accumulate capital and it will always seek to pay the lowest wages consistent with its ability to attract workers. If the employees of Wal-Mart are to be treated “better” that “obligation” must be forced on the company by law-- either direct legislation on what companies must pay and provide, or through (the best way now) by collective bargaining agreements with unions. Wal-Mart is wildly anti-union-- but the threat of government intervention would soon make the company more interested in union involvement. But there is not much of a chance that the pro-business anti-worker government will act. This means a gigantic battle for union organization at Wal-Mart is the only solution.

H. Lee Scott Jr. (the CEO of Wal-Mart) is quoted as saying “If people tell you that Wal-Mart is leading the so-called ‘race to the bottom’ in terms of job quality or pay, they’re not only wrong, they’re dead wrong. We are instead creating a better workplace with more opportunity and more benefits than have been available in retail.” He doesn’t seem to be aware of any “obligation deficit.”

Scott then justified his position by pointing out that he must be right because 8000 people showed up for 525 jobs at one location in Arizona, and 3000 for 300 jobs in Los Angeles. What this really shows is that there is a massive industrial reserve army of labor in the US caused by all the factory closings and out-sourcing and these people are desperate for jobs-- even the low paying minimum benefits jobs that Wal-Mart is offering. Good paying union jobs are falling while poor paying service and retail jobs only sop up some of the displaced workers.

Greenhouse quotes another company big-wig who bloviated the following: “Wal-Mart is a very good place to work for our associates, and every day we make it even better.” Such practices as forcing people to work overtime, “off the clock” yet, and locking workers in the store over night seem to be ignored. What is really the case was stated by a worker who said it was impossible to really live on the slave wages offered by the company. Why work for them then? “Unfortunately, in the market we live in there just aren’t many jobs available.”

Lets hope the unions will take on Wal-Mart but I worry about the militancy of some of them. Here is quote from an official of the United Food and Commercial Workers union on why Wal-Mart should pay more in wages (currently a full time employee’s yearly wage, at $9.68 an hour, is below the poverty line for a family of four!), “Henry Ford made sure he paid his workers enough so that they could afford to buy his cars. Wal-Mart is doing the polar opposite of Henry Ford.” Actually Wal-Mart is more like Henry than the union rep thinks, i.e., he was also wildly anti-union. By the way, it was not the munificence of Henry Ford that allowed auto workers to have a decent life-- but a hugh union battle and the creation of the CIO, as a union rep should know.

The critics have another argument by which they seek to persuade Wal-Mart to change its ways. They say that if the company will plunk out an extra $3.50 in wages AND benefits--it would only cost $6.5 billion extra which is about 3 percent of the amount of its sales. The company could do this “by slightly raising its prices or accepting somewhat lower profits.”

Wal-Mart made $10 billion in profit last year, so spending an extra $6.5 billion on the workers would leave a profit of $3.5 billion instead. The company is not likely to do this. Nor will it want to increase prices as its gimmick is to lure people to its stores by making them believe they will find the lowest possible prices. This is not even true in the first place, but they need the illusion.

Dan Margolis in the People’s Weekly World (4/30-5/6/05) in his article “Wal-Mart: always low-down lies?” reveals that: “Numerous surveys indicate that Wal-Mart, on the whole, is no cheaper than other stores. It is able to create its ‘bargain’ image through deceptive advertising.”

The only way the workers at Wal-Mart will get a better deal is as the result of a union contract. Appeals to the company to live up to its “obligations” will fall on deaf ears.

--Thomas Riggins is the book review editor of Political Affairs and can be reached at pabooks@politicalaffairs.net