The fight to change the Wal-Mart business model, and in particular its labor policies, is part of a larger struggle to democratize our economic life. In China and elsewhere this requires a political transformation of the first order. When authoritarian governments preside over an era of massive, sustained proletarianization, an eruption of considerable magnitude cannot be far down the agenda. China’s transformation into the workshop of the world is therefore generating the flammable social tinder that might well explode, along lines first glimpsed at Peterloo in 1819, Lowell in 1912, even Shanghai itself in 1927. When this eruption takes place, the shock waves will force companies like Wal-Mart to rethink their wager on trans-Pacific supply-chains and global sweatshops.
At home our ambitions involve the effort to revive a social democratic ethos within American politics, policy, and work life. The fight is not against Wal-Mart per se, on aesthetic or consumerist grounds, but against the reactionary squeeze the corporation has been able to mount against the wages and income of all who labor within, compete with, or depend upon the new retail-centered political economy. This road leads to politics, especially in those bi-coastal states where Wal-Mart now seeks a large retail footprint. The roar that greeted GM President Wilson’s claim that what was good for GM was good for the country generated a set of real constraints upon America’s most profitable and efficient auto corporation. GM could have put Chrysler into bankruptcy and pushed Ford to the wall had it chosen to expand its market share beyond the 45 percent it enjoyed after World War II. Correctly fearing federal anti-trust action had it chosen to pursue such an aggressive pricing strategy GM instead maintained a price umbrella under which smaller competitors might shelter and autoworkers win higher take home pay.
Wal-Mart’s competitive strategy has been just the opposite, which has generated a howl of outrage from the unions, from small business, and from those communities that see the company’s “everyday low prices” as a threat to main street vibrancy. Site-fights in California and elsewhere in the coastal
U.S. may well signal the start of an era in which Wal-Mart is subject to much greater political challenge and constraint. Wal- Mart’s major worries derive not from the competition mounted by Target or Home Depot, but from angry voters, hostile government officials, and skillful class-action lawyers. This is not unique in American business history: powerful firms have often been forced to alter their business model and their labor policies, even without the passage of new legislation or the unionization of their employees. Muckraking journalists put John D. Rockefeller’s Standard Oil on notice that it would have to curb its predatory pricing strategy. Reformers forced U.S. Steel to abandon the punishing 12-hour day in 1924. IBM put its blue collar workers on salary in 1959 to avoid unionization. And in China, Central America, and elsewhere Non-Governmental Organizations, often backed by students and unionists in the U.S., have exposed the sweatshop labor employed by contractors who supply the apparel and toy departments of many American stores.
Today, Wal-Mart faces legal challenges on a variety of fronts, from the exploitation of illegal immigrants and the violation of child labor laws to discrimination against its female employees. If successful, these suits will have a material impact on Wal-Mart labor costs, bringing them somewhat closer to those of its competitors. Perhaps even more important, Wal- Mart’s labor policies are coming under attack from a wide variety of elected officials, as well as unionists and academics, who argue that the company’s ability to pay such low wages is possible only because state and federal tax, welfare, and health-care programs subsidize the living standards of Wal-Mart employees to an extent far greater than those of other U.S. workers. In California researchers at UC Berkeley found that Wal-Mart wages - about 31 percent below those paid in large retail establishments as a whole - made it necessary for tens of thousands of company employees to rely on public “safety net” programs, such as food stamps, Medicare, and subsidized housing, to make ends meet. The Berkeley study estimated that reliance by Wal-Mart workers on public assistance programs in California cost state taxpayers about $86 million annually, in part because the families of Wal-Mart employees utilized an estimated 40 percent more in taxpayer- funded health care than the average for families of all large retail employees. In Connecticut and Alabama the findings were similar if not so dramatic. In Georgia, offspring of Wal- Mart employees were by far the largest participants in “Peach- Care,” the state’s medical insurance plan for poor children.
The challenge, therefore, is to channel this critical wave into a broad coalition that can begin to transform the nature of work at Wal-Mart and the whole business model under which the big box retailers are now restructuring so much of the economic world. If Wal-Mart’s ambitious expansion plans are thwarted, then Wal-Mart management might begin to realize that a higher-wage, higher-benefit employment model may well be only way that they can escape from these populist constraints. And when workers at Wal-Mart see that they may have a lifetime career, then they will be much more likely to look to the trade union idea to give to their work life the democratic dignity and sustaining income it deserves.
Nelson Lichtenstein teaches U.S. Labor History at the University of California, Santa Barbara. This abridged version of the lead article in his collection Wal-Mart: The Face of Twenty-First Century
Capitalism (New Press, November 2005) appears with permission.
Responsibility for editing is ours alone.