Wal-Mart: The 21st Century Company Store

By Peter Van Schaik

 

 

 

 

       Remember the old Tennessee Ernie Ford song, Sixteen Tons? Okay, maybe you youngsters don't. It went something like this:

 

You load sixteen tons and what do you get

Another day older and deeper in debt

Saint Peter don't you call me cause I can't go

I owe my soul to the company store

 


       The company stores were popular years ago in the coal mining towns in the Appalachian Mountains. The companies owning the mines also owned the stores where the miners and their families shopped for life's essentials and what few simple luxuries a miner's wages would allow. The catch was the prices of the goods at the company stores were high enough to absorb all the wages of the miners on the barest essentials. Most miners went into debt at the company store in order to support their families. The companies had the miners hooked. Few jobs outside of the mines were available so the miners had to get their debt paid before they could quit the mine, pack up the family, and move on. Problem was, there was little chance of the miner paying off the debt at the company store.

 

      Time passed, things changed, mines closed down, and the company store became simply a bad memory of the good old days. But then along came Sam Walton down in Bentonville, Arkansas. Walton came up with the perfect idea for the company store of the future: build a chain of stores that offer prices that undercut the competition and make your bundle of money on volume. Keep your prices low by paying your employees as close to minimum wage as possible and only allow them to work as many hours as you can without being forced by government regulations to offer them benefits. Benefits like medical insurance, paid vacation, paid holidays, and sick leave once taken for granted in an economy dominated by unionized manufacturing companies.

 

      Once your chain of stores grows big enough you can dictate the terms to your suppliers. Since you're the largest buyer in the world you can tell the supplier how much you’re willing to pay. It's up to them to figure out how to achieve the low prices but it usually involves cutting their employees' wages and benefits and sending more and more of their jobs overseas to take advantage of the slave wages paid in the less developed nations: especially those nations which have governments strong enough to forbid the formation of those pesky labor unions.  

 


       Since you only pay low wages and encourage short workweeks, your employees become perfect customers: they can't afford to shop anywhere else unless they're working a couple other jobs. Since you’ve forced down the wages of your suppliers' employees, they, too, become loyal customers because they can no longer afford to shop anywhere else either. The whole process just snowballs until few workers can afford to shop anywhere but your stores. Now you really make a bundle on volume. It’s no accident that five of the top ten wealthiest Americans on the Forbes 400 are heirs of the Sam Walton empire with a combined wealth of $102.5 billion. If old Sam were still alive today, he'd be worth more than twice as much as Microsoft's boy wonder, Bill Gates.

 

       Okay, I'll admit that all this may not have been Sam Walton's original intention. He may have really been motivated by an altruistic streak. He may have really wanted to provide consumers the benefit of some low priced goods. He may have really wanted to treat his employees to the fruits of all their labor with good wages and great benefits. He may have really intended to see his suppliers' employees prosper as well. But, at this point, his original intentions don't really matter. The reality of his Wal-Mart Monster is what matters. This reality is workers, both Wal-Mart's and its suppliers', with a weekly paycheck so small they have to support the company store in order to survive. This reality is millions of formerly high paying manufacturing jobs being exported to countries where workers, including children, can be forced to work for obscenely low wages in deplorable working conditions. This reality is a few making billions at the expense of many. This reality is most of us can't afford not to shop at Wal-Mart and most of us who can wouldn’t be caught dead inside a Wal-Mart no matter how low the prices. This reality is we once again owe our souls to the company store. But in the good old days, the company store only controlled the economy of a town or at most a few towns in the region. Now the 21st century company store is bent on controlling the world

 


       The really galling part is Wal-Mart acts like it is doing us such a big favor by offering goods at such low prices. But those low prices come at an extremely high price.

 

       The truth is low prices are relative. If you make low wages because of the low prices, you are no better off than you were when you earned higher wages and paid higher prices. In fact, you’re most likely worse off now because at least you had more options on where you spent your money before Wal-Mart blessed us with lower prices. There were far more stores to choose from before the Wal-Mart behemoth reared its ugly head and wiped out the competitive market of regional chains and mom and pop owned and operated stores. If you lost your job when it skedaddled overseas because of the low prices, well, too bad buddy, you really lose.

 

       It's time we all join in for a chorus of the 21st century version of Sixteen Tons:

 

We work twenty-eight hours and what do we get?

At seven bucks an hour can't pay our rent

St. Peter don't you call us cause we can't go

We owe our souls to the Wal-Mart store... 

 

 

 

 

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Keeping It In Perspective...

 

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Copyright 2004 – John Paul Jones