Shopping ’til we all drop at Wal-Mart

Wal-Mart is concentrated neoliberalism. From working to weaken government at the same time it gorges on government subsidies, to exploitation of its workforce, to moving production to the places with the lowest wages and weakest laws, to underpaying taxes, the workers who walked out on Black Friday have no shortage of targets.

Some of the latest findings in a just released report reveal that Wal-Mart dodges $1 billion a year in taxes and is the recipient of an estimated $6.2 billion a year in indirect subsidies through social-welfare programs such as food stamps. A separate report also just published documents the poverty of Wal-Mart workers, many of whom regularly skip meals because their pay is so low.

Four members of the Walton family, recipients of the capital amassed by Wal-Mart Stores Inc., are collectively worth $144 billion — each is one of the nine richest people in the United States. At the same time, Wal-Mart workers are organizing food drives so they can eat. Wal-Mart officials shamelessly praise the food drives as examples of its employees caring about their co-workers.

Too bad Wal-Mart executives care much less about their employees.

It’s not as if the company can’t afford to pay its workers — it earned $78.4 billion in profits for its last five fiscal years. In 2013 alone, Wal-Mart paid nearly $6.2 billion in dividends to its shareholders.* And who were the major recipients of this largesse, extracted from the backs of its employees? None other than the Walton family, who own about 50 percent of the company’s stock, according to The Wall Street Journal. Then there are the buybacks of its stock — a buyback is when a company pays a premium above the price to buy its stock from willing sellers, giving a windfall to the sellers and spreading the profits among fewer shareholders. In 2011, for example, Wal-Mart spent $11.3 billion on dividends and stock buybacks.

A Wal-Mart protester is led away during a Black Friday action in Sacramento, California. (Photo via Making Change at Walmart.)

A Wal-Mart protester is led away during a Black Friday action in Sacramento, California. (Photo via Making Change at Walmart.)

Who pays for this massive transfer of wealth? Let’s look at the other side of the equation. A report prepared by public-interest group Eat Drink Politics, “Walmart’s Hunger Games: How America’s Largest Employer and Richest Family Worsen the Hunger Crisis,” offers several stories of Wal-Mart employees who make too little money to eat properly. One employee, La’Randa Jackson of Cincinnati, Ohio, says:

“I skip a lot of meals. The most important thing is food for the babies, then my younger brothers. Then, if there’s enough, my mom and I eat.”

Full time work but under the poverty line

The Hunger Games report notes that Wal-Mart’s immense size drives down pay not only in retail but in other industries. The company’s wages are much less than it claims:

“Estimates of hourly Walmart wages vary, but one study by the National Bureau of Economic Research found that Walmart cashiers average just $8.48/hour, while another industry report found the average pay to be $8.81 per hour. At this rate, an employee who works 34 hours per week, which is Walmart’s definition of full-time, is paid $15,500 per year, which is about $8,000 below the federal poverty line for a family of four.”

Not that all Wal-Mart employees are able to work even those 34 hours per week. The Hunger Games report said:

“As many as 600,000 Walmart workers currently work part-time, although many want to work full-time and are pushing for additional hours. The company intensified its hiring of temporary workers last year, while continuing to deny full-time hours to many employees who want them.”

The report on Wal-Mart’s tax evasion, “How Walmart is Dodging Billions in Taxes,” produced by the coalition Americans For Tax Fairness, found that the company exploits tax loopholes to pay about $1 billion per year less in taxes than it would otherwise — a total of $5.1 billion in the past five years.

Meanwhile, the company retains a fleet of 74 lobbyists, mostly former members of Congress both Republican and Democratic, spending $33 million on lobbying in the past five years. Among the goodies on Wal-Mart executives’ wish list are more tax breaks, including a drop in the statutory corporate tax rate to 25 percent from 35 percent (although it, like almost all corporations, pay much less than 35% already) and the elimination of taxes on revenue it claims to have earned outside the U.S. Americans For Tax Fairness estimates that the company would avoid another $720 million per year in taxes should its wishes be granted.

