By Al Norman
Published November 19, 2012
Was it Bill Clinton who inserted Walmart on President Obama’s short list for Fiscal Cliff discussions at the White House recently?
Clinton promotes Walmart CEO Mike Duke like the late Sam Walton used to push Moon Pies. But it’s hard to imagine Barack Obama suffering through a meeting with Duke, who personifies the 1% corporate power-broker, and whose store managers warned Walmart “associates” in 2008 that a Senator Obama in the White House would favor the unions. Ironically, now its Duke who is in the White House.
After meeting with the President, Walmart’s CEO issued a 216-word statement that was equal parts arrogance and ignorance. The Walmart Statement on Fiscal Cliff Meeting with President Obama included the following dictums:
“In many ways, Walmart’s customers are at the center of this debate.” Why? Because there are 19 million of them every day? Discount shoppers represent no social movement or coherent vision of America—but because they are the only people who can move Walmart’s stock price–they are the focus of everything Walmart says.
“Walmart Moms tell us their confidence in the economy is shaped by whether they believe Washington is working for them.” Walmart loves it that political pollsters have created this demographic that bears the retailer’s name. But everydemographic group in the country thinks that more Congressional gridlock is intolerable, and that the government is not “working for them.” But ask these same people if the Walton Family is working for them?
Walmart Moms might not be pleased to learn that according to the Economic Policy Institute, the U.S. trade deficit with China, between 2001 and 2006, eliminated 1.8 million U.S. jobs—and Walmart’s trade deficit with China alone eliminated nearly 200,000 U.S. jobs. Walmart was responsible for 11% of the growth in the U.S. trade deficit during this period.
“Our customers are working hard to adapt to the ‘new normal,’ but their confidence is still very fragile. They are shopping for Christmas now and they don’t need uncertainty over a tax increase.” In other words, don’t ruin the holiday spirit for our shoppers with all this talk about falling off a Cliff. Sure, customers are “fragile,” because many have had to trade down a decent-paying job for a Walton Job. A recent study by the Investigative Reporting Workshop notes that U.S. factory jobs dropped by 44% from 21 million jobs in 1979, to 11.7 million manufacturing jobs in 2011.
Walton Jobs lock hundreds of thousands of workers at the poverty level. Walmart needs an underclass of workers who are financially desperate enough to work part-time for $8.90 an hour. These people aren’t worried about the Fiscal Cliff—they have already gone over it by working at Walmart.
A 2011 research brief by the Center for Labor Research and Education at UC Berkeley concluded that “jobs created by Walmart in metropolitan areas pay less and are less likely to offer benefits than those they replace…Walmart workers earn an estimated 12.4% less than retail workers as a whole, and 14.5% less than workers in large retail.”
The same report concluded that if Walmart paid its workers $12 per hour and passed on the entire cost of that wage increase to customers, the average Walmart shopper would pay 46 cents more per shopping trip. The workers would receive as much as $6,500 in an average annual pay increase–which they would no doubt spend in their local economy to pay their rent, food and utility bills.
Part of the ‘new normal’ in a Walmart economy is that fewer people are working, and they are working for less. The National Bureau of Economic Research found that a Walmart store opening reduces county-level retail employment by about 150 workers, and each Walmart worker replaces approximately 1.4 retail workers at other merchants.
“We encourage the White House and Congress to work together on an approach that includes additional revenue, comprehensive tax reform, and spending cuts, including entitlement reforms, to get our fiscal house in order while creating economic growth.” Keep in mind that the man writing this was paid $18.1 million by Walmart in 2011, not counting the use of a company plane—a perk valued at around a $100,000.
What kind of “entitlement reforms” would Walmart want? They certainly don’t want to shrink Medicaid, because in states that have published data on corporate use of Medicaid, Walmart consistently places at the very top of private companies with the most employees and dependents who rely on taxpayer-supported Medicaid health care. Similarly, cutting Medicare and forcing elders to pay more out-of-pocket for health care is going to reduce their discretionary spending at Walmart.
Social Security should not be on Walmart’s entitlement reform list, because it’s a Trust Fund. That distinction is likely to be lost on Mike Duke, who, because of the cap on Social Security wages subject to the payroll tax, contributes based on only 2.6% of his $4.18 million in base salary and cash performance bonus. His $13.1 million in stock awards is not subject at all to the payroll tax. Duke pays the same FICA tax as someone earning $110,100. In the first 10 days of the year, Mike Duke hits the cap on Social Security taxable income—the rest of his work year is tax free. So any “reforms” on Social Security should start with people like Mr. Duke (and the much richer Waltons, whose unearned income is not taxed by Social Security) paying their fair share to help today’s retired workers.
“Washington needs to find an agreement to avoid the fiscal cliff.” Walmart could help that agreement by changing its business model from one of rampant exploitation of its workers and vendors, to one that keeps product sourcing and jobs in America, offers a liveable wage to its workers, and calls upon families like the Waltons to pay their fair share in taxes.
If America goes over the Fiscal Cliff, we will find Walmart waiting or us at the bottom with a check-out register.