TAKING ON WAL-MART AND ITS SUBCONTRACTORS by Nathan Newman

This is totally same to my view of Walmart. What this article says is that we have to more focus on the subcontractors of Wal-Mart. Those companies and workers are in worse condition compared to workers who are directly employed by Wal-Mart. Moreover, this article gives regulating Wal-Mart's authority to its subcontractors as a practical way to fight off Wal-Mart.


TAKING ON WAL-MART AND ITS SUBCONTRACTORS
Progressive Populist
by Nathan Newman
June 01, 2004

The evil effects of Wal-Mart's low wages and union busting is becoming well understood among progressive activists. What's less well understood is that the problem is far larger than the 1.1 million workers directly employed by Wal-Mart. In fact, given its network of suppliers and contractors, Wal-Mart's influence is far-reaching in driving down wages in its manufacturers and service suppliers across our nation and the world.

The Service Employees International Union (SEIU) has launched a new initiative, Justice At Work, to educate the public about the exploitation happening at mega-corporations like Wal-Mart and among their innumerable subcontractors.

But they face a bit of a public relations hill in making people understand the connection between the problems created by subcontracting and the things they care about in their lives.

Obviously, SEIU cares about subcontracting. As a union that organizes janitors, who are overwhelmingly not employed directly by the companies whose buildings they clean, the union has to care.

But why should the rest of us even think about small fry like the subcontractors when the big targets like Wal-Mart are the real problem?

The answer is because those small fry don't really exist, not as real companies. It's all a big lie. If a subcontracting company lives and dies based on the commands of a giant corporation, they aren't an independent company; they're a division. General Motors used to call their divisions Pontiac, Chevrolet, Cadillac, etc., and they were each managed semi-autonomously day-to-day. But the General Motors board of directors made any ultimate decision-making.

Today, those divisions are labeled "subcontractors" and are incorporated separately, which has all sorts of legal, labor and tax advantages for the main corporation. (Think Enron and its "special-purpose vehicles.") But they are all the same company in reality as long as they take orders from Wal-Mart or any other mega-corporation head office.

Wal-Mart's Reach: Those 1.1 million workers on payroll at Wal-Mart are only a portion of the people whose employment is dependent on the decisions Wal-Mart management makes every day.

Along with janitors, exploited across the country in anonymous little companies slaving for Wal-Mart, there are delivery companies, advertising agencies and any other manner of service firms that live and die on Wal-Mart orders and business. An estimated 20,000 separate companies supply the behemoth's needs.

Assume just a few hundred people at each of those suppliers working on behalf of Wal-Mart and that's additional millions of people de facto on Wal-Mart's payroll.

The Lie That Small Business Creates Jobs: Which gets us to the main point, which is the often worshipful descriptions of "small business," when the reality is that a large portion of small companies are short-lived sweatshops living and dying at the whims of big corporations like Wal-Mart.

The biggest hoax in economics is that small business drives job creation in this country. While lots of jobs at small business appear each year -- usually at the demand of large corporations &endash; usually an equal number are destroyed as those same large corporations switch between an ever-changing musical chairs game of captive suppliers.

The toxic effect of the myth of small business job creation is that "pro-business" politicians then call for lighter regulation of "entrepreneurial firms," meaning that those underregulated firms become a safe haven for exploitation.

Which is incredibly convenient for big companies like Wal-Mart or Intel which can unload their dirtiest jobs on their small contractors, knowing they can get away with often illegal exploitation that the bigger firms could not pull off. When janitorial subcontractors were raided last year, the wage and overtime violations pervasive in those cleaning firms were just the tip of the iceberg of the subcontracted exploitation in the small business subcontractor sector.

The Global Sweatshop: The problem is only deeper at the global level of manufacturing, where companies dance to Wal-Mart's tune or they are out of the game. Wal-Mart searches the world for ever cheaper sources of supply, pitting vendor against vendor, country against country. Manufacturers therefore are desperate to do what Wal-Mart management tells them to do, or they are often out of business.

So how many employees does Wal-Mart really have?

Between domestic and overseas contractors, it's a pretty fair estimate that Wal-Mart essentially employs five to ten million people worldwide.

So what's the strategy? A campaign against Wal-Mart and other corporations needs to concentrate on subcontractors, both domestic and overseas.

