Wal-Mart's Giant Sucking Sound

That's what one hears as the giant retailer sops up the vitality from middle-class families, local communities, and the national economy

By Leo Hindery Jr.
Business Week

Updated: 12:00 p.m. ET Oct. 7, 2005


Using a multimillion-dollar ad campaign, Wal-Mart's (WMT) executives are defiantly blasting back at opponents who have criticized the retail giant's shoddy labor practices. But most people and even Wal-Mart's critics are missing the real crisis, which is that the behemoth from Bentonville, Ark., with its nationally destabilizing business model, is a dangerous detriment to America's local and national economies and to the middle class.

When H. Ross Perot ran for President back in 1992, he coined a memorable political phrase. The passage of the North American Free Trade Agreement, he said, would create "a giant sucking sound" -- the sound of jobs escaping out of the U.S. and into Mexico.

Today, if you listen carefully, you can hear a second giant sucking sound: Wal-Mart sopping up the vitality from middle-class American families, local communities, and the national economy.

EMPTY DOWNTOWNS. This happens in three different but related ways. First, there's the clobbering of Main Street: Wal-Mart moves in on the edges of towns, and the much smaller downtown merchants, unable to match its prices, soon go under. Second, there's the miserable wage and benefits package offered by Sam Walton's creation. And third, there's Wal-Mart's purchasing strategy, which seems to be about buying American-made products only as a last resort -- to the point that today Wal-Mart, by itself, is China's eighth-largest trading partner!

You could make the case that we are well on our way to becoming "Wal-Mart Nation." But maybe we don't have to be. Consider Costco (COST), Wal-Mart's most notable competitor --- whose much more sensitive and noble business model actually serves as a boost to the national economy and to its shareholders.

Costco's pay scale begins at around $10 per hour and averages $16. After four years, a Costco cashier can earn $44,000 [counting bonuses], which is significant purchasing power. In comparison, Wal-Mart's average hourly wage is a miserly $9.68. To appreciate the impact of this 65% difference in average wages, University of California at Berkeley researchers recently concluded that in 2003 Wal-Mart's low wages and benefits for its employees in California compelled taxpayers there to give these employees $86 million in food stamps, health-care, and housing subsidies just to stay above water.

UNCOVERED WORKERS. Overall, only 38% of Wal-Mart's nonsupervisory workers receive health-care benefits, according to the United Food & Commercial Workers Union. The company won't disclose how much of its total workforce receives company benefits. It does say 56% of employees in the core U.S. Wal-Mart unit, which excludes operations such as Sam's Club, receive company benefits. Judging by any reasonable standard, it's clear Wal-Mart has left American taxpayers the burden of picking up a huge tab for its uncovered health-care costs.

Wal-Mart has gone so far as to actively instruct its employees on how to apply effectively for government health-care programs like Medicaid. Costco, on the other hand, covers 85% of its employees' health-care costs. Costco is even pilot-testing a program offering discounted health-care plans to its customers in California who are either self-employed or cannot get coverage at work --- about 1.5 million people.

Not surprisingly, Costco's employee turnover is only about one-third that of Wal-Mart's, and Costco's customers are loyal almost beyond measure.

And yet Costco has operated this way while also satisfying Wall Street investors. Wal-Mart, of course, dwarfs Costco in size --- heck, it dwarfs even General Electric (GE) and Microsoft! (MSFT) --- but Costco may in fact be the much better-run company. Wal-Mart operates 5,332 stores with annual sales of $288 billion, or $54 million per store. Costco has 452 stores with annual sales of $48 billion, or $106 million per store.

WAKE-UP CALL. Costco is a living example that a company can be extremely profitable and competitive and at the same time not destroy everything and everyone in its corporate path.

Wal-Mart's success has come at an enormous and painful cost to our national and local economies. From its boarding-up of Main Streets to its failure to pay workers fairly, to its imposing on taxpayers welfare costs for its underpaid employees, to its material contribution to our obscene ballooning trade deficit with China, this "Wal-Martization" of America is leaving us with an economy increasingly characterized by a gaggle of cheap imported consumer goods, shoddy employee practices, and insensitivity to communities.

