Line About Wal-Mart Style Companies: Explain?

[samclem]

While the OP was looking for a factual answer, which many supplied, I think that this question and the resulting discussion is best suited for Great Debates. A rather interesting discussion it is.

Moved from General Questions.

samclem GQ moderator

[msmith537]

@Spartydog

It occurs to me, after reviewing the thread, that the shrill critics of Wal-Mart, including Dr. Heinberg, don’t understand retail accounting and realities of the retail market. It’s those making the accusations that probably don’t have any real world experience in large scale retail.

I sense that the Wal-Mart critics don’t have a hands-on knowledge of retail cost accounting, start-up costs and logistics of distribution.

I have noticed that most of the SDMB is horribly ignorant when it comes to matters like accounting, business and economics. Probably because most do not, in fact, have MBAs or other business degrees.

As a corporate business professional, it seems completely ridiculous to me that a chain would invest millions to build a megastore just to drive out some mom and pops and then pull of stakes just to force the residents to drive hours to the nearest store. And what prevents the mom and pops from coming back in a month once the box store pulls out? What generally happens (according to a case study I read…on WalMart…in business school) is that WalMart does drive out the mom and pops in the region for the simple reason they can’t compete with WalMarts economies of scale. That sucks for the owner of the local hardware store but hey…that’s business. People vote with their wallets.

Fact of the matter is that local economies are not driven by hardware stores, coffee shops and the local diner. These are low volume service busineses providing low paying jobs that are driven by whatever industry is local to the area - argriculture, the local steel mill or General Motors plant.

That is not to say that the introduction of the big box store brings roses and giant singing bluebirds wherever they are built. They create massive traffic, their monolithic storefront surrounded by a gargantuan parkinglot takes up a huge footprint which can disrupt the character of the community and of course there is the perception about their employment practices and dealings with their suppliers. And of course they do drive out the smaller, less competetive businesses which once again, changes the character of the community.

[Mr.Slant]

@elelle

I’m not clear on the tax incentives offered by local government when Wal-Mart decides to build a large store, and how that figures in with their actual cost in building, and, therefore, further decision to continue certain stores. Can anyone clarify that? I know I could search for it, but better minds here are more able to explain it than I would be.

A town that WANTS a Wal-Mart may go out and offer Wal-Mart “half off on property taxes for 5 years” or a similar concession.
When you’re talking about a few acres of prime retail real estate, that’s a hefty bribe. I believe some places have offerred to drop municipal income taxes on businesses, although I realize that gets tricky due to state/local revenue sharing.
This kind of thing would be a lot more likely, frankly, with a big employer offerring good jobs; Cleveland wouldn’t do this for Wal-Mart, but I could certainly imagine that if IBM or Pfizer decided that having their research campuses in in Raleigh/Durham was the suck and wanted to move to a place with worse weather, someone could get a discount on some taxes in Cleveland.

[AskNott]

@Spartydog

And your point is?

This is an old case where the parts of the suit that were dismissed had little merit. It was another case of lawyers trying to use RICO to prosecute nearly everything. Take a look at the wide range of groups and individuals that have been sued under RICO.

RICO commentary

So what does it have to do with Wal-Mart policies?

The case is three years old; that’s not very old when you’re suing a huge corporation.

The case originated from the fact that most WalMarts in the US were cleaned every night by illegal aliens. That’s a rather ugly policy right there. The parts of the case that were not dismissed have to do with unpaid overtime and violations of minimum wage laws. When a company routinely violates the laws in hundreds of stores, that’s the company’s policy.

My point is this: If you knew that WalMart gives you low prices by hiring illegal aliens, breaking minimum-wage laws, and using mandatory unpaid overtime, would you still shop there?

Lots of WalMart workers are paid so poorly that they get welfare, food stamps, and housing subsidies. Those low prices are coming out of your taxes! Does it still sound like a good deal?

It is WalMart’s policy to screw their workers six ways to Sunday, and I won’t be a part of it. I don’t shop there. If I did, I would be endorsing their illegal and unethical practices.