This report also finds that taxpayers already spend at estimated $6.2 billion per year subsidizing Wal-Mart’s low pay and paltry benefits. This was calculated by projecting the cost to Wisconsin of Wal-Mart as reported in a study prepared by the Democratic Party staff of the U.S. House of Representatives Committee on Education and the Workforce to the company’s 1.4 million employees across the country. Programs included in the report’s estimate include school breakfast and lunch programs, Section 8 housing subsidies, the Earned Income Tax Credit, Medicaid, the Low Income Home Energy Assistance Program and food stamps (the Supplemental Nutrition Assistance Program).

It’s the system, not one company

Wal-Mart is not unique in the viciousness in how it deals with, and exploits, its employees. The internal logic of capitalist development is driving the manic drive to move production to the locations with the most exploitable labor, not any single company, industry or country. One company will inevitably become the most ruthless in implementing what companies in a variety of industries are forced to do under the rigor of capitalist competition. Wal-Mart so happens to be it.

Multi-national corporations that transfer production to low-wage countries  — and their suppliers who are forced to move production to them under compulsion, such as apparel manufacturers who knuckle under to the demands of Wal-Mart — profit from systems of global supply chains, and are the fiercest advocates of “free trade” agreements that make it easier for them to transfer and subcontract production.

If a supplier doesn’t transfer production to a low-wage company, it can’t meet Wal-Mart’s demand for lower prices and goes out of business because Wal-Mart is a dominant customer. Other suppliers, even those who service other chains, then have to do the same to match the competition.

Although an increasing amount of outsourced production is being shifted to Bangladesh and Vietnam, and the Chinese government is seeking to manufacture higher-end and more sophisticated products, the low wages and vast numbers of exploitable workers, often displaced from the countryside, that China offers represented an opportunity for Western and Japanese corporations.

“Market forces” are at work here. If markets can’t be expanded, cutting costs is the route to maintaining profit rates, no matter the human cost. The Wal-Mart workers and their allies who demonstrated, walked out and, in Los Angeles, staged a hunger strike on Black Friday are therefore not only going up against the company most responsible for the lowering of wages and movement of production overseas — one virulently opposed to any form of employee organizing and relentless in eliminating local competition — they are going up against the market forces of capitalism and the logic of neoliberalism.

The fight of Wal-Mart’s workers is our fight. Consider this passage from a Businessweek article:

“Walmart has been opposed to unions since Sam Walton opened his first store in Rogers, Ark., in 1962. These days, ‘we have human resources teams all over the country who are available to talk to associates, and we will get questions about joining a union,’ says David Tovar, a spokesman for the company. ‘We would say: Let us remind you of all that Walmart offers, and of what might go away. Quarterly bonuses might go away, vacation time might go away.’ ”

The Wal-Mart spokesman is merely saying out loud what many other corporate executives say in private. U.S. labor law, weak as it is, renders illegal intimidation tactics in regards to union organizing. Yet the company believes it can talk and act with impunity. So far, that is true.

Everyone who shops at Wal-Mart contributes to this problem. Those who do believe they are saving money by buying at low prices, but those low prices actually come at a high cost. The cost will become higher until we become willing to stop believing that begging for crumbs is the only way the world can be organized.

* My own calculation: Four quarterly dividend payments of 47 cents a share, multiplied by 3.28 billion outstanding shares.

The high cost of subsidizing Wal-Mart’s profits

Each United States Wal-Mart costs taxpayers nearly $1 million because of the miserably low pay at the same time that the four heirs to the Wal-Mart fortune possess $107 billion in wealth. That’s no coincidence.

You subsidize Wal-Mart whether you shop there or not. And if you do shop there, you are facilitating the movement of production to countries with the harshest sweatshop conditions.

That Wal-Mart workers are often forced to use food stamps and other public-benefit programs is well known; but the company also receives a myriad of local tax benefits, free or reduced-price land, property- and sales-tax exemptions and various grants that, together, are difficult to quantify. The company’s known U.S. subsidies are far in excess of a billion dollars.