First, those subcontractors are where the worst labor abuses happen. However pathetic the pay and the violations of the law for core Wal-Mart employees, workers in these underground contractor jobs and in slave labor jobs in China face even greater hardships.

But the very fact that Wal-Mart's profits depend on squeezing its suppliers means that this is a pressure point on the company. Exposing those abuses and supporting those workers means that Wal-Mart will get a big black eye in public relations and lose its easy way to outsource exploitation.

Taking on the subcontractors will need a combination of lawsuits on behalf of the workers, changing the law to strengthen their rights (which can often be done with local regulation), supporting union campaigns across the country and mounting major public education campaigns to highlight these abuses. This can then be combined with a serious campaign to bring labor issues into trade negotiations with China and other countries where Wal-Mart exploits workers.

And the advantage of targeting the Wal-Mart subcontractors globally is that concrete victories can be won for workers at the various subcontractor companies without having to defeat Wal-Mart first at its core stores. It won't solve the problem overall, but it will put continual pressure on Wal-Mart, as organizing proceeds forward on organizing the core of the company's workforce.

If we want to put it in military terms, it's a campaign of encirclement. Embarrass Wal-Mart with the most obvious abuses that it promotes, then use those abuses to educate the public about the broader social ills Wal-Mart's business practices breed in our economy. Organize subcontractor companies, then pressure Wal-Mart not to abandon them merely because their workers choose to unionize -- a tactic unions like SEIU have practiced repeatedly across the country.

It's not the only strategy we need to take on Wal-Mart and its ilk, but it's one that unions and community allies can take on as a concrete first step in reining in this corporate race to the bottom.

Nathan Newman is a longtime union and community activist. Email nathan@newman.org or see www.nathannewman.org.

Posted by Nathan at June 01, 2004 09:33 PM

Ode to Love (2nd revision)

 

Dear Love,

 

I don’t know how long it has been since the last time I called your name. It’s been so long that I can’t remember. Because you are so famous and seems like everyone around the world knows you well, I merely have had a chance to greet you. Of course, it was also my fault to have maintained a lazy relationship with you. I also was afraid to be caught by prying eyes talking to you. It’s not that I am ashamed of being your friend; I was afraid of prejudices people might have after hearing of our relationship. I seem quite cold, ruthless and rough, you know. On the other hand, you are the perfect opposite of me. I too, sometimes, wonder how a man like me could have been a friend of yours.

 

I think I met you first when I was in the fifth grade of elementary school. Before then, I heard about you indirectly through the grapevine. Back then, you were described to be quite romantic, cool, and awesome. In fact, that was the reason why I never reached out to you before; I thought only handsome boys and beautiful girls were allowed to be your friends. I knew that I didn’t fulfill those requirements. But suddenly, you came to me without a knock. I remember it was a girl in my class who introduced us. You, girls, came to me so fast that I couldn’t even blink my eyes, but also you, girls, vanished within a second. You mystified me, and it didn’t take long for me to know that your first name is “lonely.”

 

Ever since then I have searched for you so eagerly, but you never even show your shadow. Now that I try to walk away, you reveal your addictive faces. Ah, you complicated one!

 

Maybe you came to me now to hear my explanation for hiding away your existence from my people. Well, as I said before, I am too shy and you are too famous to be revealed. I thought confronting you in front of everyone would hurt both of us. Seems like not satisfied about my excuse, huh?

 

OK! I admit that I was too selfish. I was so selfish that I didn’t reveal you because I didn’t want to get hurt. But please know that the concern of making you hurt was also the reason for my hesitation to reveal your existence.

 

Now answer my question: Why don’t you just stick to one place? Whenever I see a girl smiling at me, you move to her slyly as if you were there ever since from the beginning. That makes me really hard to reveal you. Besides, look at those messy footsteps you have left all around me. I beg you; Please just don’t hang around a lot. Also, please be clear-at least to me. To reveal you, I must at least know where you are. But having you as a friend throughout several years, I have realized that its your inevitable behavior. But still, I am afraid that someday I might lose you. Of course, I will be searching for you whether I want to or not, but let’s go the easy way. I don’t want to wander around in vain desperately searching for you.

 

Wow, I never thought I would write a long letter to you like this one. This letter, I think, brought me one step closer to you. Next time, I hope I can see you eye to eye. I’ll buy you a full dinner including dessert! Let us meet soon!