[DrDeth]

@AskNott

The case originated from the fact that most WalMarts in the US were cleaned every night by illegal aliens. That’s a rather ugly policy right there.

The parts of the case that were not dismissed have to do with unpaid overtime and violations of minimum wage laws. When a company routinely violates the laws in hundreds of stores, that’s the company’s policy.

Lots of WalMart workers are paid so poorly that they get welfare, food stamps, and housing subsidies. Those low prices are coming out of your taxes! Does it still sound like a good deal?
.

Cite that it’s a “fact”. Cite that it was “most”. Cite that WalMart knew they were Illegal.

Cite that the overtime and wage problems weren;t caused by a problem with “independent contractor vs employee” issue. That part of the IRS Code is so vague and confusing that two companies can do things the exact same way and the IRS will rule one is fine and the other is wrong. I knwo that Wal-mart got fined over breaks, but that’s not uncommon.

Cite that it’s only or even mainly Wal-mart. If you are a PT Min-wage employee anywhere at any job, you often earn so little that you qualify for benefits. Isn’t it better that Wal-mart hire these dudes at least PT so that they aren’t entirely on the dole? Or do you think that “Mom & Pop” stores pay so much better and all their employees are FT workers getting fat salaries and benefits? Cite that Wal-Mart pays less that “Mom & Pop” stores.

[AskNott]

@DrDeth

Cite that it’s a “fact”. Cite that it was “most”. Cite that WalMart knew they were Illegal.

Cite that the overtime and wage problems weren;t caused by a problem with “independent contractor vs employee” issue. That part of the IRS Code is so vague and confusing that two companies can do things the exact same way and the IRS will rule one is fine and the other is wrong. I knwo that Wal-mart got fined over breaks, but that’s not uncommon.

Cite that it’s only or even mainly Wal-mart. If you are a PT Min-wage employee anywhere at any job, you often earn so little that you qualify for benefits. Isn’t it better that Wal-mart hire these dudes at least PT so that they aren’t entirely on the dole? Or do you think that “Mom & Pop” stores pay so much better and all their employees are FT workers getting fat salaries and benefits? Cite that Wal-Mart pays less that “Mom & Pop” stores.

**Cite that it’s a “fact”. Cite that WalMart knew they were Illegal.Cite that the overtime and wage problems weren;t caused by a problem with “independent contractor vs employee” issue. **
http://www.walmartjanitors.com/wmj94.pl?wsi=0&websys_screen=public_casedevelopments

…In particular, after raids at Wal-Mart stores in 1997, a Wal-Mart senior vice president instructed Wal-Mart’s leading maintenance contractor to set up dummy companies to hide the employment of undocumented migrant janitors. As he told the contractor (using an ethnic insult to refer to the Polish workers Wal-Mart exploited in many of its stores): “I like those Polocks.”

Overtime in MO,CO,CA,LA,NY,OH,OR,WA,GA,OK, and NV.

Suits Say Wal-Mart Forces Workers to Toil Off the Clock

http://www.cbsnews.com/stories/2002/12/20/national/main533818.shtml

Thirty-nine other class-action lawsuits are pending against the company in 30 states. Those suits, from California to New York, involve hundreds of thousands of workers seeking tens of millions in back pay.

Up Against Wal-Mart

Low pay, medicaid, labor law crimes, union-busting, all decisions from Bentonville.