SerfsA study prepared by the Democratic Party staff of the U.S. House of Representatives Committee on Education and the Workforce estimates that each Wal-Mart costs taxpayers nearly $1 million in public-assistance programs alone. The study said:

“[Wal-Mart’s] business model has long relied upon strictly controlled labor costs: low wages, inconsiderable benefits and aggressive avoidance of collective bargaining with its employees. As the largest private-sector employer in the U.S., Wal-Mart’s business model exerts considerable downward pressure on wages throughout the retail sector and the broader economy. … While employers like Wal-Mart seek to reap significant profits through the depression of labor costs, the social costs of this low-wage strategy are externalized. Low wages not only harm workers and their families — they cost taxpayers. When low wages leave Wal-Mart workers unable to afford the necessities of life, taxpayers pick up the tab.” [page 2]

To reach this conclusion, the congressional staff analyzed data obtained from the Wisconsin Medicaid program because they were believed to be “the most recent and comprehensive.” Data from that program showed that more Wal-Mart employees were enrolled in Wisconsin’s program for low-income people, BadgerCare, than from any other employer.

Low pay is expensive

Extrapolating from the numbers it found, the authors of the report estimated that a single 300-employee Wal-Mart “super-center” store in Wisconsin likely costs taxpayers at least $904,542 per year — about $3,105 per employee. If all eligible Wal-Mart workers were to enroll in all public-assistance programs in which they are eligible, each Wal-Mart would cost the state’s taxpayers up to $1,744,590 per year.

That is far from exhausting the list of public subsidies to Wal-Mart. The grassroots advocacy group Good Jobs First has tallied 279 “economic development” subsidies totaling roughly $1.16 billion. These are not necessarily small outlays — 33 separate handouts are worth at least $10 million each. The largest of these, for a distribution center in Schoharie County, New York, will save Wal-Mart $46 million over 20 years because the county government took title to the facility so that the company would not have to pay taxes. That’s $1,433 per county resident!

The cheap goods Wal-Mart sells in its subsidized stores rest not only on exploitation of its in-store clerks, but on a ruthless system of sweatshops to which production is outsourced. This is a product of capitalist competition and “market forces” — competitors’ “innovations” in reducing costs must be matched to be able to survive — but also of Wal-Mart’s leadership in moving production to the lowest-wage countries. Although this an industry-wide phenomenon (inevitably mimicked in other industries), one company will be the most ruthless at this, and Wal-Mart is it.

The prices that Wal-Mart will pay its suppliers are so low, they had no choice but to move overseas or go out of business. Because of Wal-Mart’s domination of retail, there was no alternative to knuckling under to its demands. China was that destination, but now the garment industry is increasingly outsourcing to Bangladesh, a low-wage alternative to China with non-existent labor and safety standards, as the April 2013 fire that killed more than 1,100 trapped workers testifies.

Billions at the top, little at the bottom

How dominant is Wal-Mart? The company’s US$470 billion of revenue in 2012 is larger than the world’s next four largest retailers combined. The four heirs of founder Sam Walton are each among the 17 richest people on Earth — worth a combined $107 billion, making them the world’s richest family. Outgoing Wal-Mart chief executive officer Mike Duke is paid more than 900 times the average company employee, and those employees are paid more than 12 percent less than the dismal pay of retail workers elsewhere.

The average wage of a Bangladeshi garment worker is US$70 to $100 per month. The Institute for Global Labour and Human Rights estimates that a worker in Bangladesh would have to labor fifteen and one-half hours to buy a gallon of milk, while CEO Duke needs to work one second to buy that gallon.

If you have drawn the conclusion that Wal-Mart racks up huge profits, you are correct. The company, the world’s largest private employer, reported profits of $75.8 billion for its five most recent fiscal years.

Workers are paid too little for their physical survival so that a handful of plutocrats can grab more money than anybody could possibly spend — although the Walton family, notoriously stingy in its charitable giving, does play a prominent role in funding the U.S. movement to privatize public schools. Three sets of billionaires — the Walton family, Microsoft founder Bill Gates, and construction and insurance magnate Eli Broad — provide the money for the “charter school” movement that is a thinly disguised initiative to bust unions and place schools under corporate control so that students are taught narrow technical skills without being given the tools to think independently so they become corporate drones.