 

Your true friend,

Paul JunSuk Lee

Does Wal-Mart Destroy Communities? - William L. Anderson

In a recent poll on the CNN website, viewers were asked the "poll" question of whether or not they believed that Wal-Mart stores were "good" for the "community." Perhaps it is not surprising that a large majority answered "no." 

Now, this by itself does not mean much, since these online "polls" are not scientific and reflect only the views of the moment by people who choose to participate. What is more significant, however, was the anti-Wal-Mart content of a speech recently given by Teresa Heinz Kerry, John Kerry's wife and an influential person in her own right. Speaking at a Democratic Party rally, Mrs. Kerry declared that "Wal-Mart destroys communities."

Indeed, Wal-Mart bashing is in vogue. Whether one journeys to the sight of Sojourners Magazineor reads even mainstream news publications, the charges against Wal-Mart abound. According to the consensus of the critics, Wal-Mart is guilty of the following:

• Paying low wages to workers, and generally abusing them.
• Intimidating shoppers by having them "greeted" by an elderly person at the door. (As one writer said, the real purpose of that greeter is to let shoppers know that they are being watched.)
• Putting small stores out of business, as shoppers stop patronizing the little "mom-and-pop" boutiques for the big box, thus "destroying" the look of "Main Street" in small towns and cities.
• Purchasing low-priced goods from abroad, which puts American workers out of jobs.
• Contributing to that allegedly harmful disease known as "consumerism," in which Americans are constantly purchasing goods that the Wal-Mart critics insist that they really don't need. As the bumper sticker of one of my faculty colleagues proclaims: "Mal-Wart: The Source of Cheap Crap."

Of course, what really bugs the critics is that people choose to shop at Wal-Mart instead of the places where they would want people to spend their money. (Activists on both left and right often will invoke the name of the "people" when their real goal is to restrict the choices of those "people.")  Yet, while up front I question the real motives of the Wal-Mart haters, it still behooves us to answer the charges using economic logic, since many of the arguments against this chain store also appeal to economics.

In a recent article, "Always Low Wages," Brian Bolton declares that Jesus would not shop at Wal-Mart, since the company's employee pay scale is not up to Sojourners' standards. Furthermore, he all but declares it a "sin" for Christians to patronize the store because it imports cheap goods made by people who make even less money than Wal-Mart employees. As Bolton writes, "lower prices equal lower wages."

Nearly all of us would accept higher payment for our services, and Wal-Mart employees are no exception. Yet, that condition alone hardly makes a company's pay scales illegitimate, as Bolton and other critics contend. If my employer were to double my pay tomorrow (which is highly doubtful), I doubt I would object, although I'm sure that most of my colleagues would see the event in a different light. That Frostburg State University does not make that offer to me does not make my current salary illicit, nor does it make my employer the second coming of Silas Marner.

The point is this: payment for services involves mutually agreeable exchanges. They are not manifestations of power, as some would say. No one is forced to work at Wal-Mart; people who choose to work there do so because they prefer employment there to other circumstances.

At the local Wal-Mart where I shop (contrary to Bolton, I do not believe that shopping at Wal-Mart violates the Holy Scriptures), I have noticed that many employees have stayed with that company for a long time, and there does not seem to be much turnover there. Furthermore, from what I can tell, they seem like normal people, not the oppressed slaves that the critics claim fill the ranks of Wal-Mart workers.

Now, my personal observations hardly constitute proof that Bolton and the other Wal-Mart critics are wrong, but unless they can repudiate the opportunity cost argument, they have ground upon which to stand. Wal-Mart is not engaged in a grand conspiracy to push down wages in any given market, and twisted logic cannot prove otherwise.

For example, Bolton writes that part of the problem faced by recent striking union grocery store workers in Southern California was that Wal-Mart super centers in the area paid lower wages, which placed pressure on the other grocery stores. Thus, he reasons, it was Wal-Mart that ultimately kept workers from receiving "just wages" for their work.

No doubt, Bolton can appeal to the anti-capitalist mentality of many people, but his work stands economic logic upon its head. By paying lower wages, Wal-Mart makes grocery stores like Vons and other places that pay union scale more attractive to workers (although labor unions do not exactly welcome some potential employees with open arms). The success of Wal-Mart does not have to do with the pay scale of its employees, but rather with the perception by consumers that the store will have the goods they want at an affordable price.