It is beyond time for all Americans to wake up from this nightmare and support those companies --- Costco, for example --- that believe that companies and their CEOs have as much responsibility to employees, customers, and the nation as to shareholders. And it is way beyond time for us to take our support away from those companies that believe otherwise and do more to aggrandize management than to serve employees and their communities.

Copyright © 2005 The McGraw-Hill Companies Inc. All rights reserved.

I thought it was the Unions that were destroying America. Guess it must the low paying jobs that are instead.

I like walmart, They were very helpful today when I bought a tire from them. Very good customer service.

I didn't think the weekly Walmart bashing threads started until Monday evenings.

Another "WalMart is the Anti-Christ personified"  article.

Wal-Mart's ok if I need something there, but I know going to WM with my wife sucks

Oh shit.  Another Wal-Mart bashing article.

Consider the facts

Wal-Mart gets more from America than China.

When Wal-Mart came to where I live, the only 'boarding up' was of K-mart...

Seriously, how many people actually still have 'mom-and-pop' businesses in their area anymore anyway, even w/o Wallyworld???

Where I came from, the only family businesses were (A) franchises of national chains, or (B) in 'specialty' service areas that the big guys don't do business in...

Also, am I going to be the first one to commend (yes, commend) WalMart for actually paying their employees what their jobs are WORTH????

The writer (obviously a liberal) acts like corporations have some obligation to provide for people - like business exists primarily to pay workers!!!

Absurd... Business exists only to make money for shareholders. Period. They DO NOT EXIST TO GIVE PEOPLE JOBS...

More socialist crap - WM competes agressively, and delivers products at a low price with minimal hassle & frill... For the stuff I buy there (ammo, sparkplugs, oil and hand-tools) I'll keep shopping there as long as the price stays low...

GO WALMART GO!

I hate Commies.

Quoted: When Wal-Mart came to where I live, the only 'boarding up' was of K-mart...

Seems like K-mart has not been borded up, but rather gone down the proverbial crapper.

Seriously, how many people actually still have 'mom-and-pop' businesses in their area anymore anyway, even w/o Wallyworld???

There is, but not the kind that is in the kind of business that Wal-Mart is in.

Where I came from, the only family businesses were (A) franchises of national chains, or (B) in 'specialty' service areas that the big guys don't do business in...

+1.  

Also, am I going to be the first one to commend (yes, commend) WalMart for actually paying their employees what their jobs are WORTH????

Entry-level positions are just that, entry-level.  

The writer (obviously a liberal) acts like corporations have some obligation to provide for people - like business exists primarily to pay workers!!!

+1.  

Absurd... Business exists only to make money for shareholders. Period. They DO NOT EXIST TO GIVE PEOPLE JOBS...

Right.

More socialist crap - WM competes agressively, and delivers products at a low price with minimal hassle & frill... For the stuff I buy there (ammo, sparkplugs, oil and hand-tools) I'll keep shopping there as long as the price stays low...

For all the PIA it seems it is, I'll keep shopping there too.

GO WALMART GO!

Second that!

Yeah - capitalism sure sucks.

Let's choose something different!!  How does Communism sound?  Or maybe we can try to live in the PAST and see how that works in the global economy!  

hard for me to believe a cashier at costco making $44k, that is BS. there attitudes suck ass for making that much money.

Actually since wal-mart opened thier doors here main st's empty stores have re-opened and it seems like a new store/shop/restarant is opening every day. most are specialty shops and cafes but the local hardware store (3 of those) and variety stores are still very much alive and prospering. When the mills and factories left most of this town was put out of work Wal mart was the kick in the butt needed to get things moving again.  on a side note I find plenty of USA made stuff in Wal Mart to spend money on including but not limited to Winchester/Remmington/Federal ammo. most of the grocery items are domestic. in every depatment I have found stuff made in USA --NO DIFFERENT OR WORSE than any other store.  Go into any stores clothing section and see just how challenging it is to locate ANYTHING made in the USA same with electronics etc but elsewhere there are plenty of USA made items to be found.  

Quoted: I hate Commies.

well, throw away your mouse, keyboard, monitor in the trash.

Quoted: hard for me to believe a cashier at costco making $44k, that is BS. there attitudes suck ass for making that much money.

That is exactly what I was thinking.

Quoted: I thought it was the Unions that were destroying America. Guess it must the low paying jobs that are instead.

it's unions that destroyed the US car and US airline companies.

