Sunday, January 02, 2005

The Secret to Wal-Mart's Success: Corporate Crime

They've got it all figured out:

Al Zack, who until his retirement in 2004 was the United Food and Commercial Workers' vice president for strategic programs, observes that appealing to the poor was "Sam Walton's real genius. He figured out how to make money off of poverty. He located his first stores in poor rural areas and discovered a real market. The only problem with the business model is that it really needs to create more poverty to grow." That problem is cleverly solved by creating more bad jobs worldwide.

In a chilling reversal of Henry Ford's strategy, which was to pay his workers amply so they could buy Ford cars, Wal-Mart's stingy compensation policies -- workers make, on average, just over $8 an hour, and if they want health insurance, they must pay more than a third of the premium -- contribute to an economy in which, increasingly, workers can afford to shop only at Wal-Mart.

To make this model work, Wal-Mart must keep labor costs down. It does this by making corporate crime an integral part of its business strategy. Wal-Mart routinely violates laws protecting workers' organizing rights (workers have even been fired for union activity).

It is a repeat offender on overtime laws; in more than 30 states, workers have brought wage-and-hour class-action suits against the retailer. In some cases, workers say, managers encouraged them to clock out and keep working; in others, managers locked the doors and would not let employees go home at the end of their shifts. And it's often women who suffer most from Wal-Mart's labor practices. Dukes v. Wal-Mart, the largest civil rights class-action suit in history, charges the company with systematically discriminating against women in pay and promotions.

Given the poverty they have in common, it makes sense that Wal-Mart's workers often express a strong feeling of solidarity with the shoppers. Wal-Mart workers tend to be aware that the customers' circumstances are similar to their own and to identify with them. Some complain about rude customers but most seem to genuinely enjoy the shoppers.