Welcome to the 81st installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
This week, Wal-Mart Stores Inc. (NYSE: WMT) closed the first shop in North America that had been completely unionized. Does this signal anything to other Wal-Mart locations that form a collective bargaining organization? Sure: form one and the retailer would rather see the operation shut down entirely instead of having employees with any kind of power.
That may sound harsh, but it has to be the feeling around a Wal-Mart tire and lube shop in Gatineau, Quebec, which was literally closed due to its unionization last week. What better a way to leave consumers in the lurch than to close up shop on something that brings in revenue even if its employees decide to stray from Wal-Mart's "non-union" stance in its retail locations.
Was the closing really the best answer?
With the Gatineau location in Canada the first official Wal-Mart location with an actual union contract in place, Wal-Mart's response could be seen as severe. Was the global retailer trying to get a message out to any other Wal-Mart location in North America -- "unionize and we will shut your doors?" If so, that's no way to run a business, right? Is Wal-Mart so afraid of unions in its stores that it would rather shut them down (or pieces of them) instead of continuing to operate?
Lisette Wallingford, a frustrated customer of the Gatineau shop, expressed her disappointment: "They told me to come back today because my tires were coming in ... I think I'll go to Canadian Tire because I can count on them." There's all we need to know: a frustrated customer. Wal-Mart was at least kind enough to direct customers late last week to other Gatineau-area Wal-Mart locations, with no mentioning that the closed location was due to unionization. Nice.
Wal-Mart and the living wage
So, it comes back to this: many Wal-Mart employees are apparently so underpaid that their only recourse is to try and unionize their stores in order to negotiate a better wage. That has to be a logical conclusion to why the Gatineau tire and lube shop employees wanted a union. Although these employees could seek work elsewhere, they decided to stay put with their current employer and just try for better working conditions (pay, benefits, etc.).
I can already see the "personal responsibility" crowd coming out and defending Wal-Mart's move, while the "living wage" folks coming out in defense of the employees in question here. And there valid points to both sides. Then there's the argument of human versus corporate interests. Either can be abused, and both regularly are in many companies. Maybe you've heard of the mortgage meltdown where greedy banks and greedy customers combined to undermine the entire American economy (and the global economy in many ways). I think it's been in the news recently.
Wal-Mart's perspective on the closings
The global retailer stated that costs associated with the new labor agreement was the ultimate cause for closing the Canadian location shortly after it was unionized. The shop's minimum pay scale, which was $8.50 per hour before the agreement, was raised to $11.54 per hour. In addition, the new maximum wage was set at $15.25. Apparently, Wal-Mart couldn't afford those changes.
Some customers disagreed. Customer Hélène Toutloff said, "They should go back to their own country if they don't want to obey Quebec law," while customer Raymond Potvin stated, "they gave me a good price last week, but now they are gone. How's a young guy going to pay for his apartment and his car on $8 an hour? Wal-Mart is going to put these people on welfare."
Personal responsibility versus corporate responsibility
And therein lies the argument: Is Wal-Mart putting these people on welfare, or are they going to do it themselves? It's the classic capitalist vs. socialism argument that seems to be everywhere these days. Wal-Mart said the contract resulted in a 30% in increased costs, which had to be followed by "dramatic" price increases on products. Wal-Mart Canada spokesman Andrew Pelletier said, "the union contract that was imposed is simply unworkable."
Well, Wal-Mart may be in trouble if both scenarios are true: Wal-Mart finds it too expensive to agree to increased wages for lower-paid employees at a single store, while living costs are so much higher now than in the past that workers just can't afford to live on Wal-Mart's existing non-union pay scale.
This situation is certainly going to raise its head again as it's hard to imagine that none of its 3,000+ U.S. locations won't try to unionize at some point in the next decade. Wal-Mart may save customers money, but at the expense of incessant penny-pinching. And since in Wal-Mart's case labor is its biggest expense, this means keeping employee costs low.
Is Wal-Mart's perspective on labor costs "simply unworkable" too? With costs going up for fuel, food and everything in between, Wal-Mart employees will feel the pinch first. That pinch will turn into a tourniquet. At that point, those who can't leave Wal-Mart employment may try to work in some kind of union activity into more of the retailer's North American locations. Wal-Mart can't just shut those locations down when this starts happening. Or, can it?
Join me right here this time next week for another edition of The Wal-Mart Weekly. Until then, have a great week.
With the Gatineau location in Canada the first official Wal-Mart location with an actual union contract in place, Wal-Mart's response could be seen as severe. Was the global retailer trying to get a message out to any other Wal-Mart location in North America -- "unionize and we will shut your doors?" If so, that's no way to run a business, right? Is Wal-Mart so afraid of unions in its stores that it would rather shut them down (or pieces of them) instead of continuing to operate?
