Wednesday, January 03, 2007

Welfare for Wal-Mart

In her compelling book Nickel and Dimed, Barbara Ehrenreich chronicles her experiences working “under cover” in various low-wage jobs, including a stint as a clerk in a Minneapolis Wal-Mart. She reports in general that workers in such jobs, which at the time of her research (1998-2000) made roughly $6-$7 per hour, face many economic hurdles beyond the obvious fact that if they have any dependents then they are living below the government’s definition of the poverty level. (One of the things that I must admit had not occurred to me until I read the book was that on this salary few people can afford a security deposit for an apartment, and therefore many live in single room occupancy situations where the cost of living is increased by such factors as the absence of a kitchen.) Depending on which reports one reads, it appears that roughly half of Wal-Mart’s employees cannot afford even the cheapest of the health care benefit plans offered to them by their employer.

All of this is in keeping with a strategy that I understand Sam Walton emphasized in his memoirs -- maintaining and increasing profit margins by working to ensure that the growth of workers’ productivity exceeds the growth of their wages and benefits. Today’s Wall Street Journal reports on another tool that Wal-Mart is employing to implement that strategy: a computerized scheduling system that will move many of its workers away from predictable shifts in favor of staffing based on the number of customers in the store at particular times. The front-page article indicates that workers in Wal-Mart stores where this system has been implemented complain that it deprives them of the ability to “know when or if they will need a babysitter or whether they will work enough hours to pay that month’s bills.” Some also have asserted that it has been used to cut back on the hours of the highest-paid sales associates. But it does improve the efficiency of staffing, which the retailer apparently hopes will translate into greater customer satisfaction, presumably leading to higher profits.

Many who criticize Wal-Mart’s employment practices rail against the unfairness of practices that enable the nation’s largest private employer to optimize its profits by pushing its workers toward (and in some instances below) the poverty level. I agree. But a company that profits in this manner is doing so not only on the backs of its employees, but also on the backs of all taxpayers -- who, among other things, foot the bill for the public assistance for which many of these workers undoubtedly qualify. It’s really nice that Wal-Mart is now selling fancy light bulbs that use less electricity, in an attempt to give more people the choice to become more environmentally conscious (as reported, coincidentally, this morning on the “Today” show). But I would suggest that no corporation of Wal-Mart’s size and profit levels should be permitted to pay employees so little that they qualify for public assistance.

Perhaps companies the size of Wal-Mart should be subject to a separate, meaningful minimum wage. Perhaps (as some have proposed) they should be fined when they “dump” employees into Medicare and other public programs by cutting back on wages and benefits. Or perhaps the answer is something else entirely. But in all events, it seems clear that despite its recent, highly-publicized efforts to improve its image, Wal-Mart is not going to fix this problem voluntarily. I hope, therefore, that we can move toward dealing with Wal-Mart’s labor practices as the public problem that they are, and take steps to address this problem on a national scale.