But even if the family chose to spread a bit of its largesse on charity not benefiting themselves, why would we want to live in a world in which the vast majority is dependent on a lord deigning to bestow his or her benevolence on us? Shouldn’t social decisions be made democratically to advance the health and welfare of society rather than by the self-interested whims of a few people consumed by personal greed? Modern capitalism is taking us back to feudalism.

The world’s richest 22 people own more than Switzerland produces

By Pete Dolack

The wealthy are wealthy because they work harder than you: So goes a favorite parable. Many wealthy people undoubtedly do work hard; at least those who amassed it themselves rather than inheriting it.

But is it really possible that 22 people could work harder than the entire population of Poland? Or Switzerland?

It safe to assume there are millions of Poles and Swiss who work diligently at their jobs. Yet the gross domestic products of Poland, Switzerland and most other countries of the world is smaller than the wealth amassed by 22 people.

The top of an extraordinarily steep pyramid is in the stratosphere. There are 22 people in the world who possess US$20 billion or more of assets, according to the 2012 edition of Forbes magazine’s annual list of the world’s billionaires. Those 22 people have a combined total of $675 billion in assets. You read that correctly: two-thirds of a trillion U.S. dollars. There are only 18 countries in the world with a gross domestic product of more than $675 billion, according to World Bank calculations.

So, yes, 22 people have more than is produced by the entire country of Switzerland — one of the world’s richest countries — and more than the 38 million people of Poland, one of the European Union’s biggest countries.

The corollary of the wealthy supposedly working harder than the rest of us is that they really don’t have that much, and taxing them would be useless in terms of reducing government deficits. When we peer into the numbers, however, that mantra has no more basis in reality than the idea that 22 people work harder than entire countries or that U.S. chief executive officers work 340 times harder than their employees.

The “World Wealth Report 2012” just issued by consultancy Capgemini and Royal Bank of Canada, intended for financial-industry professionals, contains some interesting facts about the people the financial industry reverently calls “high net worth individuals.” These fortunate folks are those with at least US$1 million at their disposal for investment — a sum that does not include the value of personal assets and property such as primary residences, collectibles and consumer durables. (Therefore, this report does not include all accumulated wealth, as the Forbes list does.)

What do we find? That there are 11 million people in the world who qualify as a “high net worth individual” and these 11 million people have a combined investable wealth of US$42 trillion. Because it is impossible to imagine a number that large, think of it this way: That total is equal to two-thirds of the world’s gross domestic product. Those 11 million people represent not the one percent, but the top 0.16 percent of Earth’s population.

Let’s tease out one more number from the Capgemini report. In the United States and Canada, there are 3.4 million “high net worth individuals” — quite close to constituting North America’s one percent — and they have disposal income for investment totaling US$11.4 trillion. The economist Richard Wolff, in his Economic Update radio show, points out that if only these people were taxed 10 percent for this portion of their wealth — their fixed assets such as mansions, yachts and collectibles such as works of art would remain untouched — the entire yearly U.S. government budget deficit would be eliminated.

There is nothing unique about the U.S. A British economist, Michael Roberts, writes that the wealth of the 1,000 richest people in Britain has increased by £315 billion in just the past 15 years, and taxing only those gains at Britain’s capital-gains tax rate of 28 percent would cover 70 percent of the government’s total deficit.

As has been noted before, such people would prefer to loan governments money, with interest, rather than pay taxes. And then they complain that the government is borrowing too much and demand austerity be imposed. Theoretically, they could use their accumulations of wealth for productive investment, which would at least create jobs. But, thanks to austerity — and the high unemployment and reduced wages that result from it — demand is stagnant. If there is too much productive capacity and/or corporations can’t sell the products they already produce, then there is no economic rationale to invest in new production. Thus U.S. corporations are sitting on $2 trillion of cash and the wealthy pour their immense income into speculation because they have more than they can possibly spend, there being too few investment opportunities, and speculation is more profitable than production.

When too much money is chasing too few assets, a financial bubble inflates. But the bubble always bursts. And the bigger the bubble, the bigger the fall.

