The Cost of Cheap Goods

By Fr. John Rausch
Herald Columnist
(From the issue of 11/20/03)

Founded in 1778, Abingdon, Va., the state’s oldest town west of the Blue Ridge, numbers among the approximately 100 communities in the United States currently resisting a Wal-Mart superstore. For over a year the town council and concerned citizens collaborated to address the zoning and architectural issues that would make that possible. Abingdon residents wanted to preserve their historical legacy, control town sprawl and maintain a vibrant economy rooted in local businesses. Most important, residents feared the change in character of their community that a big box store would bring.

The behemoth Wal-Mart dwarfs all other retailers. With $245 billion in sales in 2002 and a global workforce of 1.4 million workers, Wal-Mart boasts being the world’s largest company. Every week 138 million people shop its 4,750 stores. Last year, 82 percent of American households bought at least one item from the company.

Shoppers flock to Wal-Mart because the retailer, according to a recent study, offers prices on average 14 percent below its competitors. Its lower prices reflect its preoccupation with shaving every penny of overhead and operating expenses. But, critics charge those cheap prices come at the expense of human and social costs.

First, critics cite Wal-Mart’s employment practices. In 2001, according to court documents, company sales clerks averaged $8.23 an hour but earned only $13,861 a year, because Wal-Mart defines full time as 28 hours a week. The federal poverty line for a family of three at the time was $14,630.

Women comprise 72 percent of Wal-Mart’s sales force, but only 33 percent of its management. Conversely, competitors boast female management rates of more than 50 percent. The company now faces nearly 40 lawsuits charging sex-discrimination and forcing employees to work overtime without pay.

Wal-Mart stands virulently opposed to unions. It maintains an anti-union response team of nearly 70 people ready to visit stores where organizing activity begins. The meat-cutters in Jacksonville, Texas, voted for the union in February 2000 and within 11 days Wal-Mart closed its meat-cutting departments introducing prepackaged meats from outside its stores. Not one Wal-Mart store is unionized.

To maintain cheap prices Wal-Mart shops the global marketplace to stock its shelves. In 2002 it purchased $12 billion worth of Chinese goods, an amount representing 10 percent of all U.S. imports from China. Charles Kernaghan, director of the National Labor Committee, an independent non-profit group monitoring global sweatshops, says, "In country after country, factories that produce for Wal-Mart are the worst."

Workers at a factory in China’s Guangdong Province making toys for Wal-Mart work 13- to 16-hour days, seven days a week, earning 13 cents an hour. Wal-Mart officials issued a "code of conduct" insisting on decent treatment of workers that global suppliers must follow, but critics charge the process lacks sufficient monitoring and enforcement.

Despite these considerations Wal-Mart enthusiasts praise the company for introducing large numbers of low income people to middle-class consumption. Yet, cheap goods cost somebody —whether the single parent sales clerk, or the truck driver denied a union, or the Chinese worker laboring in a sweatshop. In the global economy today low prices are the product of human misery, and the challenge according to John Paul II is to humanize globalization.

As citizens discussed the advent of the Wal-Mart superstore in Abingdon, their reasons covered the spectrum of issues from employment practices and the global economy to threaten local businesses and even traffic safety concerns at the proposed location. In the end the town’s open debate clarified the issues, affirmed local businesses and slowed the forces of globalization in their backyard.

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