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.
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.
It’s been a couple of years since I read The Great Transformation, by Karl Polanyi, so I decided that it was time to read it again because of all of the insights I’ve garnered from this blog and from the reading I’ve done recently, spurred by ideas presented on this blog. When I got to Polanyi’s coverage of the Speenhamland Law, I immediately thought of the subsidy that taxpayers give to Wal-Mart. If you read the linked article, you will see that what is taking place today is not a whit different than what took place in England in the early 19th century.
Polanyi held that the self-regulating market economy that is characteristic of capitalism is dis-embedded from the larger society. He also said that there has never been and never will be a free market and that that is a right-wing utopian dream. Markets have always been embedded in societies – until the arrival of capitalism. He said there was a “double-movement”: the movement towards a self-regulating market (free market) and the countermovement to reign that market in. Now that I know so much more than I did two years ago, I find his argument compelling and see the connections of his ideas to so much that is going on these days.
On a side note: if anyone is confused about why the term “neo-liberalism” is used to describe what I think is more commonly called neo-conservatism, know that the term “liberalism” is a code word for the free market touted by the Austrians, the gold bugs, and the libertarians. It has nothing to do with anything progressive. But then, if anyone would read Chet Bowers’ essay on the misuse of our political language, they would understand.
Interesting. English elites feared revolts, as were happening in France, so they implemented a program under which a “labourer would have his income supplemented to subsistence level by the parish.” Throw them a few crumbs, and enough people will become quiet so as to avoid a mass uprising. Indeed, there is little new under the sun.
As to your other point, the term “neoliberal” — a standard word outside of North America — derives from the use of the word “liberal” other than in North America: Liberal toward the market and against government interventions. (What in the U.S. is called “libertarianism.”) So the word “neoliberalism” is a description of new versions of what the rest of the world understands as “liberal.”
It’s not actually a “code word” because the root “liberal” in “neoliberalism” is being used in its original sense and is the meaning that most of the world still imparts to it, as the Austrian School economists of Europe would. Indeed, it has nothing to do with anything progressive.
Because North America uses liberal to mean something different — although usage there is an evolution from the original meaning — the term “neoconservative” is substituted. It does not quite mean the same thing, however, as “neoconservative” has militaristic connotations and is particularly associated with ideologues of the the Bush II/Cheney administration.
Well, it’s a little bit more complicated than the fact that the English elites feared revolts and thought that poor relief would satisfy the poor. I don’t think the fact that many Wal-Mart workers receive SNAP benefits and live in Section 8 housing makes them any less inclined to support those who walked out on Black Friday. The beginnings of the modern welfare system can be found in the Old Poor Laws in England. The modern welfare system is designed to support capitalism, not to provide welfare. Welfare in the era before Henry VIII (reigned 1491-1547) was an entirely different thing than what came later. Polanyi provides enough information for the interested reader to explore just how welfare and the rising capitalist system are inextricably intertwined. It’s a fascinating tale.
Undoubtedly more complicated. Henry VIII reigned during the first era of enclosure of the commons, a time of repeated peasant uprisings. Large numbers of people were executed for being “vagabonds” or “thieves” — in reality for not working in a factory after being thrown off their lands.
One contemporary estimate is that 72,000 were executed under Henry VIII — a remarkable total for such a time. Whatever the true number, it was bloody.
I forgot to comment on your point regarding your statement that “liberal in North America means “[l]iberal towards the market and against government interventions.” Polanyi asserts that in the history of mankind, there never has been and never will be a “free” (or, as he terms it “self-regulating”) market. “Free” markets are always the result of government interventions. Always. To be “[l]iberal towards the market and against government interventions” is to be schizophrenic.
Indeed so, as it is “free market” ideology, not science.
Polanyi also makes the point that “free” markets are a utopian vision. That is why libertarians, when it is pointed out that there is an error in their vision, fall back on the “if only” argument, as in, “if only government would get out of the way”, etc., etc., etc.
And the Right has the gall to accuse the Left of engaging in utopian schemes ….
Here is a expanded discussion of your explanation of how a “neo-conservative” differs from a “neo-liberal”.
WalMart’s prices aren’t all that low. Several years ago, a group did a study of WalMart prices and found that, aside from the advertised loss-leaders, their prices were the same as, and sometimes higher, than other retail establishments.
Worse than that, they have forced some suppliers to sell out to corporations willing to do the kind of cost cutting WalMart demands, to the detriment of the quality of their product. After Rubbermaid was forced into sale, for instance, they stopped making the flexible drainboard that all of us have used since the beginning of time, replacing it with a hard plastic one so bad that people have reportedly fished their 20-year-old drainboards out of the garbage.
Not surprised to hear of Wal-Mart’s bait and switch tactics. Even if it does initially sell at a low price, to drive out the local mom-and-pop businesses, they can easily raise prices once they are the last retailer standing in a town. And all the money that once was re-circulated locally now goes to Wal-Mart headquarters, where it adds to the Walton family’s billions, further impoverishing communities.
[…] Shopping ’til we all drop at Wal-Mart […]
Wal-Mart holds its place as retailer to the poor in several ways. Its own workers buy there partly out of convenience and partly because they buy into the lie. But other poor citizens who could drive to Target don’t, because many see Target as a fancy store for the less-poor.
Thanks for the clarification on neo-liberalism; it never made sense.
Wal-Mart is also a direct beneficiary of food stamps. The Eat Drink Politics report found that 18 percent of all U.S. food-stamps money is spent in Wal-Marts, so it’s really a double subsidy.
A primer on neo-liberalism.
Well for Tubularsock it’s the lighting in the big barn of crap that drives me more nuts than usual.
Tubularsock doesn’t buy from WalMart …… really the junk isn’t worth the cash and you all know what cash is really worth. But Tubularsock sees the advantage of buying your motor oil right up next to your radiated frozen beef steak.
Great post SD.
Yikes! That reminds me of a Bloom County Sunday comic strip in the 1980s in which a Reaganite was so enthused over falling oil prices that he declared he was going to feed oil to his cat. But steak sauce might go up in price …
Reading this makes me sick at my stomach. Not that this is all that new — the rich have persecuted the poor since time immemorial. The more things change, the more they stay the same.
Confiscations of surpluses by elites have gone on since the dawn of agriculture, often in conditions of scarcity. Now that humanity produces enough for everybody, it’s all the more a crime that it not only continues, but is actually accelerating. As I often say, until there is economic democracy, there will be no political democracy, and thus no end to vast inequality.
I would like to add that, until we all stop buying lots of unnecessary stuff, whether it be at big box stores (cheap stuff), our local gentrified boutiques (expensive stuff), or mail order shills who appeal to our willingness to be satisfied by buying into an Omidyar-esque fantasy of “doing good”, we’re all going to be constantly hoodwinked and wonder what we did that brought it about.
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