Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
22 November 12
half century ago America's largest private-sector employer was General
Motors, whose full-time workers earned an average hourly wage of around
$50, in today's dollars, including health and pension benefits.
Today, America's largest employer is Walmart, whose
average employee earns $8.81 an hour. A third of Walmart's employees
work less than 28 hours per week and don't qualify for benefits.
There are many reasons for the difference - including
globalization and technological changes that have shrunk employment in
American manufacturing while enlarging it in sectors involving personal
services, such as retail.
But one reason, closely related to this seismic shift,
is the decline of labor unions in the United States. In the 1950s, over
a third of private-sector workers belonged to a union. Today fewer than
7 percent do. As a result, the typical American worker no longer has
the bargaining clout to get a sizeable share of corporate profits.
At the peak of its power and influence in the 1950s,
the United Auto Workers could claim a significant portion of GM's
earnings for its members.
Walmart's employees, by contrast, have no union to
represent them. So they've had no means of getting much of the
corporation's earnings.
Walmart earned $16 billion last year (it just reported
a 9 percent increase in earnings in the third quarter of 2012, to $3.6
billion), much of which went to Walmart's shareholders - including the
family of its founder, Sam Walton. The wealth of the Walton family now
exceeds the wealth of the bottom 40 percent of American families
combined, according to an analysis by the Economic Policy Institute.
Is this about to change? Despite decades of failed
unionization attempts, Walmart workers are planning to strike or conduct
some other form of protest outside at least 1,000 locations across the
United States this Friday - so-called "Black Friday," the biggest
shopping day in America when the Christmas holiday buying season begins.
At the very least, the action gives Walmart employees a
chance to air their grievances in public - not only lousy wages (as low
at $8 an hour) but also unsafe and unsanitary working conditions,
excessive hours, and sexual harassment. The result is bad publicity for
the company exactly when it wants the public to think of it as Santa
Claus. And the threatened strike, the first in 50 years, is gaining
steam.
The company is fighting back. It has filed a complaint
with the National Labor Relations Board to preemptively ban the Black
Friday strikes. The complaint alleges that the pickets are illegal
"representational" picketing designed to win recognition for the United
Food & Commercial Workers (UFCW) union. Walmart's workers say
they're protesting unfair labor practices rather than acting on behalf
of the UFCW. If a court sides with Walmart, it could possibly issue an
injunction blocking Black Friday's pickets.
What happens at Walmart will have consequences
extending far beyond the company. Other big box retailers are watching
carefully. Walmart is their major competitor. Its pay scale and working
conditions set the standard.
More broadly, the widening inequality reflected in the
gap between the pay of Walmart workers and the returns to Walmart
investors, including the Walton fammily, haunts the American economy.
Consumer spending is 70 percent of economic activity,
but consumers are also workers. And as income and wealth continue to
concentrate at the top, and the median wage continues to drop - it's now
8 percent lower than it was in 2000 - a growing portion of the American
workforce lacks the purchasing power to get the economy back to speed.
Without a vibrant and growing middle class, Walmart itself won't have
the customers it needs.
Most new jobs in America are in personal services like
retail, with low pay and bad hours. According to the Bureau of Labor
and Statistics, the average full-time retail worker earns between
$18,000 and $21,000 per year.
But if retail workers got a raise, would consumers have to pay higher prices to make up for it? A new study by the think tank Demos
reports that raising the salary of all full-time workers at large
retailers to $25,000 per year would lift more than 700,000 people out of
poverty, at a cost of only a 1 percent price increase for customers.
And, in the end, retailers would benefit. According to
the study, the cost of the wage increases to major retailers would be
$20.8 billion - about one percent of the sector's $2.17 trillion in
total annual sales. But the study also estimates the increased
purchasing power of lower-wage workers as a result of the pay raises
would generate $4 billion to $5 billion in additional retail sales.
This seems like a good deal all around.
Robert B. Reich, Chancellor's Professor of Public
Policy at the University of California at Berkeley, was Secretary of
Labor in the Clinton administration. Time Magazine named him one of the
ten most effective cabinet secretaries of the last century. He has
written thirteen books, including the best sellers "Aftershock" and "The
Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
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