When the bubble bursts, the banks are bailed out and the rest of us are sold out, as the saying goes. The net result is a still greater concentration of wealth and more people pushed into or toward poverty, forced to rely on government assistance. But that puts more strain on governments, which become more reliant on the wealthy to loan them money, more desperate to give corporations giveaways in the hopes of a few more jobs being created locally, and progressively weaker in relation to corporations. Corporate dominance intensifies, and executives and speculators are able to increase the wealth they extract from the corporations they control and reduce their tax bills. Round and round it goes until a mass movement reverses a downward spiral.

Just what is it that the wealthy do to accumulate so much? Let’s return to the tip of the tip of the pyramid: Those with $20 billion or more in total wealth. Eleven of the 22 who have accumulated this fantastic level of wealth are residents of the United States. Who do we find? Four members of the Walton family (heirs to the Wal-Mart fortune); the Koch brothers (who inherited their oil and gas empire from their father); a financial speculator who crashed more than one currency; two software moguls (taking advantage of a technology created by the U.S. government); an owner of casinos; and one highly successful investor, Warren Buffett.

Wal-Mart’s leading role in the race to the bottom is well documented. Wal-Mart is extraordinarily ruthless in cutting its costs — not uniquely bad, merely the company most efficient — and has done more than any other entity to cause production to be moved to Chinese sweatshops. Wal-Mart is a company notorious for its hatred of unions and pays so little that new employees are handed application forms for food stamps.

Taxpayers thus are subsidizing Wal-Mart’s profits; sweatshop workers are brutally exploited; jobs in advanced capitalist countries are eliminated; and communities ravaged as local mom-and-pop businesses are forced to shutter. In all these ways, more money is funneled upward into the Wal-Mart central office, and away from local communities. That is how the Walton family accumulated its fantastic wealth — the four members are each individually among the richest 11 people in the U.S.

The Koch brothers are becoming well known for their attempts to create an ideological monopoly within the United States. Their father was one of the leaders of the John Birch Society, an extremist group that was the “tea party” of the mid-20th century, going so far as to denounce Dwight Eisenhower as a “communist”! The sons have learned well, bankrolling the tea party movement of the extreme Right, funneling huge sums on money into a variety of extreme Right causes and institutions, funding libertarian ideology, and directing the policies of, among others, Wisconsin Governor Scott Walker and his anti-union, anti-government austerity program.

The two Koch brothers have $50 billion between them — so they can afford to donate millions of dollars to cultural organizations to “greenwash” their image without losing the ability to impose their agenda. Thanks to their lucky birth, they are tied for fourth place on the list of richest U.S. citizens, and they are going to make certain they are not dislodged.

Then we have Microsoft founder Bill Gates and Oracle founder Larry Ellison. We are supposed to believe that Silicon Valley moguls created vast wealth. They did — for themselves. But they did so by taking advantage of what others created. Amidst all the celebrations of newly minted computer billionaires, it is easy to forget none of it would have been possible without government research. The Internet is a creation of the U.S. Department of Defense, which had a strong interest in creating a decentralized means of communication that could not be knocked out at a stroke; many universities, including public universities, helped in the Internet’s creation; and the world wide web is a product of CERN, the European intergovernmental research institution.

Many other industries exist due to government funding — the Internet is merely one example of public investment converted into private profit. Microsoft was accidentally handed a monopoly on personal-computer operating software by International Business Machines before IBM had any inkling of how ubiquitous PCs would one day become, and Microsoft’s billionaires have cashed in by leveraging the company’s monopoly without innovating any products as mythology would have us believe.

Even Warren Buffett has profited nicely from financial legerdemain. He is the largest shareholder of one of the three main credit-rating agencies, Moody’s. Those agencies played a critical role in the housing bubble by giving sterling ratings to high-risk bundles of mortgages and other speculative financial products, and those agencies continue to play their role within the world of finance capital by repeatedly downgrading the ratings of governments, forcing higher payments of interest to the wealthy who loan money to governments instead of paying taxes.

