Wal-Mart: Protests Are Just Union Stunts

source: http://www.flickr.com/photos/evanobrandon/

“Ten current or recently fired Walmart workers were arrested in Washington, DC in late August for peaceful civil disobedience near Walmart’s downtown office. This action comes after the company fired or disciplined more than 70 workers for going on strike. Workers announced that if Walmart did not reinstate the illegally fired workers and publicly commit to pay a decent wage by Labor Day, the company will face some of the most intense actions it has seen to date. Labor Day came and went and Walmart is yet to respond, so workers are mobilizing for actions on September 5th.”
– “Making Change at Wal-Mart” petition

Wal-Mart (NYSE:WMT) employees organized Thursday under union-backed activist group OUR Walmart to call attention to the discount retailer’s failure to respond to the activist-drafted petition asking that the company pay its workers “a minimum real wage of $25,000 annually so they can support a family” and immediately end its “attempts to suppress workers’ rights by reinstating and rescinding punishment of the more than 70 Wal-Mart workers who were unjustly targeted for standing up.”

What exactly Wal-Mart has done in retaliation is a matter of contention between the company and protesters. Several workers have come forward, claiming to have been fired for their participation in demonstrations. As recently as August, a Wal-Mart spokesperson told The Nation that “no associates were disciplined for participating in any specific protests.” There are also two sides to the wage complaint; the company also maintains that the average pay of its workers already is $25,000 annually, plus benefits, as Fox Business reported.

The living wage movement has gained momentum in recent months, and both Wal-Mart and the fast-food industry have become battlegrounds in the confrontation between big business and labor activists. Thursday’s protests, which spread far beyond the walkouts planned in 15 United States cities by Making Change at Wal-Mart, a coalition of Wal-Mart worker activists, echoed fast-food worker walkouts that occurred in 60 cities last week. While rising home prices have given homeowners more equity, and combined with the modest gains made by the labor market, put them in a better position to increase their outlays, stagnant wages and higher payroll taxes have affected spending for lower-income earners — like Wal-Mart employees.

“You’re seeing a bit of a split economy where that lower income consumer has been under a lot of pressure but the higher end is doing OK,” Telsey Advisory Group senior research director Joe Feldman told CNBC. Even worse is the fact that the majority of employment gains the sputtering economy has made this year have been concentrated in part-time or contract employment in lower-wage sectors like the retail and food service.

Employing 1.4 million people in the United States, Wal-Mart is the largest private employer in the nation. With such a massive workforce, its labor practices and poor relationship with unions made the company a go-to example for lawmakers in Washington D.C. when considering the issue of minimum wage. In June, the Washington, D.C. city council approved a bill called the Large Retailer Accountability Act — also known as the living wage law — that requires big box stores, or those companies doing business in spaces with more than 75,000 square feet and more than $1 billion in annual sales, increase the minimum wage paid to employees from D.C.’s minimum wage of $8.25 to $12.50 per hour.

Demos, a research and policy center focused on economic stability, defines low-wage work as “a job paying $12 an hour or less, equivalent to an annual income of about $24,000 for a full-time worker.”

A July 10 letter penned by five-time presidential candidate Ralph Nader told D.C. mayor Vincent Gray to ask himself five questions before coming to a decision regarding the Large Retailer Accountability Act. First — noting that if the 1968 minimum wage kept pace with inflation, it would now be $10.70, or $22 if it kept pace with worker productivity — he postulated that Wal-Mart should be willing to pay workers in D.C. $12.50 minus benefits. He also suggested that Gray should think about these facts: Wal-Mart CEO Mike Duke makes $11,000 an hour; Costco starts their workers at $11.50 an hour plus benefits and is profitable; Wal-Mart has enough money to launch a $15 billion stock buyback; and, a study from U.C. Berkeley’s Center for Labor Research and Education showed that an increase in the hourly wage to $12.00 would add, provided all of the wage increase was absorbed by price increases, just 46 cents per trip for the average Wal-Mart customer.

The economic argument against raising wages for low-income earners workers is that higher wages means fewer jobs. “The most basic principle in economics is the law of demand: when something becomes more expensive, people buy less of it,” wrote economist Richard Vedder for the Daily Beast. “This is true for America’s employers.” In fact, he contends that Wal-Mart has been a vital institution for the U.S. economy by putting millions of Americans to work over the decades, making goods available at lower costs to relatively low-income consumers, and increasing the number of consumer choices relative to the pre-Walmart age. Appeasing workers demands would hamper the company’s ability to fill that economic role of mass employer and discount retailer, Vedder wrote.

For retailers like Wal-Mart, profit margins are extremely small. Last year, even though the company earned about $17 billion on sales of $469 billion, profits were only about 3.6 cents on each dollar of goods sold. “Labor costs are much larger than profits, so a large increase in those costs, such as by establishing a minimum Walmart wage of $12 an hour and insisting the company hire workers for enough hours to ensure medical benefits under Obamacare, would raise labor costs at least $10 billion a year and probably much more, reducing profits by well over half if not accompanied by price increases or other actions to try to reduce the damage to profitability,” Vedder argued. “Just as the American economy is seeing a little light at the end of the tunnel, we don’t need militant workers or a sympathetic government to do things that will add more tunnel,” he concluded.

As for Wal-Mart, the company termed Thursday’s protests as a “handful of union orchestrated media stunts, made of up of primarily union members and activists, [and] don’t represent the views of the vast majority of the 1.3 million associates who do work for Wal-Mart,” according to the statement received by Fox Business.

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