Walmart Is The Corporate Embodiment Of America’s Growing Inequality

I have a secret to reveal. I used to regularly shop at Walmart. I live in the outer stretches of Philadelphia’s western suburbs, and Walmart happened to be the closest place to go food shopping. I was never enthusiastic about shopping at Walmart, and as my social and political views evolved, I grew even more uneasy with contributing my money to a company in opposition to my values. So nearly three years ago I stopped food shopping at Walmart, and in fact, I don’t think I’ve stepped foot inside a Walmart since then.

If you shop at Walmart, I’m not judging you, I simply needed to go on the record as a reformed shopper. I needed to get that out-of-the-way before stating that I believe Walmart is the corporate embodiment of America’s growing inequality. The wealth of the Walton family (I believe just six members actually) is equal to the bottom 40% of all Americans. That’s 6 people vs. maybe 100 million or more. Does that seem right? Is this the America you envisioned when you were growing up? I know there are a lot of people who will say we shouldn’t single out the rich, but I’m sorry, there is something wrong in a country where one family is able to own nearly half the country’s wealth. I’m not begrudging the Walton family’s success, I’m simply saying we need to enact social and political change that will address this growing inequality.

Paramount, California Walmart rally 10.28.11 - photo by OURWalmart

And if you still think this is fair and there is nothing wrong with capitalism in America, then consider this statistic from Robert Reich:

A 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. – Why You Shouldn’t Shop at Walmart on Friday, Robert Reich

Of course many liberals have already guessed correctly that declining union representation in the private workforce has a lot to do with growing inequality. It was a national source of pride to say the largest employer was unionized and paid its workers a living wage with benefits, but that was 50 years ago. It should now be seen as a national source of shame to say the largest employer is not unionized and does not pay its workers a living wage, and in many cases, does not offer benefits.

Reich also points to the growing reliance on consumer spending to fuel the U.S. 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.

So in the short-term, the Walton family and Walmart shareholders can get fat and rich, but in the long-term they are killing their own business model. It’s the same kind of short-term gain, long-term pain that we see in other industries, most notably the oil industry. But usually the people getting fat and rich are old, so long-term vision might not be their primary concern. This lack of long-term vision is what venture capitalist Nick Hanauer calls the “death spiral of falling demand.”

He [Hanauer] says he makes 1000 times more than the average worker but that doesn’t translate to 1000 times the consumerism of the average worker. He can’t makeup the difference. So with more wealth accumulating within a small pool of wealthy people, that means less wealth spread across the rest of the country. It means less purchasing power and less demand for products and services from tens and hundreds of millions of Americans. This is why supply side (trickle down) economics doesn’t work. We’ve tried it for 30 years. How many more years do we need to continue failed economic policy before we wake up and realize it will never work? – Video: ‘Death Spiral Of Falling Demand’ – Venture Capitalist Nick Hanauer On Viewpoint with Eliot Spitzer

I’m not sure who it was that said this, but another byproduct of the shrinking purchasing power of the middle class over the past three decades is the availability of easy credit. When middle class incomes didn’t keep up with inflation, cheap credit was used to fill the gap. This is part of what fueled the 2008 financial meltdown, but unfortunately the average American is still overextended over four years later. The economy is slow to recover from the great recession, not because we are overtaxed, not because there are too many regulations, but instead the economy is slow to recover because we still have too much consumer debt combined with economic policy (including tax policy) that favors the wealthy.

I might be picking on Walmart, but they represent what is wrong with American capitalism. It’s a race to the bottom. Consumers have less purchasing power, so they demand cheaper products. But these cheaper products (along with greedy executives) result in lower wages, which then leads to consumer demand for even cheaper products. Death spiral indeed. / photo by OURWalmart

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