Lisette Wallingford, a frustrated customer of the Gatineau shop, expressed her disappointment: "They told me to come back today because my tires were coming in ... I think I'll go to Canadian Tire because I can count on them." There's all we need to know: a frustrated customer. Wal-Mart was at least kind enough to direct customers late last week to other Gatineau-area Wal-Mart locations, with no mentioning that the closed location was due to unionization. Nice.
Wal-Mart and the living wage
So, it comes back to this: many Wal-Mart employees are apparently so underpaid that their only recourse is to try and unionize their stores in order to negotiate a better wage. That has to be a logical conclusion to why the Gatineau tire and lube shop employees wanted a union. Although these employees could seek work elsewhere, they decided to stay put with their current employer and just try for better working conditions (pay, benefits, etc.).
I can already see the "personal responsibility" crowd coming out and defending Wal-Mart's move, while the "living wage" folks coming out in defense of the employees in question here. And there valid points to both sides. Then there's the argument of human versus corporate interests. Either can be abused, and both regularly are in many companies. Maybe you've heard of the mortgage meltdown where greedy banks and greedy customers combined to undermine the entire American economy (and the global economy in many ways). I think it's been in the news recently.
Wal-Mart's perspective on the closings
The global retailer stated that costs associated with the new labor agreement was the ultimate cause for closing the Canadian location shortly after it was unionized. The shop's minimum pay scale, which was $8.50 per hour before the agreement, was raised to $11.54 per hour. In addition, the new maximum wage was set at $15.25. Apparently, Wal-Mart couldn't afford those changes.
Some customers disagreed. Customer Hélène Toutloff said, "They should go back to their own country if they don't want to obey Quebec law," while customer Raymond Potvin stated, "they gave me a good price last week, but now they are gone. How's a young guy going to pay for his apartment and his car on $8 an hour? Wal-Mart is going to put these people on welfare."
Personal responsibility versus corporate responsibility
And therein lies the argument: Is Wal-Mart putting these people on welfare, or are they going to do it themselves? It's the classic capitalist vs. socialism argument that seems to be everywhere these days. Wal-Mart said the contract resulted in a 30% in increased costs, which had to be followed by "dramatic" price increases on products. Wal-Mart Canada spokesman Andrew Pelletier said, "the union contract that was imposed is simply unworkable."
Well, Wal-Mart may be in trouble if both scenarios are true: Wal-Mart finds it too expensive to agree to increased wages for lower-paid employees at a single store, while living costs are so much higher now than in the past that workers just can't afford to live on Wal-Mart's existing non-union pay scale.
This situation is certainly going to raise its head again as it's hard to imagine that none of its 3,000+ U.S. locations won't try to unionize at some point in the next decade. Wal-Mart may save customers money, but at the expense of incessant penny-pinching. And since in Wal-Mart's case labor is its biggest expense, this means keeping employee costs low.
Is Wal-Mart's perspective on labor costs "simply unworkable" too? With costs going up for fuel, food and everything in between, Wal-Mart employees will feel the pinch first. That pinch will turn into a tourniquet. At that point, those who can't leave Wal-Mart employment may try to work in some kind of union activity into more of the retailer's North American locations. Wal-Mart can't just shut those locations down when this starts happening. Or, can it?
Join me right here this time next week for another edition of The Wal-Mart Weekly. Until then, have a great week.
Reader Comments (Page 1 of 2)
10-20-2008 @ 7:56PM
Smough said...
Wal-Mart has the lowest prices in our area. No way can they keep the prices low if they have to pay 15.25 per hour. If you don't like the wages just go somewhere else. Why do you think everything we buy is made in China? Wake up, you can't screw the owner for very long. All of the textiles plants have closed as soon as they go union.
10-20-2008 @ 8:40PM
bob said...
that is the most biased article i have had the mispleasure to read
10-20-2008 @ 9:06PM
Brian said...
Wow Bob - incredible insight. Thanks for your contribution!
10-20-2008 @ 9:16PM
mike said...
Support prostitution and your local drug dealer vote yes for union, and if you really want to see this country go further down the tube, Vote for Buckwheat and Alfalfa.
10-20-2008 @ 9:22PM
jerome said...
It is real simple. If you feel WM is not fair to its employees and that is important to you then do not shop there. If you like cheap things and that is your priority then continue shopping. But do not bitch about WM and then shop there. You cannot have it both ways.
10-20-2008 @ 10:33PM
Roy said...
The reaction by Wal-Mart was predictable. A 35% min. labour increase is not a reasonable settlement. What was the Union/Arbitrator thinking of? More dues? Unfortunately the victims are the workers who were mis-lead.
Wal-Mart does treat its employees with respect, saleries are in-line with competition and benefits are reasonable to good.
Store management at mid-level is another thing!
Oh by the way, my spouse works as a Wal-Mart Cashier and we are Stock holders.