… After three years with the company, McLaughlin earns only $16,800 a year. “And I’m considered high-paid,” she says. “The way they pay you, you cannot make it by yourself without having a second job or someone to help you, unless you’ve been there for 20 years or you’re a manager.” Because health insurance on the Wal-Mart plan would deduct up to $85 from her biweekly paycheck of $550, she goes without, and relies on **Medicaid ** to cover her son, Gage…

…Wal-Mart has responded to the union drive by trying to stop workers from organizing – sometimes in violation of federal labor law. In 10 separate cases, the National Labor Relations Board has ruled that Wal-Mart repeatedly broke the law by interrogating workers, confiscating union literature, and firing union supporters. At the first sign of organizing in a store, Wal-Mart dispatches a team of union busters from its headquarters in Bentonville, Arkansas, sometimes setting up surveillance cameras to monitor workers. “In my 35 years in labor relations, I’ve never seen a company that will go to the lengths that Wal-Mart goes to, to avoid a union,” says Martin Levitt, a management consultant who helped the company develop its anti-union tactics before writing a book called Confessions of a Union Buster. “They have zero tolerance.”

…The retaliation can be extreme. In February 2000, the meat-cutting department at a Wal-Mart in Jacksonville, Texas, voted to join the UFCW – the only Wal-Mart in the nation where workers successfully organized a union. Two weeks after the vote, the company announced it was eliminating its meat-cutting departments in all of its stores nationwide. It also fired four workers who voted for the union.

…Russell Lloyd, an attorney representing Wal-Mart employees in Texas, says the company “has a pattern throughout all stores of treating their workers the same way.” Corporate headquarters collects reams of data on every store and every employee, he says, and uses sales figures to calculate how many hours of labor it wants to allot to each store. Store managers are then required to schedule fewer hours than the number allotted, and their performance is monitored in daily reports back to Bentonville. To meet the goals, supervisors pressure employees to work extra hours without pay.

,In fact, more than two-thirds of all Wal-Mart employees are women – yet women make up less than 10 percent of top store managers… Wal-Mart today has the same percentage of women in management that the average company had in 1975.

…Attorneys representing workers contend that Wal-Mart is too tightly controlled from headquarters in Arkansas to claim ignorance of what’s happening in its stores. “In Bentonville they control the air conditioning, the music, and the freezer temperature for each store,” says Brad Seligman, a lawyer with the Impact Fund, a nonprofit legal organization in Berkeley…

Isn’t it better that Wal-mart hire these dudes at least PT so that they aren’t entirely on the dole?
If they were paid a living wage, they wouldn’t be on the dole at all. And, by the way, 2/3 of WalMart’s “associates” are dudettes.

Dr Deth has demanded that I cite some things I never asserted. The good Dr can look those things up for himself. You can read me now and believe me later, there’s plenty of material out there. This long post has only scratched the surface.

[Epimetheus]

Ah, good thing you cited from walmartjanitors.com. Wouldn’t want you to site something that isn’t credible or anything.

[R.P.McMurphy]

AskNott -

If you think any of this is unique to Wal-Mart then you are deluding yourself. Have you followed the very recent immigration debate? The millions of illegal immigrants aren’t all working for Wal-Mart. A lot of them are actually working for small local businesses. Wal-Mart didn’t invent the concept of screwing employees. They are, by a long stretch, the easiest target.

Don’t order Chinese food to be delivered. Don’t hire a service to mow your lawn. Don’t go to the car wash. There’s probably a better than even chance that the person providing the service is an illegal. Who do you think is cleaning all of the offices in all of the buildings in the major ciies? Sorry, but they don’t all have their green cards. Some of them even speak fluent Polish.

Antecdotally, a friend of mine had a dispute in a Subway sandwich shop. He settled it real quick by threatening to send an immigration official in. He caused an instant change of attitude. It was funny but true.

Again, I’m no fan of Wal-Mart but it seems like a lot of people want to use them as a Pinata when there are a lot of worse things going on around them.

[AskNott]

@Epimetheus

Ah, good thing you cited from walmartjanitors.com. Wouldn’t want you to site something that isn’t credible or anything.

What, you want a quote from the Walton heirs in Bentonville? That would be credible, right?