Quoted: Absurd... Business exists only to make money for shareholders. Period. They DO NOT EXIST TO GIVE PEOPLE JOBS...

Walmart doesn't even do that though

Thier stock is at like a 6 or 7 year low.

Quoted: Quoted: I thought it was the Unions that were destroying America. Guess it must the low paying jobs that are instead. it's unions that destroyed the US car and US airline companies.

Are you in a union?  Have you ever been in a union?  I am pretty tired of all the union bashing that goes on around here from guys who have no idea what they are talking about.

The equation for small town retail success:

(EVERYTHING) - (Wal Mart) = Potentially profitable niche

Before Wal-Mart came to my town, there wasn't a grocery within 30 minutes of me, and no one sold guns or ammo either. Now, there is. I can get my tires there, my food, my camping stuff, clothes, junk for the house....where before I had to pay too much and drive too far.

There were NO businessees to run out, so Walmart kicks ass in my view.


Viva La Walmart!

Quoted: Quoted: Quoted: I thought it was the Unions that were destroying America. Guess it must the low paying jobs that are instead. it's unions that destroyed the US car and US airline companies. Are you in a union?  Have you ever been in a union?

Thank fucking God, no.  My job skills ensure my employment, not lies, deceit and treachery.

My Aunt makes 40K working at Costco. She's been there 9 years and works the register.

M-F 6:30 to 3

Not to shabby.

When a new place opens up where I can kill all my birds with one stone, i'll try 'em out.
I just don't see anyone new taking WM's position.

Ammo, Krylon and a 1000 count pack of Q-tips is the future currency of the New World Order.

HS1

I decided to edit my post after I read my sig line and realized that people may confuse me for an idiot.

But let me say this:  You have no idea what you are talking about and until you have a clue perhaps you should just stop bashing things you don't know about.

When another store starts selling ammo at the same great prices that Walmart does, perhaps I will also consider shopping there. I don't really buy anything else at Walmart, not because of their labor practices, but because I don't really think they carry a lot of quality brands. If Walmart's labor practices are really so bad, then perhaps those employees should consider exercising their right to quit.

Quoted: Quoted: Quoted: Quoted: I thought it was the Unions that were destroying America. Guess it must the low paying jobs that are instead. it's unions that destroyed the US car and US airline companies. Are you in a union?  Have you ever been in a union?   Thank fucking God, no.  My job skills ensure my employment, not lies, deceit and treachery.

                                                                                                                                                                                                                                                                                                      I'm a union carpenter and I finished a 5 year apprenticeship.Well trained and earn every dollar.I make over 70k a year,have an annunity.great insurance for my family and a great pension.All that because of the union.I work hard everyday putting my skills to good use.Fuck you non-union hacks.

Look at all the Walmart bashing articles around here. The bottom line is that they're doing a lot of damage to their brand name by supplying crappy service. From what I've seen the quality of the goods are sketchy, too. I get depressed just walking into a Walmart store because I know I'll have an awful time while there. What will go wrong this time, I think--30 minute wait for a checker? Asiles blocked? (The one around here is a gigantic store near a bunch of riff-raff, so YMMV.)

I'd rather go to Target or Costco.

The writer of the article seems to be mad that walmar provides jobs to people who other wise would have no work. This is why democrats suck. They point out the we are bing out sourced and think by raising the minnimum wage this will go away when the opposite shoud happen. For us to compete with India and China we need to have a pure freemarket.

Edit: Unions are good to a point. They are good at ensuring that their memebers have good working conditions and get their freemarket price. But when they make it so you need to be part of the union to get a job or try to change their wages to be different than their freemarket levels. Or go on strike and prevent other new workers to go to work. Or try to get the max hours a week to low, like 30 or even 40 is low. They are bad. Perhaps some unions only want good working conditions and fair wages and let the employee and employer work out the hours, those unions are good.
to summarize. Good unions get good working conditions and fair freemarket wages. Bad unions try to distort the free market.

Ender (the annarcho-capitalist) Wiggin

Quoted: Quoted: Quoted: I thought it was the Unions that were destroying America. Guess it must the low paying jobs that are instead. it's unions that destroyed the US car and US airline companies. Are you in a union?  Have you ever been in a union?  I am pretty tired of all the union bashing that goes on around here from guys who have no idea what they are talking about.

