Profit, Values, and the Glorification of Walmart

You may have seen the viral post floating around social media sites that glorifies Walmart, praising its business success. In part, the post points out:
Americans spend $36,000,000 at Wal-Mart every hour of every day. This works out to $20,928 profit every minute!...Wal-Mart now sells more food than any other store in the world, has approx 3,900 stores in the USA, of which 1,906 are Super Centers...90% of all Americans live within fifteen miles of a Wal-Mart.
The post contrasts Walmart with other "broke" government-run agencies and programs, and says that if Walmart executives were running the country, we'd be much better off.

The first thing I'm curious about is how these folks imagine a Walmart-like government would achieve the massive increase in revenue that would be necessary. But here's the thing: Walmart-type people ARE running the country. They're called corporate lobbyists. Profit is their only motive and their only value, and they put gobs of cash in your representatives pockets every year so that they will vote for their interests. Campaign contributions hang in the balance for any politician who would dare not give them what they want (it's essentially a system of bribery). And here we sit in America with one of the largest income disparities in modern times. Yes, Walmart is one of the largest and fastest growing companies in the world, employing more Americans than any other corporation. But missing from this post and many others like it are the Ethics 101 questions concerning the human cost of these ends.

Here are some other Walmart stats for you:
  • A majority of Walmart's employees live below the federal poverty line--including the full-time employees--while having one of the largest CEO to store employee pay disparities in the country. 
  • The employee turnover rate is 70%, and a UC Berkley study found that employees who have been there 2 years or more make up to 32% less than their counterparts in other retail jobs.
  • Despite a campaign back in the 80s to encourage American manufacturing and purchasing, Walmart now obtains more than 60% of its goods from overseas.
  • According to a study by economist Emek Basker, when a Walmart opens in a typical United States county, three other retailers close within two years and four close within five years. Another study at Penn State found that communities with a Walmart have a higher poverty rate, all other factors being equal.
  • Duke professor Gary Gereffi found that Walmart puts constant pressure on its suppliers to lower cost however possible, leading many to turn to international sweatshops where there are little or no employee protections, and wages are as low as $0.20/hour.
  • Walmart offers some of the poorest healthcare benefits in the industry (to the 48% of its workforce that receives healthcare at all), and recently instituted a program that forces employees needing certain types of surgery to choose between one of six hospitals in the entire country.
  • Claims of withheld overtime pay are rampant with some becoming lawsuits (that Walmart employees don't have the money to fight in court).
Walmart's great for America? I think it's fair to say that such a claim is on shaky ground when scholarly studies published in peer reviewed journals have proven the opposite. 

Let me play along for a second and assume that the American government should adopt the practices of a successful for profit business (which it shouldn't). If we're going to emulate a business, let's emulate Costco (a direct competitor to Walmart's "Sam's Club"). Adding together base pay, bonuses, and stock options, Costco CEO Craig Jelinek took home 77% less than Walmart CEO Mike Duke, and yet he paid his employees approximately twice as much (looking at the average pay for corresponding positions). Only 4% of Costco's workforce is part-time, compared to 25% at Walmart. During the recession of 2008-2009, then CEO Jim Sinegal increased the pay of his hourly workers. He is quoted as saying, "This economy is bad. We should be figuring out how to give them more, not less." Since going public in 1985, Costco has endured relentless pressure from Wall Street to cut pay and benefits, but has never done so. Costco employees' self-reported job satisfaction is one of the highest in the industry, and 88% of them have company sponsored health insurance (in contrast to Walmart's 48%). The company is known for treating it's employees well, and CEO Jelinek says this is intentional: "We know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty." Retail industry expert Doug Stephens makes an observation that rings true: "A lot of people working at Walmart go home and live below the poverty line. You expect that person to come in and develop a rapport with customers who may be spending more than that person is making in a week? You expect them to be civil and happy about that?”

Both Walmart and Costco make their business philosophies clear, and they have both been effective at achieving their stated goal. However, Walmart's priority is on the ends, and Costco's on the means. From its beginning, Walmart set out to make products available at the cheapest price possible. It has done that. In contrast, Costco has focused on investing in its "human capital." It's a strategy that business gurus have written about for a long time, but the ravenous profit hounds don't have the time for it. In his best-seller 7 Habits of Highly Effective People, Stephen Covey likens the need to invest in people to the lesson of Aesop's fable, "The Goose That Laid the Golden Egg," in which a farmer, in greedy haste, kills the goose to get to his eggs faster, only to realize that he destroyed the one thing that could produce the eggs. Covey refers to it as the P/PC balance; balancing production with production capability, a balance that is particularly crucial with your human assets. Covey writes, "There are organizations that talk a lot about the customer and then completely neglect the people that deal with the customer: the employees...Always treat your employees exactly as you want them to treat your best customers."

All of this must be especially critiqued by Christians, those who claim to follow Christ and believe in the God who cannot be served alongside money (Matt 6:24). There's something amiss when Costco and Stephen Covey have more to say about the value of people over profits than Christians do. In the past few years, there has been a troubling wave of elected officials who successfully got people railing against "government spending" with no discussion of what the spending is for. We were pulled into an abstract debate about budgets and deficits that was morally void and paid no attention to the needs of citizens and what constitutes a good investment in the common good (which the Constitution explicitly identifies as one of the purposes of government). The result has been a government that crunches numbers while crushing people, adopting the business model of Walmart. In the midst of jumping on the bandwagon, many Christians have neglected the Bible's high value on economic justice and its concern for how the powerful treat the vulnerable. Proverbs 31:8-9 is one of the most clear and powerful: "Speak up for those who cannot speak for themselves, for the rights of all who are destitute. Speak up and judge fairly; defend the rights of the poor and needy." Jeremiah 22:13-14 carries a harsh warning to those who build their wealth on the backs of the poor, as Walmart does worse than anyone: "Woe to him who builds his palace by unrighteousness, his upper rooms by injustice, making his own people work for nothing, not paying them for their labor. He says, 'I will build myself a great palace with spacious upper rooms.'" In fact, you would be hard pressed to find a verse the Bible that talks about the wealthy or the powerful without an accompanying warning concerning how that wealth and power is used.

In a strictly for-profit mindset, employees are annoying hindrances on the way to a fat earnings sheet. Hiring employees, especially full-time ones, is a course of last resort for businesses and is done only when consumer demand requires it. This exposes the inimical effect of giving tax breaks to "job creators" who hire part-time and low paying whenever they can. This is the pervasive reality of the business world, but Christians are called to live out and support a totally different ethic. You cannot be a Christian and value profit above the well-being of people. It's that simple. Even Costco, who treats its employees like gold compared to other retail stores, does it because it's "more profitable in the long term." As Christians, we begin with the belief that every person is created in the image of God (Gen 1:27), deserving of equal worth, and the command to love our neighbor as ourselves (Matt 22:39). I have not figured out a way to have genuine care and concern for others while complacently watching them live in poverty despite having a full-time job.



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