The Washington Post
November 6, 2003
Stores Follow Wal-Mart’s Lead in Labor
By Greg Schneider and Dina ElBoghdady
Wal-Mart, the world’s biggest retailer and the nation’s biggest private employer, has become so powerful that its practices reverberate throughout the U.S. economy. About as many people work for Wal-Mart — 1.3 million — as are on active duty in the U.S. military. Its most recent annual sales — $245 billion — are greater than the gross domestic product of Switzerland.
Wal-Mart’s vast, non-unionized work force earns a typical wage of about $7
to $8 an hour. Unionized workers at Kroger, by contrast, said they were making between $11 and $13 an hour, with full health benefits. About 62 percent of Wal-Mart workers are eligible for benefits, but less than half of the workforce participates. Critics say the low participation is because Wal-Mart requires steep employee contributions.
Some economists argue that the Wal-Martization of the American workforce is
simply the free-market system functioning as it should. Gary Stibel, founder
and principal of the New England Consulting Group, said Wal-Mart has saved
consumers more than $20 billion through its discount pricing. Figuring in Wal-Mart’s pressure on other retailers to lower prices, savings top $100 billion, he said.
“In this day and age, the United States needs more companies like Wal-Mart
to create jobs, even if not at the highest pay,” Stibel said. “The company
that makes its mark by taking the cost of manufacturing products and services up will lose, and the country that promotes that will lose.”
For retailers, competing with Wal-Mart means not just holding down wages, but curbing health care costs, which are becoming an increasing burden on employers nationwide.
A report by the AFL-CIO, which has tried and failed to organize Wal-Mart workers, said the retailer insures only about 45 percent of its workforce. Wal-Mart workers must pay about one-third of the cost of their health care premiums, while employees at other large companies typically pay 16 to 25 percent, the report said.
The result is that many Wal-Mart workers transfer the health care burden either to their spouse’s employer or to government agencies, the report said.
Some employees at Minneapolis-based Target Corp., a non-union company once
known for its generous employee benefits, say they believe price competition with Wal-Mart caused their employer to cut benefits as well.
In April, Target rolled out a new health care plan for 2004 that offered generous benefits, but only for employees who averaged more than 32 hours of work each week. Some Target employees say the company then hired more workers and reduced existing workers’ schedules so they no longer qualified for the plan.