I have had several union jobs...........

 I will never again have another union job. Just a bunch of grown sniveling crybabies looking for more ways to fuck up a lower senioity persons day.

Quoted: When Wal-Mart came to where I live, the only 'boarding up' was of K-mart... Seriously, how many people actually still have 'mom-and-pop' businesses in their area anymore anyway, even w/o Wallyworld??? Where I came from, the only family businesses were (A) franchises of national chains, or (B) in 'specialty' service areas that the big guys don't do business in... Also, am I going to be the first one to commend (yes, commend) WalMart for actually paying their employees what their jobs are WORTH???? The writer (obviously a liberal) acts like corporations have some obligation to provide for people - like business exists primarily to pay workers!!! Absurd... Business exists only to make money for shareholders. Period. They DO NOT EXIST TO GIVE PEOPLE JOBS... More socialist crap - WM competes agressively, and delivers products at a low price with minimal hassle & frill... For the stuff I buy there (ammo, sparkplugs, oil and hand-tools) I'll keep shopping there as long as the price stays low... GO WALMART GO!

What fucking rock did you crawl out from under?? I own a gun shop and get sick and fucking tired of hearing " do you have _________ Walmart is out" Why didn't they check me first? I usually have what their looking for, but their ignorance sends them to WallyWorld first. They DO buy most of their shit from China, read the labels. Plus they sell seconds and don't tell you. Hell their ammo is even different, made JUST FOR WALMART!!  There are alot of mom & pop businesses still around TRYING to survive............get out some time and look around!!

FUCK WALMART!!!

Quoted: . Hell their ammo is even different, made JUST FOR WALMART!!

Not this crap again.  Didn't we bury this nonsense in the "Wal-Mart sells factory reject guns" thread?

Quoted: Quoted: . Hell their ammo is even different, made JUST FOR WALMART!! Not this crap again.  Didn't we bury this nonsense in the "Wal-Mart sells factory reject guns" thread?

That's right................this non-sense need stopped!!!

Quoted: Quoted: Quoted: . Hell their ammo is even different, made JUST FOR WALMART!! Not this crap again.  Didn't we bury this nonsense in the "Wal-Mart sells factory reject guns" thread? That's right................this non-sense need stopped!!!

Well, it's a pretty safe bet I won't be buying anything from YOUR shop.  

Quoted: Quoted: Quoted: Quoted: . Hell their ammo is even different, made JUST FOR WALMART!! Not this crap again.  Didn't we bury this nonsense in the "Wal-Mart sells factory reject guns" thread? That's right................this non-sense need stopped!!! Well, it's a pretty safe bet I won't be buying anything from YOUR shop.

What's that supposed to mean??

Quoted: Quoted: I hate Commies. well, throw away your mouse, keyboard, monitor in the trash.

Mine are US made


though somewhat on the older side of things

What are the real facts on working for Walmart. Does anyone work there that is posting here?
I would think that they offer a medical insurance .Does a fulltime worker make at least 30,000 a year.or close to it?

Hell, I shop 'em all. Walmart, Kmart but the best is to:

SHOP SMART! SHOP S-MART!

Quoted: Quoted: Quoted: Quoted: I thought it was the Unions that were destroying America. Guess it must the low paying jobs that are instead. it's unions that destroyed the US car and US airline companies. Are you in a union?  Have you ever been in a union?  I am pretty tired of all the union bashing that goes on around here from guys who have no idea what they are talking about. I have had several union jobs...........  I will never again have another union job. Just a bunch of grown sniveling crybabies looking for more ways to fuck up a lower senioity persons day.

Unions seem to shoot themselves in the foot as often as not anymore.  In illinois, the state workers union refused and refused cuts, and as a result had to watch as a bunch of their members got layed off.  I fail to see how that is a better solution.  The other problem with unions:  my GF was working at a grocery store for minimum wage, part time.  She was required to join a union that demanded $200 upfront and $7 a week, just to work there.  The funny part was her union benefits..  NONE.   No unemployment, no insurance, no good wages, no good hours, no nothing.  None of the benefits traditionally associated with unions were available to her.  Not just when she started, but would have been ever offered to her even if she was there 20 years.. just another leech on her paycheck...

Quoted: I didn't think the weekly Walmart bashing threads started until Monday evenings.

