Tuesday, October 19, 2010

Walmart, American Workers, and their Families

Walmart has grown from a small discount store in 1968 into the world's largest retailer and has become the largest company in the United States. The chain attracts 100 million U.S. shoppers every week, 1/3 of our country's population, who seek low prices and items they need in their day to day life. Walmart offers a seeming contradiction in that it has the highest profit margin of any retail chain and yet continues to deliver low prices. While low prices may seem like a good thing for American shoppers, it is unjust to its workers and slowly weakening the United States. Walmart's success forces us to take a serious look at this chain and ask some difficult questions.

If Sam Walton were alive today, he would qualify as the world's richest man. Carlos Slim Helu, who holds this position today, has $53.3 billion dollars. Walton's wealth, which was divided among his four children, is worth $30.4 billion more than Helu's sum and is valued at $83.7 billion. Walmart's success has made the Waltons the world's wealthiest family.

The four children (and their individual net worth) are listed below.

Christy Walton's net worth is $22.5 billion

Jim Walton's net worth is $20.7 billion
Alice Walton's net worth is $20.7 billion
S. Robson Walton's net worth is $19.8 billion

When we contrast the wealth of the Walton royal family to that of its workers, a very different picture emerges. The average Wal-Mart employee makes $1,200 a month (or $8/hour) and this amounts to $14,400 a year. This is above the official U.S. government poverty calculation which is $10,830 for a single person. If the employee has one family member, they fall officially below the poverty rate (the poverty rate for a family of two is $14,570). According to U.S. government expectations, a family of two with a full time wage from Walmart will not be able to pay for its basic necessities and would need to seek additional help. Who picks the tab? A North Carolina hospital reports that thirty-one percent of patients who were Walmart employees were covered by Medicaid and sixteen percent had no insurance at all. Georgia found that over 10,000 children of Walmart employees received health care from the state. The cost is paid by taxpayers. The health insurance Walmart provides (to 45% of its workers) requires them to pay as much as $264 a month to insure a family and out-of-pocket costs can be $13,000. The basic premium is twenty-two percent of the average full-time employees salary and this forces families to live on less than one thousand dollars a month.

Where does the money spent at Walmart go? Walmart has the highest profit rate of any retail chain earning 5.5% on its gross revenue (Cosco's rate is only 2.7% but it provides health care) and 0.5% of your purchase pays for employee health care. When you spend $20 at Walmart the company profits $1.10 (which goes to the Walton children) and only $.10 (ten cents) goes to cover employee health care costs. This means that Walmart profits are 1,083.77% more than total health care costs. Another way to state this is that Walmart profit is over 10.8 times greater than the money it spends on employee health care. This is not a problem of a capacity to fund its employee's health care, rather it reflects a simple lack of desire.

This very brief commentary contrasts the vast wealth of the Walton family with the misery suffered by their average worker. Walmart does not pay a living wage and it has effectively blocked all attempts to unionize (Pope Leo XIII recognized unions as fundamental human right in Rerum Novarum); this has made it impossible for the employees to generate any pressure for them to be paid a living wage. Walmart has another cost in that its search for low prices often forces U.S. manufacturing firms to move their factories outside the country and frequently they relocate in China. As Walmart has become the largest company in the United States, it has made our country weaker by exporting high-paying manufacturing jobs that generated enough income to support middle class families. As these positions are lost, more families are turning to low wage jobs where they will need public assistance merely to provide basic necessities. This serves to decrease the size of the U.S. economy and reduce the number of jobs in the United States. Walmart has done more to hurt American families than any other company and yet families will continue to shop there because they do not understand the relationship between their purchases and poverty. Shopping at a Walmart is not neutral and, I contend, serves to weaken our country and its families. Please take this posting seriously and do your best to avoid Walmart whenever possible.

These issues will be ignored politically in the United States because Walmart created the largest corporate political action committee in 2004 and also manages its own 'voter education' program (since 2006). Their donations to legislators have worked to prevent Congress from taking a serious look at the domestic costs Walmart inflicts on U.S. families and our country. We cannot depend on government to address this fairly. Our best course of action is to boycott Walmart and avoid purchasing anything until this reality changes.

Remember that shopping at Walmart comes at a price, namely your job and standard of living.

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