[js_africanus]

@FrantzJ

I am reading Power Down by Richard Heinberg. He says something, with no citation, that I find confusing. Not to suggest that he is lying, or anything, Heinberg has obviously done his homework. But I’m just wondering:

Page 236-237:
“Corporate globalization has hit local economies hard. In town after town, local businesses have succumbed to ‘big box’ chains like Wal-Mart, which buy in huge quantities and often sell mostly imported items made by low-paid workers. Once a local economy has been destroyed by dependance on the ‘big box’, the chain frequently pulls out, forcing members of the community to drive tens of miles to the nearest larger town for basic consumer needs.”

Something like that with no citation? It certainly doesn’t sound like he’s done his homework. I once tried to find some data that a consultant claimed to have gathered for the township in which I work. I went back later and tried to update the data, and I could find no source whatsoever for many of his supposed facts. After a long and frustrating search, with no results, I went to the reference librarian at the local college. I told her that I have these alledged facts, but no references. She said, “Ah, so he just made them up.”

I am the zoning administrator and de-facto planner for a township in Michigan, and we’ve been dealing with big-boxes wanting to locate here. I’ve looked into the welfare impacts of such stores and the simple fact is that there is no comprehensive analysis of the good or harm that big-box stores do to communities. Period. That includes extensive email conversations with an economist who is actually studying the question and trying to build a model to measure the welfare effects. This report on big-box stores and home values is typical of the type of articles I’ve been seeking out in order to better inform myself. I’ve also found technical publications on employment, wages, consumer benefit, inter alia. They’re hard to find, but there are a few such articles out there.

I’ve also been on the front line of the pro- vs. anti-big-box struggle in one small community. I’m the zoning administrator of the ogdamn township in which such stores want to locate.

I’ve seen a depressing paucity of honorable motives in the efforts to pillory big-box stores. And after dealing with one of Wal-Mart’s competitors, I wish Wal-Mart had applied instead. That is not a joke.

I’ve also seen a depressing paucity of honorable motives in the efforts to promote big-box stores.

In the end, the evidence is mixed, but does point to some benefit, depending on whom you really care about. If you care about people who aren’t well off, then you shouldn’t assume big-boxes are the bad guys.

What is also true is that the big-boxes need to be heavily regulated and kept on a short leash, especially during the planning process. For example, a nearby big-box built a gigantic store and then demanded a tax break because the store was too big to sell to anybody, therefore it’s assessed value was too high. Please. They need to be forced to comply with conditions that will be good for the community; e.g., posting bonds to demo the building if it is no longer actively used. That’s something communities have to do; however, keeping them out is, in my experience, no better than going to war against the poor.

As for cites, read the lit review of the paper to which I linked and refer to its references. That’s a good start.

[AskNott]

@Spartydog

AskNott -

If you think any of this is unique to Wal-Mart then you are deluding yourself. Have you followed the very recent immigration debate? The millions of illegal immigrants aren’t all working for Wal-Mart. A lot of them are actually working for small local businesses. Wal-Mart didn’t invent the concept of screwing employees. They are, by a long stretch, the easiest target.

Ah, yes, the old “We’re not the only criminals in the world” defense. It’s a charming misdirection. No judge in the country buys it, and I don’t either. If you hold up a liquor store, I don’t give a rat’s how many other people did the same. If you committed a crime, you are a criminal.

No, WalMart didn’t invent screwing employees, but the kind that WalMart does is against the law. If somebody works 11 hours for you, you legally must pay them for 11 hours, not 8. If your employees want to discuss forming a union, you can’t fire them for it, or intimidate them. That’s been illegal since 1936, but it is WalMart policy.

[Spartydog ticks off 4 places he supposes I would find illegal aliens working…]

Again, if businesses are employing illegals, they should be prosecuted. Crime is crime. On the other hand, searching for illegals among the lawncutters and carwashers in my town would disappoint Spartydog. I know some of the people who clean offices and carpets around here. They were born right here. Some of them do speak fluent Polish, so they can talk to their grandparents, who came here legally. There’s a sizable Polish community here.

…Again, I’m no fan of Wal-Mart but it seems like a lot of people want to use them as a Pinata when there are a lot of worse things going on around them.