No kidding this stuff needs its own forum...

Quoted: Yeah - capitalism sure sucks. Let's choose something different!!  How does Communism sound?  Or maybe we can try to live in the PAST and see how that works in the global economy!

Both in their extremes blow...

It's called globalization. Companies make their products where it is cheapest. Levi jeans and clothing are made in FIFTY DIFFERENT countries now and the United States is not one of them. It is cheaper for them to import them into the U.S. Are you going to stop wearing levi's?

The U.S. is a technology/knowledge based economy now, not a manufacturing economy. The $18 an hour job to sew together clothing is long gone.The mom and pop store is long gone. Wal-Mart has the most highly advanced supply chain in the world. When you buy a box of ammo there it is automatically reordered and shipped from a local warehouse. Don't hate them because they are good at what they do. The U.S. economy was going to go global with or without them.

I just spent the last seven weeks studying world economics and it was eye-opening.

Quoted: I own a gun shop and get sick and fucking tired of hearing " do you have _________ Walmart is out" Why didn't they check me first? I usually have what their looking for, but their ignorance sends them to WallyWorld first.

Maybe you ought to increase your advertising budget.

Quoted: Quoted: I own a gun shop and get sick and fucking tired of hearing " do you have _________ Walmart is out" Why didn't they check me first? I usually have what their looking for, but their ignorance sends them to WallyWorld first. Maybe you ought to increase your advertising budget.

They obviously knew I was there why do you think they came looking??

You need to give them a compelling reason to chose you first.

Quoted: You need to give them a compelling reason to chose you first.

General small town mentallity is go to WallyWorld first because they think they are the cheapest and they've "got everything", no matter how much you advertise. It's Walmarts brainwashing of the public, why do you think they only locate in rural, small towns?? How many Walmarts do you see in big cities? NY, Chicago? Higher class of people demand better quality.

The only thing I hate about going to Wal-Mart is the crowds, and the people making up those crowds.

But hey, that's what happens when you sell cheaper than anyone else.

The Wal-Mart bashers are simply jealous they didn't think of it, and if the labor unions are pissed, GOOD!

Quoted: What fucking rock did you crawl out from under?? I own a gun shop and get sick and fucking tired of hearing " do you have _________ Walmart is out" Why didn't they check me first? I usually have what their looking for, but their ignorance sends them to WallyWorld first. They DO buy most of their shit from China, read the labels. Plus they sell seconds and don't tell you. Hell their ammo is even different, made JUST FOR WALMART!!  There are alot of mom & pop businesses still around TRYING to survive............get out some time and look around!! FUCK WALMART!!!

??????

Mom and pop businesses can still survive - they just have to provide a better service, or at least something better than Walmart. I have stopped shopping completely at some of my local gunstores because it is straight absurd to shop there. The store salesmen are rude, they are charging prices 50% above what I could order the same thing and have it delivered from cabelas with a 100% return guaruntee, and they don't want to help. Why in the fuck would I want to shop there? Because I OWE them something?

Give me a break man - if your store provided something people would shop there. I buy my guns at a premium from (good) local gunshops because I like the people and they will find me what I want.  

Quoted: What are the real facts on working for Walmart. Does anyone work there that is posting here? I would think that they offer a medical insurance .Does a fulltime worker make at least 30,000 a year.or close to it?

I work for Wal-Mart and they have been very good to me for the the past 7 years I have been there. My wife also works there and together Wal-Mart pays us close to 70k a year and we both are regular hourly workers. My wife works at a store and I work at a DC.  Good bennifits and quartly bonuses.  

Couple quick facts about Wal-Mart:

Wal-Mart spent 17 billion with China last year

Wal-Mart spent almost 200 billion with America last year

75% of it's employees are full time and insured with bennifits and that number is growing.

Wal-Mart donated more then double to charity last year then all other retailers combine.

Don't take my word for it see for yourself....www.walmartfacts.com.

Quoted: Don't take my word for it see for yourself....www.walmartfacts.com.

Liar!!!!

Mom and pop shops pay better.


What I always find most aburd about the Walmart thing is WHAT ARE THEY COMPARING THESE JOBS TO?????????? Mom and pop shops really abuse kids, and adults, on pay - and they are never called out for it. When is the last time you heard about a mom and pop shop providing insurance for the kid working full time?

