Sunday, December 21, 2003

Research shows that 4% of the growth in the U.S. economy's productivity from 1995 to 1999 was due to Wal-Mart's efficiency alone. A three-part series on the firm, published Nov. 23-25 in the Los Angeles Times, noted that the resulting lower prices attract even union members, who would otherwise prefer to shop at unionized stores. Surveys by the Teamsters and the United Food and Commercial Workers -- the two unions most threatened by Wal-Mart -- show that many of their own members shop at the discounter.

On the negative side, by pressuring suppliers to cut costs Wal-Mart has contributed to the loss of U.S. manufacturing jobs, as producers shift operations to the Third World. As for its own employees, Wal-Mart admits that a full-time worker might not be able to support a family on a Wal-Mart paycheck, according to the Los Angeles Times.

A case in point is the textile sector. Celia Clancy, an executive vice president, oversees Wal-Mart's clothing budget, estimated at $35 billion in 2000. Clancy gives her buyers a "Plus One" mandate every year: For each item they handle, they must either lower the cost or raise the quality.

That means, for instance, that Honduras produces the same amount of Wal-Mart clothing as it did three years ago, but with 20% fewer workers. Even so, Hondurans fear that this work will soon be lost to China and other lower-wage countries. Even Bangladesh has problems meeting the Wal-Mart demands. Bangladeshi factory owners say Wal-Mart and other retailers have asked them to cut their prices by as much as 50% in recent years.

Concern over low-paying jobs is not limited to Wal-Mart. The trend to part-time work, outsourcing, and greater flexibility has trapped many in low-wage employment, noted Business Week in its Dec. 1 issue. The problem affects more than a quarter of the U.S. labor force, around 34 million workers.

Adding to concern is evidence that relative income mobility is declining, meaning that those on the lower rungs are finding it harder to improve their lot. The article cited a study by the Federal Reserve Bank of Boston that showed how 49% of the families that started the 1970s poor, were stuck there at the end of the decade. In the 1990s this figure rose to 53%.

Beth Shulman, ex-union official and now a consultant, addressed this problem in her recent book, "The Betrayal of Work." Shulman noted that it is not only a question of pay, with a quarter of workers earning less than $8.70 an hour. As well, many of these workers lack basic entitlements such as health care, sick pay, paid vacations or retirement benefits. And added to the physically arduous nature of many of these jobs is the emotionally degrading way in which many are treated.

Moreover, such a situation creates many social ills and "undermines the country's moral foundations," Shulman argues. Leaving such a numerous group without the chance to share in economic progress "impairs the functioning of America's democracy and communities," she adds.

As John Paul II noted in his 1981 encyclical "Laborem Exercens," No. 3: "human work is a key, probably the essential key, to the whole social question." Further on he commented: "The justice of a socioeconomic system and, in each case, its just functioning, deserve in the final analysis to be evaluated by the way in which man's work is properly remunerated in the system." Worth keeping in mind in deciding which business strategy to adopt.

posted by Shaun Kenney | 12/21/2003 12:20:00 AM | 0 comments

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