Bolton claims that Wal-Mart can charge lower prices and still be profitable because it pays its employees less than do other companies. As anyone with even cursory training in Austrian Economics knows, such an argument is false. As Murray Rothbard points out in Man, Economy, and State, economic profit exists because of temporarily underpriced factors of production. Over time, as the owners recognize their position, they will either refuse to sell their factors at current prices and look to other options, or accept the current price because the opportunity costs of selling to other buyers may be higher than they wish to incur. If it is the latter, then one cannot say that these particular factors are even underpriced, as their owners are not able or willing to do what is necessary to gain higher prices for their employment.

In places like Southern California, where there are numerous employment opportunities, to say that workers are "forced" to work at Wal-Mart for "slave wages" is ridiculous. As noted before, the fact that workers there would be willing to accept higher pay is not evidence that they are enslaved. That they would prefer more to less simply means that they are normal, purposeful human beings.

One can easily dismiss the charge about the "greeter" at the door—unless one truly is intimidated by the presence of a diminutive 60-year-old grandmother. (What I have found is that if I select merchandise and actually pay for it, then no one there bothers me at all. If activists are upset that Wal-Mart does not like individuals to steal goods from their shelves, then they are advocating theft, and one does not have to pay attention to their arguments at all.) 

The "Wal-Mart destroys the community" charge, however, needs more attention. It goes as such: Wal-Mart enters a geographical area, and people stop shopping at little stores in order to patronize Wal-Mart. The mom-and-pop stores go out of business, the community is left with boarded-up buildings, and people must leave the small businesses and accept lower wages at Wal-Mart. Thus, while a shiny new store full of inexpensive goods is in the locality, in real terms, most everyone actually is poorer.

Again, these kinds of arguments appeal to many people. For example, all of us have heard of the theoretical owner of the small, independent hardware store who had to close his shop when Wal-Mart or Home Depot moved into his community, then suffer the indignity of having to go to work at the very place that put him on the streets. The former owner has a lower income than before, which is held up as proof that the "big boys" create and expand poverty.

A few items need to be put in order. First, no one forced the hardware owner to close his shop; he closed it because it was not profitable enough for him to keep it open. If the new chain store meant that many of his former customers had abandoned him, that is not the fault of the new store. Instead, consumers faced with choices and lower prices that they had not previously enjoyed freely chose to patronize the new store.

Second, while the owner of the smaller store has suffered a loss of income, everyone else has gained. Third, if the employees of the smaller store go to work at the new chain store, it is almost guaranteed that their pay will be higher than before and they will enjoy new benefits that most likely had not been available to them previously.

Third, the presence of Wal-Mart means local consumers will pay lower prices for goods than before, and also will benefit by having a wider array of available items than they had previously. (And they save on time by being able to stay under one roof while shopping for different items.) Whatever the reason, we can safely assume that consumers in that particular locality are exercising their free choices, choices that they perceive will make them better off than they were before the store existed. Activists may not like their reasoning, but that is irrelevant to our analysis.

Having dealt with the "Wal-Mart" creates poverty argument, we now turn to the more nebulous claim that the chain store "destroys" communities. Now, I have never seen a place that has been severely damaged or "destroyed" by Wal-Mart. (I have seen places that have had their quality of life spoiled by rent controls, "urban renewal," and other statist interventions that so-called activists have championed, but that is another story for another time. Suffice it to say that activists are unhappy that individuals freely choose to shop at Wal-Mart, and they want to restrict their choices in the name of "community.")

In fact, I would like to make a reverse argument; Wal-Mart and stores like it add to the quality of life in large and small communities because they provide consumer choices that otherwise would not be available. Take the area near Cumberland, Maryland, where I live, for example.

Cumberland is something of a time warp, a place that 50 years ago was a manufacturing center and was the second-largest city in Maryland. Today, most of the large factories are long shut down and the population is less than half of Cumberland's heyday numbers. Furthermore, the area has a relatively high unemployment rate and many jobs do not pay very well.

The presence of Wal-Mart and Lowe's (a large hardware store), along with some large grocery chains, however, means that people here can stretch their incomes farther than we would if those stores did not exist. If they suddenly were to pull out, one can be assured that our quality of life here would not improve in their absence. Furthermore, the fact that Wal-Mart and other large stores are willing to locate in smaller and poorer communities also makes these areas more attractive for people who wish to live here but do not want to have to give up all of the amenities of living in a larger city.