Halton Hills - Ontario.
10-20-2008 @ 9:42PM
jeff said...
Everytime Walmart opens another store, they are inundated with applications. Seems that should make a point about working conditions than your whining about unions. Unions were needed when workers had no mobility, now they can leave w like and ahenever they wish and 10 will sign up to take their place.
Walmart rocks and I am 'rich' according to The One
10-20-2008 @ 10:12PM
Salsa Shark said...
Wow, glad to see so much support for capitalism in this great country.
Keeping beating up the successes and see what you're left with. The lowest common denominator and a reason why the US is falling behind the rest of the world...
10-20-2008 @ 11:59PM
Jeff said...
WM...it is generally not the wage that hurts the company, it is all the matching payroll taxes, worker comp. rates...all of which go up.
10-21-2008 @ 12:29AM
ludwig said...
it's as simple as supply and demand. if the wages are so low, people will not be working there and wages (along with prices) will have to go up. unions are terrible ways to create better working conditions.
10-21-2008 @ 12:22AM
joshua said...
I worked for walmart for 4years they can pay more you know they had department managers making 56000 a year in arkansas. You know walmart is one of the top importers of goods in the world they import more then russia does. They in 2006 got rid of 2 jobs per store when they got rid of tire and lube and photo lab assistants which in turn gave more stress to the other assistants in the store. You know any time walmart goes to an area they get government subsidies which they dont need
10-21-2008 @ 4:05AM
Russell said...
Almost nothing Wal-mart sells in US made. I'll bet if they did show made in usa it would fit in a Small Radio Shack. My guess you would not need that much room. When will all understand, made in USA will save this mess we are in. When people do not work or work just for the min. No one really wins except for companies like Wal-Mart stock holders. Hey Wal-Mart your in the USA, Show us Made in USA in your stores. If there were less wal-marts many small companies would still be alive and well.
10-21-2008 @ 6:08AM
Larry said...
The only reason people want a cheap price is because they want something they can not afford. Since WalMart carries the lower line of products I do not shop Wal-Mart. As far as the food goes I will not stand in line with a bunch of kids screaming and running around for a cheaper price.
10-21-2008 @ 7:14AM
jerry said...
If you look at WalMarts Profits you can see they can afford the pay increases.
They just do not want to pay for quality employees. They will settle for any type of employee. To fill the gap. When WalMart moves into an area the area falls apart. They are also the biggest drug dealers with their $4 dollar percriptions for Oxy and other pain killers. They sell $$$$Billions. Sold as generics of course made in China.
10-21-2008 @ 7:43AM
lc5401 said...
The textile industy has been dead a long time thanks to the unions and tax breaks for going over seas. I was a ILGWU member for 20 years. The Union is the enemy of their members
10-21-2008 @ 8:43AM
Jerry said...
The best thing to do is boycot any other location they open. Picketing on the street would also send a signal to Walmart. Since it is against the law to close up to eliminate a union in the USA openning up a new store down the road would call for a class action law suit that, in the end, would cost Walmart more money! ! ! ! ! ! !
10-21-2008 @ 8:42AM
Jerry said...
We shop at HEB here in Texas and we have found that our grocery bill is a little less than Walmart. My wife likes Target for most other things and Target has hem cheaper also. So, I don't understand why people shop at Walmart if they have these other cheaper stores available !
10-21-2008 @ 9:13AM
bob said...
i think its a disgrace if they think 15.25 an hour is to much pay . the hell with wamart, just like the one guy said, they get federal money they never have to pay back, ands thats should not fly. those kids destroyed sam waltons good name, he only sold made in america products. as soon as he died the sister and two brothers ran his policys in the dirt, and that goes for the wages also.
10-21-2008 @ 10:08AM
ceb said...
US automakers caved to unions and the result is they are no longer competitive. Detroit is turning into a ghost town. The answer was to move south where the unions couldn't play their dirty tricks. WalMart isn't about to make the same mistake the automakers did. They had no choice. Now Obama wants to end secret ballots so union thugs will be able to coerce employees to sign up for membership.
10-22-2008 @ 1:56AM
JackSprat said...
Where is the outrage over the guy or gal who works as a gas station attendant, move theater usher, fast food cook, specialty big-box retail clerk (e.g. Best Buy, Staples, Bed Bath & Beyond, etc.), car washer, rent-a-cop, and so on... who I'm sure make nowhere near $15.25 an hour.
The bias is ridiculous. People expect Wal-Mart to be the U.S. Government or some 1950's U.S. Corporation. Last time I checked, EVERY retailer and service sector was outsourcing, importing, and keeping wages & benefits as low as possible.
One day someone will make a fair comparison and realize that the benefits offered by Wal-Mart -- plus the opportunities to advance in the company and receive raises -- are far more than most retailers and service sectors offer the joe schmoes of this country.