Thursday, May 29, 2008

Walmart Trying To Hold Down Food Prices(At What Cost?)

(Fortune Magazine) -- With gas, grain, and dairy prices exploding, you'd think the biggest seller of corn flakes and Cocoa Puffs would be getting hit by rising food costs. But Wal-Mart has temporarily rolled back prices on hundreds of food items by as much as 30% this year. How? By pressuring vendors to take costs out of the supply chain. (For more information, please click on link above.)
Wal-mart would be in twenty-seventh place on a list of world economies if it were a country. It is in a position to use its size and economic clout to set economic trends and business terms for suppliers. Much of the shift to American consumer goods being manufactured in China has been spearheaded by Wal-mart. Labour practices include keeping worker's hours down to a part time level to avoid paying employee benefits, hefty charges for medical insurance against meager salaries and making workers put time in off the clock. The company invests millions of dollars in policing workers to prevent any discussion that might lead to the formation of a union. Wal-mart's effect on small towns in which it has opened outlets has been catastrophic, destroying local economies that were years in formation. A documentary that must be seen is"Wal-mart:The High Cost of Low Prices." It is a comprehensive look at the effect that Wal-mart has on workers, communities and the economy at large. It is readily available through a Google search and can be downloaded.
Illegal immigration and outsourcing to developing countries have a strong dampening effect on the wages of the American worker and ultimately the stability of the American currency . Wal-mart cultivates a folksy home town image that belies its total lack of loyalty to the American worker. The world economy is a network of delicate balances. People in Mexico want to come to America to find opportunities lacking at home. Widening the circle of Mexicans enjoying consumer goods could create high paying jobs that would increase the Mexican tax base, lower the incentive for illegal immigration and raise the quality of life in Mexico without impacting negatively the wages of American labour. There are figures kept on market saturation for various products. There are for instance far fewer automobiles per thousand people in India and Mexico than there are in the United States and Canada. Targeted investment could raise the number of automobile drivers, computer owners and families with televisions. There is a car set to be marketed in India that sells for $2500.00 that is geared to the particular needs of that vast market. Its manufacture will create thousands of jobs that pay well and do not depress the value of American wages. Enforcement of immigration laws should be combined with sensible investment in developing countries that does not involve outsourcing American jobs.
It is good that Wal-mart is holding down prices. But one must ask what price is attached to such savings. There are large corporations that use their size to provide opportunities and benefits to their workers that are beyond the reach of smaller companies. Starting with large purchases, one should ask how employees are treated before giving a company business. If you know that a local business is kind to its staff, make that a winning proposition by taking your business there.
The percentage of American workers belonging to unions has gone down, but work conditions and remuneration have not improved. Some organised way of guarding worker's rights and living standards has to be considered. Unions could be part of the solution . Consumers who vote with their wallets could be another part of a coordinated strategy to protect the position of American labour. Additionally, small retailers should find ways to pool their economic resources so they can compete effectively with the retail giants.
America is facing major economic challenges in the next four years. An ersatz patriotism consisting of displaying an American flag made in China will not take us very far. We have to care about each other. This means voting with our wallets for the companies both big and small that care about their workers.

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