YES IT WILL

Ezra Klein claims that

making Wal-Mart do better will not change [T]arget, or whoever dominate[s] the next major industry.

Of course it will.

Right now, Wal-Mart is militating against living wage employment with human rights nationally by forcing higher-wage employers out of business and inspiring competitors to ape its strategies for temporarily squeezing as much labor power as possible out of each of their employees before dumping and replacing them. Puffed up with public subsidies, Wal-Mart is the pep squad as well as the front-runner and the finish line in the race to the bottom. Transforming Wal-Mart into a progressive ally, as Ezra rightly seeks to do, would cease the damage Wal-Mart is currently doing far beyond the ever-multiplying communities which it’s entered.

And transforming Wal-Mart will send a clear signal to its competitors. Wal-Mart does business the way it does – locking employees indoors, forcing them to work off the clock, vetting them for class consciousness – because it can get away with it. When Wal-Mart changes, it will be because a broad-based coalition has used effective mobilization and pressure to show that they can’t.

The longest strike in the history of the Hotel Employees and Restaurant Employees International (HERE, now merged to become UNITE HERE) was the strike at the Las Vegas Frontier Hotel and Casino, fought against a viciously anti-union family which preferred to run their hotel into the ground rather than settling with the union. These people reprogrammed their sprinkler system in an effort to target picketers. Once they caved in 1998 (the family essentially went bankrupt and had to sell the hotel to someone else willing to settle), after a six-and-a-half year strike during which none of the 550 strikers crossed the picket line, workers at each of the neighboring hotels were able to win recognition without having to go on strike for a day.

The same principle, writ large, is at work in the campaign to transform Wal-Mart. Wal-Mart is the biggest and the baddest, and a movement which fought them and won would entirely reshape the playing field in the struggle over whether we a s a country will race to the bottom or pave the high road. Change them, and you change the country.

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THE COSTCO ALTERNATIVE

In yesterday’s New York Times, Steven Greenhouse profiles Costco, its Chief Executive Jim Sinegal, and the model he’s providing as an alternative to the Wal-Mart economy:

Costco’s average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam’s Club. And Costco’s health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco “it’s better to be an employee or a customer than a shareholder.” Mr. Sinegal begs to differ. He rejects Wall Street’s assumption that to succeed in discount retailing, companies must pay poorly and skimp on benefits, or must ratchet up prices to meet Wall Street’s profit demands. Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, he said…If shareholders mind Mr. Sinegal’s philosophy, it is not obvious: Costco’s stock price has risen more than 10 percent in the last 12 months, while Wal-Mart’s has slipped 5 percent…

Despite Costco’s impressive record, Mr. Sinegal’s salary is just $350,000, although he also received a $200,000 bonus last year. That puts him at less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies. “I’ve been very well rewarded,” said Mr. Sinegal, who is worth more than $150 million thanks to his Costco stock holdings. “I just think that if you’re going to try to run an organization that’s very cost-conscious, then you can’t have those disparities. Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong.”…Costco also has not shut out unions, as some of its rivals have. The Teamsters union, for example, represents 14,000 of Costco’s 113,000 employees. “They gave us the best agreement of any retailer in the country,” said Rome Aloise, the union’s chief negotiator with Costco. The contract guarantees employees at least 25 hours of work a week, he said, and requires that at least half of a store’s workers be full time.

CostCo continues to prove, as I wrote here last year, that the choice Americans face isn’t between policies that are “friendly” or “hostile” to business, or between “big government” and “economic freedom.” Government policies can force a race to the bottom of ever-worsening standards and quality of life for the working Americans who make prosperity possible. Or they can pave the high road by rewarding companies that invest in the economic security of workers and consumers. It’s the latter choice which fosters and expands the real economic freedom which comes from workers’ voice on the job and control over their lives, and whose expansion increases the humanity of our economy.

Wal-Mart Watch: A disappointing op-ed today from Robert Reich, who should know better. Somewhere in there, he’s trying to make the accurate point that government regulation has a role to play in overcoming the collective action problem under which consumers who prefer high-roading companies nonetheless patronize low-roading ones for the cheaper prices (this is a point he makes better in his book I’ll Be Short). Indeed, there is a structural problem which could be ameliorated by changing the perverse incentives behind the corporate race to the bottom. Thing is, it’s not only national legal change which could better reward companies which invest in their workers. It’s also coordinated organizing and media campaigns by labor and community folks organizing workers and consumers to reward better companies and punish worse ones. Taking the fight to Wal-Mart in particular is the defining challenge facing labor in the next decade. Because Wal-Mart is indeed bigger and badder than anyone else. So to write a piece called “Don’t Blame Wal-Mart” suggesting that all employers squeeze their workers equally is simply false and counterproductive. Reich gets a pedestal from which to play broker state technocrat, rising above parochial concerns, calling no one out in particular, pleading with both sides to be more fair-minded. Meanwhile, millions of Wal-Mart workers continue to face prejudicial treatment based on gender or immigration status, poverty wages, anti-union intimidation, and Triangle Shirtwaist Factory-style work rules. Sure, blame Bush, blame Nike, blame ourselves. But let’s blame ourselves in part for not blaming Wal-Mart nearly enough or as often as it deserves.

Looks like the Mad Cow scare has brought on much-needed regulatory reforms in the beef industry. As the Times notes:

…some large American companies that process and sell beef had already abandoned those more controversial practices, which had been a rallying point for food safety advocates since mad cow disease appeared overseas nearly two decades ago. While a schism developed in the industry, the current crisis reveals how government regulators sided with companies that adhered to those methods of operation.

This touches on a larger point, one which many have made before: There are high-road and low-road approaches between which companies choose how to make a profit. The high-road includes greater investment in human capital, quality control, investments in local community, and such. It has benefits for workers, capital, and consumers, but has a great deal of difficulty competing with low-roading firms. In earlier decades, a regulatory government and an empowered labor movement helped pave the high-road – now, both are in need of revival. But Mad Cow disease viscerally illustrates the failures of the low-road system. An argument that manufacturers who kill their customers will be punished with decreased sales, while attractive in a college Economics course, depends first on the premise that there’s an acceptable number of preventable deaths and second on the contention that consumers have accessible to them the information necessary to determine which meat is safe and which is not. It’s time to reject both.