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The Bully of Bentonville
March 29, 2006
Wal-Mart is the largest company in the world. It brings in revenues in excess of $280 billion, employs almost one and half million American workers, and controls a large share of the business done by almost every U.S. consumer-product company. More than 138 million shoppers stroll through its 5,300 stores each week. With a company so powerful and so immense, it is easy to find much to complain about. And really, grumbling about Wal-Mart has become popular—chic even.
The Bully of Bentonville is one in an increasingly long line of books, documentaries and articles detailing “how the high cost of Wal-Mart’s everyday low prices is hurting America.” It is written by Anthony Bianco, a senior writer at BusinessWeek who in 2003 coauthored an acclaimed cover story dealing with Wal-Mart.
To be honest, there is much about Wal-Mart that can and should concern us. Among the statistics Bianco wants American to know are:
- The average Wal-Mart employee working full-time earns just $9.69 per hour, which adds up to less than $18,000 per year.
- Only 44 percent of Wal-Mart employees are enrolled in the company medical plan. Most who are not enrolled cite the high cost of insurance premiums as the reason they are unable to enjoy the medical benefits.
- 46 percent of the children of Wal-Mart employees are either uninsured or are on Medicaid.
- The company has faced multitudes of lawsuits alleging that it forces employees to work extra hours without pay. Wal-Mart’s internal studies have reached similar conclusions, but the company has taken little or no action to correct this.
- Wal-Mart is a strongly anti-union company. When a store in Jonquiere, Quebec voted to join the United Food and Commercial Workers Union, the company simply shut down the store and fired all of the employees.
- Annual employee turnover is nearly 50 percent, meaning that Wal-Mart must hire almost 600,000 new employees every year.
- Wal-Mart alone accounted for over 13 percent of the U.S. trade deficit of $162 billion. Studies have concluded that over 80 percent of Wal-Mart’s international suppliers are based in China where labor costs are very low. Wal-Mart is increasingly dealing with international suppliers for this very reason. This is done, of course, at the expense of domestic suppliers, and thus, domestic jobs.
Suffice it to say that Bianco sees Wal-Mart as a great danger to America. He is pro-union, Wal-Mart is anti-union. He appears to be strongly anti-Republican, while it seems that Wal-Mart is pro-Republican. He is clearly and unashamedly biased in writing this book. And from that perspective it is difficult, at times, to take him too seriously. Still, on the whole his attacks on Wal-Mart are measured and avoid falling into senseless rants (despite, at a few spots, using alarmist language and even comparing Sam Walton to the likes of Mao Zedong). He raises many interesting and important critiques of the company. He is more sympathetic with Sam Walton and the company he started, than his successors and the company Wal-Mart has become since Walton’s death. While he portrays Walton as a shrewd and calculated businessman, he seems to give him the benefit of the doubt more than those who are now responsible for the company.
While Bianco is long on diagnosis, he is quite short on cure. He seems to feel that many of the most pronounced of Wal-Mart’s problems would disappear if the company were just to allow its workers to unionize. And in many ways he is right, though such a move would also sound the death-knell for the company as the rising costs of employee wages would quickly eat up the thin margins and destroy Wal-Mart’s very niche. After all, people shop at Wal-Mart not for the experience or the atmosphere, but for the low prices. Unionization would inevitably cut deeply into these margins. As a Christian I have great difficulty with unions, or at least unions that encourage employees to rebel against their employers. He seems to sympathize with and even advocate the type of rebellion that has happened in many stores across North America, where employees have turned their backs on their managers and have tried to unionize. Yet the Bible tells us that we are to respect and obey our employers. If they are not treating us properly, we cannot advocate this type of open rebellion.
Bianco often compares Wal-Mart to COSTCO, a company that is, in many ways, similar. Yet COSTCO does not deal with the skyrocketing employee turnover and pays its employees far better wages. The difference, he feels, is that COSTO takes care of its employees. In the long-run, this lowers company costs, even as wages increase, for the cost of training new employees cuts deeply into Wal-Mart’s profits. While he does see some incremental improvements in the way Wal-Mart has run its business in the face of growing criticism, he cannot help but conclude that even Wal-Mart may be unable to survive in the world that it has helped create.
As I read the book, I began to wonder if Bianco is blaming Wal-Mart for something that is a product of American society more than the working of a single company. After all, America has become an increasingly consumer-driven nation. Americans (and most Westerners) want and demand stuff! We want it and we want it now. We want to fill our homes and our lives with gadgets and trinkets, the quantities of which would shock people of other nations and other generations. A few weeks ago I was at the local landfill site, emptying out another van-load of junk taken from my garage. I turned to the man beside me, who was also emptying a great load of trash into the bins and remarked that we truly are a wasteful society. We stood there, almost ashamed, looking at the vast mountains of junk - things we needed not too long ago, but now were tossing away.
And so I wonder, is Wal-Mart creating this consumerism, or is it doing little more than giving us what we demand? It seems to me that Wal-Mart caters perfectly to this Western mindset, giving us more for less. By reducing the costs of manufacturing, distribution and sales, they can give us items of moderate quality for a low price. A quick trip to the local store, and a look at the long lineups at the registers, will show us just how successful they have been in doing this. Wal-Mart’s shame is, in many ways, our shame.
The Bully of Bentonville is an interesting book, even if it is not required reading. It is the type of book that may convince people to stop shopping at Wal-Mart, and I am not convinced that this would necessarily be a bad thing. There is something to be said for good old-fashioned service - something that rarely exists anymore. But like most people, I am rarely eager or willing to pay extra for it.
The Bully of Bentonville