Nelson Lichtenstein on how Walmart has changed the face of business

Dr. Nelson Lichtenstein explains how Walmart has paved the way for an entirely new set of business practices and how they impact our world.

FLORIDA, November 3, 2012 —Yesterday, noted academic and scholar of American labor history Nelson N. Lichtenstein explained about Walmart’s unique socioeconomic impact. 

Today, he tells us how the prototypical big box store has revolutionized our society’s retail industry.

Has Walmart really decreased retail wages across the country? Is disfavor toward Walmart and other big box stores actually disguised anger at the free enterprise system? 

A great deal would say that big box stores serve a positive function as they employ people who tend to be in serious need of work. It is also said that big box stores offer consumers a wide variety of products at low prices. Are either of these arguments true?

Furthermore, what inspired Dr. Lichtenstein to write about Walmart’s impact on our society in the first place?

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Joseph F. Cotto: Has Walmart really decreased retail wages across the country? If so, how?

Dr. Nelson N. Lichtenstein: It has in the retail sector, both by putting downward pressure on its rivals, or by actually bankrupting them, which has happened in Las Vegas and in some mid-South cities, and by setting a new employment norm for the entire service sector. Today, the employment model pioneered by Walmart - relatively low wages, high turnover, lots of part time work - is copied everywhere, from Amazon fulfillment centers to hotels to janitorial service companies to home health care services.

Cotto: Many believe that disfavor toward Walmart and other big box stores is disguised anger at the free enterprise system. Have you found this to be the case?

Dr. Lichtenstein: To the extent that Walmart does erode wages and working conditions throughout its global supply chain, from Shenzhen computer product factories to Inland Empire distribution centers to the local Kansas City supercenter, then yes the company does bring to the top of the political and social agenda questions about how fairly giant companies like Walmart distribute to both their workers and those of their vendors and transport service companies the fruits of their enormously efficient system of supply and sales. 

Walmart constantly takes surveys that measure its corporate “reputation.” There is some evidence that the company’s recent initiatives on the environmental front, and even selected city wage increases, are an effort to bolster its sagging reputation.

Cotto: A great deal would say that big box stores serve a positive function as they employ people who tend to be in serious need of work. It might also be said that big box stores offer consumers a wide variety of products at low prices. What are your opinions about these arguments?

Dr. Lichtenstein: High unemployment is endemic in American life. Therefore any employer will have little trouble recruiting an overqualified workforce. This is also true of employers, such as those in the fast food industry and in carwashes and among home health care providers, who actually pay less and offer fewer benefits than Walmart. As for price, Sam Walton and his heirs did pioneer a productivity revolution in retail and distribution on pair with that of Henry Ford and the U.S. auto industry a century ago.  

But just as GM adopted Ford production techniques, so too have all of Walmart’s rivals learned from the Bentonville-based company. 

So Walmart’s competitive advantage is today far less than it used to be, even though consumer goods and clothing today do in fact represent a far lower proportion of the average household budget than in 1960 before the retail revolution. But that is not enough to sustain prosperity. As Ford and then as unionized GM came to realize, high wages were essential to prosperity. This Walmart has failed to generate. 

Cotto: What inspired you to write about Walmart’s impact on our society?

Dr. Lichtenstein: In 2003 Safeway, Kroger and other Southern California supermarkets precipitated a strike/lockout by nearly 70,000 unionized workers. Executives that those companies wanted to lower wages and benefits so as to compete more effectively with Walmart, which then planned to build scores of supercenters in California. I realized then that the most important social and political struggles in the United States were often taking place in the larger retail sector, a distinct contrast to that of auto and other manufacturing enterprise which I had studied earlier in my career.

Cotto: Now that our discussion is at its end, many readers are probably wondering about your life and career. What inspired you to write about Walmart-related issues?

Dr. Lichtenstein: I am interested in creating a more democratic society with a prosperous and political engaged working-class. The retail sector of our economy is where this fight is now going on.



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Joseph Cotto

Joseph F. Cotto is a social journalist by trade and student of history by lifestyle choice. He hails from central Florida, writing about political, economic, and social issues of the day. In the past, he was a contributor to Blogcritics Magazine, among other publications. He is currently at work on a book about American society.

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