Others on this page and elsewhere have dealt with the charge that Wal-Mart destroys American jobs by purchasing goods from abroad, where the goods often are manufactured in what activists call "oppressive" conditions. (In fact, Sojourners elsewhere has openly stated that Third World peoples should simply be supported by American aid, and that the West should do all it can to make sure that the economies of these poor nations do not grow, all in the name of environmentalism. In other words, none of us are poor enough to satisfy the anti-Wal-Mart activists whose real goal is to eviscerate our own standards of living and "turn back the clock" to an era when life expectancy was lower and people generally were more deprived.)

The last objection—that Wal-Mart helps create "mindless" consumerism—is easily refuted by Austrian economics. The very basis of human action is purposeful behavior; to call human action "mindless" is absurd. Consumers at Wal-Mart and other chain stores are not zombies walking aimlessly through the building with glassy stares. They are human beings with needs and desires who perceive that at least some of those desires can be fulfilled through the use of goods purchased at Wal-Mart.

In a free society, activists would have to try to convince other individuals to change their buying habits via persuasion and voluntary action. Yet, the very history of "progressivist" activism in this country tells us a story of people who use the state to force others to do what they would not do given free choices. Yesterday, Microsoft was in their crosshairs; today, it is Wal-Mart, and tomorrow, some other hapless firm will be declared guilty of providing customers choices that they had not enjoyed before. A great sin, indeed.

------

William Anderson, an adjunct scholar of the Mises Institute, teaches economics at Frostburg State University. Send him  MAIL. See his Mises.org Articles Archive.

http://mises.org/daily/1521

Ode to Love

Dear Love,

I don’t know how long it has been since from the last time I called your name. It’s been too long that I can’t remember. Because you are so famous and seems like everyone around the world knows you a lot, I merely had a chance to talk with you. Of course, it was also my fault to have lazy relationship with you. I also was afraid to be caught by anyone while talking to you. It’s not that I am ashamed of being a friend of you; I was afraid of prejudices people will have after hearing our relationship that the man like me would ever get to be a friend of you; it seem odd even for me. I seem quite cold, ruthless and rough, you know. On the other hand, you are the perfect opposite of me. I too sometimes wonder how a man like me could have been a friend of you.

I think I met you first when I was in fifth grade of elementary school. Before then, I heard about you indirectly by hearing other people talking about you. Back then, you were told to be quite romantic, cool, and awesome. In fact, that was the reason why I never reached you before: I thought only handsome boys and beautiful girls were allowed to be friends of you. I knew myself a lot, and I knew that I don’t fulfill those requirements to be your friend. But suddenly, you came to me without a knock. I remember it was a girl in my class who introduced you to me. You girls came to me so fast that I couldn’t even blink my eyes, but also you girls vanished within a second. That sure made me to wonder a lot about you, and it didn’t take long for me to know that your first name is “lonely”.

Ever since then I searched for you so eagerly, but you never even showed your shadow. Now that I try to walk away, you show up your faces. Ah, you complicated one!

Maybe you came to me now to hear my explanation about hiding your existence from my people. Well, as I said before, I am too shy and you are too famous to be revealed. I thought confronting you in front of everyone would hurt both of us. Seems like not satisfied about my explanation, huh?

OK! I admit that I was too selfish. I was so selfish that I didn’t reveal you because I didn’t want to get hurt. But please know that the concern of making you hurt was also the reason for my hesitation to reveal your existence.

Now answer my question. Why do you always easily fall into people who smile at me? That makes me really hard to find you. Please just don’t hang around a lot. Please just stick to one place. Also, please be clear at least to me. In case of revealing you, I must at least know where you are. But having you as a friend throughout several years, I realized that you don’t really be clear to me. I am afraid that someday I might lose you. Of course I will be searching for you whether I want or not, but let’s go easy way. I don’t want to wander around in vain desperately searching for you.

Wow, I never thought I would write a long letter to you like this one. By this letter I think I came one step more close to you. Next time, I hope I can see you eyes to eyes. I’ll buy you full dinner including dessert! Let us see soon!

Your true friend,

Paul JunSuk Lee