The rest of the tip of the pyramid seem not so impressive compared to the tip of the tip, although we need not shed tears for them. Last October, the Swiss financial company Credit Suisse published its “Global Wealth Report 2011,” which also revealed interesting information. For instance, the world’s most wealthy one percent own 44 percent of the world’s wealth, while the bottom 50 percent collectively own one percent. Nor is the further concentration of wealth we have experienced since the rise of neoliberalism at the start of the 1980s in your imagination. Credit Suisse’s report states:

“Available evidence suggests that household wealth in mature economies was a fairly constant multiple of income for much of the 20th century until 1980, after which the wealth-income ratio has trended upwards. … Financial assets in [Group of Seven] countries also show little change relative to income up to 1985, when a regular pattern of growth began.”

In plain English, what the report is saying is that the accumulation of wealth by “high net worth individuals” is outstripping gains in income — wealth is becoming more concentrated. It takes money to make money, the old saying goes. And it is more effective than working.

David and Charles Koch can create a network of institutions and bankroll a national movement that promotes their business interests. Bill Gates, the Walton family and an allied billionaire can personally direct the thrust of education toward a narrow training in technical skills shorn of courses that teach independent thinking, and work to replace public schools with corporate-controlled “charter” schools. Their peers can fund an overwhelming bombardment of ideology to suit their elitist agenda.

Wouldn’t it be better for decisions in education and all the other fields important to the public be made by the public through democratic, accountable institutions? Wouldn’t democracy be better than plutocracy?

Chinese exploitation and multi-national corporate profits

By Pete Dolack

The extent to which multi-national corporations are profiting from super-low Chinese wages is often obscured in the rush to point nationalist fingers at China’s economic policies. In the corporate media the subject generally remains a taboo.

One way of shining some light on that profiteering is this: During the mid-2000s, Wal-Mart was China’s fifth-largest export market. In other words, there were only four countries that imported more goods than Wal-Mart, the world’s biggest retailer, did by itself.

By now, Wal-Mart has slipped a bit down the charts because the volume of Chinese exports continues to grow; but the company would remain among the top ten destinations were it a country by itself. Wal-Mart is hardly unique among multi-national corporations, but, true to its general business practices, is perhaps the most ruthless in not simply exploiting Chinese workers but in accelerating the trend of moving manufacturing to the location with the lowest wages.

Other major United States retailers began procuring clothing items from Asian subcontractors before Wal-Mart, but the relentless drive to have the lowest costs forced an acceleration in the shift of production to countries with the most exploitable populations. If a manufacturer wants to continue to have contracts to supply Wal-Mart, then it has no choice but to ship its operations overseas because it has no other way to meet Wal-Mart’s demands for ever lower prices.

Eighty percent of Wal-Mart’s suppliers are located in China. And because the company is so much bigger than any other retailer, it can dictate its terms. Gary Gereffi, a professor at Duke University, said in an interview broadcast on the PBS show Frontline that “No company has had the kind of economic power that Wal-Mart does, to be able to source products from around the world. … Wal-Mart is able to transfer whole U.S. industries to overseas economies.”

Because of its size and its innovation in computerizing its inventory and tightly managing its suppliers, coupled with its willingness to squeeze its suppliers to the exclusion of all other factors, Wal-Mart holds life or death power over manufacturers, Gereffi said:

“Wal-Mart is telling its American suppliers that they have to meet lower price standards that Wal-Mart wants to impose. The implication of that in many cases is if you’re going to be able to supply Wal-Mart at the prices Wal-Mart wants, you have to go to China or other offshore locations that would permit you to produce at lower cost. … Wal-Mart’s giving them the clear signal that you can’t be a Wal-Mart supplier if you can’t produce at substantially lower prices. … You can go to China, or, in many cases, many U.S. suppliers can’t make that move, and they just go out of business, because Wal-Mart is the dominant company for many U.S. suppliers. If they can’t go offshore, those suppliers end up going out of business.”

And Wal-Mart leverages this power further by contracting to make products with its own name (“private-label products” in retailing lingo) and undercutting makers of traditional branded products, who can’t survive unless they, too, drive down their costs. This only accelerates the race to the bottom.

Nonetheless, let us not lay all the blame for corporate globalization at the doorstep of Wal-Mart headquarters. The internal logic of capitalist development is driving the manic drive to move production to the locations with the most exploitable labor, not any single company, industry or country. One company will inevitably become the most ruthless in implementing what companies in a variety of industries are forced to do under the rigor of capitalist competition. Wal-Mart so happens to be it.