If there are worse things than locking your workers in until they are done and failing to pay them what they are owed, then those should be prosecuted, too. If workers have to swat the WalMart piñata to get justice, then swing away, sisters, swing away.

[AskNott]

jc africanus, your link, which seems to hold a big part of your explanation, clicks through to Lexis-nexis. Most of us aren’t paying clients there. Could you give us a bit of what you hoped we would learn there? Thank you.

[R.P.McMurphy]

@AskNott

Ah, yes, the old “We’re not the only criminals in the world” defense. It’s a charming misdirection. No judge in the country buys it, and I don’t either. If you hold up a liquor store, I don’t give a rat’s how many other people did the same. If you committed a crime, you are a criminal.

No, WalMart didn’t invent screwing employees, but the kind that WalMart does is against the law. If somebody works 11 hours for you, you legally must pay them for 11 hours, not 8. If your employees want to discuss forming a union, you can’t fire them for it, or intimidate them. That’s been illegal since 1936, but it is WalMart policy.

[Spartydog ticks off 4 places he supposes I would find illegal aliens working…]

Again, if businesses are employing illegals, they should be prosecuted. Crime is crime. On the other hand, searching for illegals among the lawncutters and carwashers in my town would disappoint Spartydog. I know some of the people who clean offices and carpets around here. They were born right here. Some of them do speak fluent Polish, so they can talk to their grandparents, who came here legally. There’s a sizable Polish community here.

If there are worse things than locking your workers in until they are done and failing to pay them what they are owed, then those should be prosecuted, too. If workers have to swat the WalMart piñata to get justice, then swing away, sisters, swing away.

Yea, Hardscrabble, IN is representative of the United States. It really represents what is goint on in New York, Los Angeles, Chicago, Houston, Miami, etc., etc., ad nauseum.

I feel like Rodney Dangerfield in “Back to School” where he explains to the class how the real business world works.

If you don’t want to shop at Wal-Mart don’t shop there. I don’t give a rat’s ass. Just get tuned into reality. If you don’t like low wages then start screaming about the minimum wage laws. If you don’t like illegals then support a policy that deals with the problem pragmatically. Bush and some other conservatives have found that a reasonable policy towards the immigration problem will only get them in trouble with their own party.

Probably the biggest criminal company in the world is UPS. Do you have any idea how many parking citations get written against them? They get caught perfoming more illegal acts than any other enterprise. I recommend that you never accept a package deliverd by UPS. FedEx isn’t far behind so put them on the list.

It’s good to know that you are checking green cards before you have any work done. Personally, I just want my Chinese food delivered as fast as possible.

Excuse me if I don’t stick around while you get off your high horse. I’ve got to pick up a few things at Target.

[AskNott]

Hardscrabble is a few miles northeast of here. I live in Anderson, a city of roughly 40,000 people.

Spartydog, you seem to assume I have ill will for all the big box stores. I don’t. In fact, (for full disclosure) I own stock in Home Depot. I suggest you prowl the search engines to see if Target, KMart, Lowe’s, and Home Depot combined have as many employee lawsuits and complaints to the National Labor Relations Board as WalMart has. They don’t. I don’t mind dealing with honorable, lawful companies. WalMart is not one of those.

[Epimetheus]

@AskNott

What, you want a quote from the Walton heirs in Bentonville? That would be credible, right?

More credible than some badly designed website that is no way affiliated with Wal-mart and is about as objective as PETA in their mission.

Now, I certainly am no Wal-mart apologist, nor do I condone many of their activities, but surely you can find something a bit… more tasteful.

[Maeglin]

@AskNott

jc africanus, your link, which seems to hold a big part of your explanation, clicks through to Lexis-nexis. Most of us aren’t paying clients there. Could you give us a bit of what you hoped we would learn there? Thank you.

I am not a paying client and I had no trouble accessing the paper cited above.

[ftg]

I continue to be astonished by the lack of basic knowledge exhibited in this thread. What people learn in first year B-school has nothing to do with how a company like WalMart operates. Losses and profits at a given store simply don’t matter.