Quoted: Quoted: What are the real facts on working for Walmart. Does anyone work there that is posting here? I would think that they offer a medical insurance .Does a fulltime worker make at least 30,000 a year.or close to it? I work for Wal-Mart and they have been very good to me for the the past 7 years I have been there. My wife also works there and together Wal-Mart pays us close to 70k a year and we both are regular hourly workers. My wife works at a store and I work at a DC.  Good bennifits and quartly bonuses.   Couple quick facts about Wal-Mart: Wal-Mart spent 17 billion with China last year Wal-Mart spent almost 200 billion with America last year 75% of it's employees are full time and insured with bennifits and that number is growing. Wal-Mart donated more then double to charity last year then all other retailers combine. Don't take my word for it see for yourself....www.walmartfacts.com.

I'm glad you posted  some of these facts.
I have purchased  at the same walmart for the last 10 years for most of my shooting supplies.
The same sporting goods dept manager has been there for about the last 6 years. He seems to really like it and is always helpfull . And no small gunshop can really come close to many of their prices.Just too give a small example .I was shopping for a new buck knife for this hunting season and knew what the price was at walmart for it.I decided to give the small shop a chance. It was 12.00 more for the same knife. And he wonders why they are collecting dust in his shop.

Quoted: Quoted: Quoted: What are the real facts on working for Walmart. Does anyone work there that is posting here? I would think that they offer a medical insurance .Does a fulltime worker make at least 30,000 a year.or close to it? I work for Wal-Mart and they have been very good to me for the the past 7 years I have been there. My wife also works there and together Wal-Mart pays us close to 70k a year and we both are regular hourly workers. My wife works at a store and I work at a DC.  Good bennifits and quartly bonuses.   Couple quick facts about Wal-Mart: Wal-Mart spent 17 billion with China last year Wal-Mart spent almost 200 billion with America last year 75% of it's employees are full time and insured with bennifits and that number is growing. Wal-Mart donated more then double to charity last year then all other retailers combine. Don't take my word for it see for yourself....www.walmartfacts.com. I'm glad you posted  some of these facts. I have purchased  at the same walmart for the last 10 years for most of my shooting supplies. The same sporting goods dept manager has been there for about the last 6 years. He seems to really like it and is always helpfull . And no small gunshop can really come close to many of there prices.

Where I work(distrubution center) we have a few associates with over 20 years in, couple dozzen with over 15 years and countless 5 and 10 year associates. If you put in a few good years of work you can expect to be paid about 20+/hour for a lot of the jobs. It has its bad days and is some times is a chor but all in all most workers stick around like the above because Wal-Mart is truly good to us dispite what the media and "Wal-Mart bashers" say.

Quoted: Quoted: Quoted: Quoted: What are the real facts on working for Walmart. Does anyone work there that is posting here? I would think that they offer a medical insurance .Does a fulltime worker make at least 30,000 a year.or close to it? I work for Wal-Mart and they have been very good to me for the the past 7 years I have been there. My wife also works there and together Wal-Mart pays us close to 70k a year and we both are regular hourly workers. My wife works at a store and I work at a DC.  Good bennifits and quartly bonuses.   Couple quick facts about Wal-Mart: Wal-Mart spent 17 billion with China last year Wal-Mart spent almost 200 billion with America last year 75% of it's employees are full time and insured with bennifits and that number is growing. Wal-Mart donated more then double to charity last year then all other retailers combine. Don't take my word for it see for yourself....www.walmartfacts.com. I'm glad you posted  some of these facts. I have purchased  at the same walmart for the last 10 years for most of my shooting supplies. The same sporting goods dept manager has been there for about the last 6 years. He seems to really like it and is always helpfull . And no small gunshop can really come close to many of there prices. Where I work(distrubution center) we have a few associates with over 20 years in, couple dozzen with over 15 years and countless 5 and 10 year associates. If you put in a few good years of work you can expect to be paid about 20+/hour for a lot of the jobs. It has its bad days and is some times is a chor but all in all most workers stick around like the above because Wal-Mart is truly good to us dispite what the media and "Wal-Mart bashers" say.

Every job has it's bad days. It 's easy to jump on the band wagon and bash walmart but I will continue to shop there and I bet many of these bashers do too