Fully two-thirds of China’s exports are shipped from factories wholly or partially owned by non-Chinese companies. The world’s multi-national corporations profit immensely from China’s low wages and like the current Chinese system just as it is.

As I noted recently in my Feb. 9 post, extraordinarily low wages and harsh working conditions endured by Chinese workers are fueled by a steady flow of peasants from the countryside (where wages are even lower) to the cities. Most of these workers, often young women, intend to return to the countryside.

Working conditions are too harsh to endure, and wages are so low that it can literally be impossible to survive on them, report John Bellamy Foster and Robert W. McChesney in an excellent article in the February 2012 edition of Monthly Review:

“The eighty hour plus work weeks, the extreme pace of production, poor food and living conditions, etc., constitute working conditions and a level of compensation that cannot keep labor alive if continued for many years—it is therefore carried out by young workers who fall back on the land where they have use rights, the most important remaining legacy of the Chinese Revolution for the majority of the population. Yet, the sharp divergences between urban and rural incomes, the inability of most families to prosper simply by working the land, and the lack of sufficient commercial employment possibilities in the countryside all contribute to the constancy of the floating population, with the continual outflow of new migrants.”

The world’s attention on those harsh conditions have lately centered on the Foxconn electronics factory, manufacturer of Apple computer and phone products, after a rash of suicides by employees who could no longer endure their prison-like conditions. Foxconn executives showed their humanity and compassion when their response was to install nets to catch future suicide attempts. But as with Wal-Mart, Apple is far from alone in exploiting low-wage workers; in fact, these companies are the norm and not the exception.

Here are but three examples, each a separate investigation conducted by the Institute for Global Labour and Human Rights:

  • Workers at the Meitai factory are prohibited from talking, raising their heads or putting their hands in their pockets. They are fined for being one minute late, for not trimming their fingernails or for stepping on the grass, and are searched on the way in and out of the factory. Workers sit on hard wooden stools twelve hours a day, seven days a week, for a base pay of 64 cents an hour. The Meitai factory produces computer equipment for companies including Dell, Microsoft, IBM and Hewlett-Packard.
  • Workers at the Jabil Circuit factory work twelve-hour shifts, seven days a week — they are at the factory 84 hours a week. They are prohibited from sitting down and are paid 93 cents an hour. Workers who make a mistake are forced to write a “letter of repentance” begging forgiveness, which they must read aloud in front of all their co-workers. This factory produces circuit boards for Whirlpool, General Electric, Hewlett-Packard and Nokia.
  • Base wages at the Yuwei Plastics and Hardware Product Company are 80 cents an hour for 14-hour shifts performed seven days a week. During the peak season, workers toil 30 days a month, often drenched in their own sweat. Safety equipment is turned off to speed up production. The punishment for missing one day of work is to be docked three days’ wages. Yuwei produces auto parts for Ford, General Motors, Chrysler, Honda and Volkswagen.

These are the prices that millions of people are forced to pay so that more money can be distributed upward. The profits from these reductions on labor costs are distributed to high-ranking corporate executives and to shareholders. It pays to be cheap: Wal-Mart reported net income of US$16.4 billion on revenue of US$419 billion for its fiscal year ending on Jan. 31, 2011. Four members of the Walton family, descendants of the company founder, are each among the 22 richest people in the world, according to Forbes magazine — they are collectively worth 73 billion dollars.

One final thought related to Apple. The New York Times columnist Paul Krugman recently wrote that, although Apple is the largest U.S. corporation by market value, it employs only 43,000 people in the U.S., but indirectly 700,000 overseas through its subcontractors. By contrast, 50 years ago, General Motors was the largest U.S. corporation but employed ten times as many U.S. workers as does Apple. Those were union jobs, not sweatshop jobs.

Chinese workers make about five percent of what workers in the United States earn. I strongly suspect that Apple products are not sold at five percent of what they would be had they been produced domestically. Good for corporate profits, but not good for working people.

As wages are driven down further, who will be able to afford the products that are made? If wages fall below a level at which employees can remain alive, what does that portend for the future? That such a question can even be asked illustrates the insanity of our economic system.