My qualifications? Here’s my qualifications: I’m informed.

One of the big reasons WalMart got into so much trouble in my county resulted from their policy about their old stores when they upgraded from regular WalMarts to Super WalMarts*. Lots of vacant big boxes.

One of the owners of a vacant former WalMart found a new company that wanted to move into the vacant space. So he went to WalMart and told them they could be let out of their lease. WalMart said “no thanks, we’ll keep paying the lease.”

This ticks off everyone else. The owner is mad since he can’t rent out the adjacent stores since there is no anchor. The county is mad since the vacant stores create problems, bring down property values (less property tax) and they are missing the sales tax from the replacement store.

Just to make it clear and simple: This is a “store” that WalMart is knowingly and willingly losing money on for purely strategic reasons.

The individual profit and loss of a WalMart store doesn’t mean squat. It’s overall corporate strategy that matters.

(*That’s right folks, WalMart closed a bunch of profitable stores. Why? So it could make more money elsewhere. Sounds awfully darn close to the matter of the OP to me.)

[LonesomePolecat]

@Mr. Slant

It’s like “selling stuff at a loss to drive competitors out of business”. Any business that did that on a long-term basis would wind up out of business itself, and doing it temporarily just doesn’t work… as soon as there’s a vacuum in the system, something pops up.

It worked well enough for railroads and oil companies in the nineteenth century. Underpricing to drive competition out of business isn’t just a fantasy of populist yahoos.

[AskNott]

@Epimetheus

More credible than some badly designed website that is no way affiliated with Wal-mart and is about as objective as PETA in their mission.

Now, I certainly am no Wal-mart apologist, nor do I condone many of their activities, but surely you can find something a bit… more tasteful.

Would you care to refute anything you found in the cites I provided? By “refute” I don’t mean finding a quote from the WalMart PR smiler saying that the company is pure as the driven snow.

[Throatwarbler_Mangrove]

I continue to be astonished by the lack of basic knowledge exhibited in this thread. What people learn in first year B-school has nothing to do with how a company like WalMart operates. Losses and profits at a given store simply don’t matter.My qualifications? Here’s my qualifications: I’m informed.One of the big reasons WalMart got into so much trouble in my county resulted from their policy about their old stores when they upgraded from regular WalMarts to Super WalMarts*. Lots of vacant big boxes.One of the owners of a vacant former WalMart found a new company that wanted to move into the vacant space. So he went to WalMart and told them they could be let out of their lease. WalMart said "no thanks, we’ll keep paying the lease."This ticks off everyone else. The owner is mad since he can’t rent out the adjacent stores since there is no anchor. The county is mad since the vacant stores create problems, bring down property values (less property tax) and they are missing the sales tax from the replacement store.Just to make it clear and simple: This is a “store” that WalMart is knowingly and willingly losing money on for purely strategic reasons.The individual profit and loss of a WalMart store doesn’t mean squat. It’s overall corporate strategy that matters.(*That’s right folks, WalMart closed a bunch of profitable stores. Why? So it could make more money elsewhere. Sounds awfully darn close to the matter of the OP to me.)

OK Mr. Informed, please provide evidence for the following assertions:

• That Walmart was acting illegally when it leased the space at your mall but kept it empty. A smart property owner would surely have realized this (Your anchor going out of business) could have been an issue and written a contingency into the lease. If he didn’t, well, he’s just a plain fool.

• That Walmart has done this with the intention of bolstering sales at locations further away.

• That sales at other Walmart locations have increased as a result. Have you visited these locations yourself to verify this as fact? Do you have friends and relatives that are now forced to commute further for their weekly dose of Walmart Magic? Or are they now forced to pay inflated prices at inefficient Mom and Pop retailers?

• That the presence of an empty Walmart is having a negative effect on property values, irrespective of other factors that also affect other property values.

• That since Walmart left, no local competitors are able to take their place.