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Former Labor Secretary Blasts Wal-Mart for Growing Divide Between Rich, Poor

Robert Reich, who last served under President Clinton, says mega-retailers are depressing wages for millions of working class Americans and keeping both spending and growth down

 

Former U.S. Labor Secretary Robert Reich warned against a growing economic divide in the country and placed the blame on deregulation and large companies such as Wal-Mart that keep wages low while reaping massive profits.

An estimated 500 people packed Santa Rosa’s Glaser Center Monday night to hear Reich, now a professor of public policy at UC Berkeley, argue that low wages at companies such as Wal-Mart were directly responsible for rising poverty levels. Reduced wages mean less money for 115 million of the poorest Americans and decreased consumer spending.

“It’s not businesses who create jobs, but customers who buy products that leads to job growth,” Reich said.

Sixty years ago, the largest employer in the country was General Motors where an average hourly wage, when adjusted for inflation, was $50 an hour. Today, Wal-Mart is the largest employer, but pays its (non-unionized) employees an average wage of about $9 an hour, creating a growing class of poor who can’t afford to support their families, Reich said.

As a result, low-wage workers are more likely to need social services including at local health clinics or federal programs such as Medicaid, food banks and other community resources just to make ends meet.

“What happens is that the public ends up subsidizing Wal-Mart,” Reich said.

Wal-Mart says the average full-time wage for California employees is $12.89 an hour and that an entry-level job often leads to more lucrative positions in the company.

“At Wal-Mart, you can climb the ladder from a stocker to a department manager and beyond,” wrote Steven Restivo, a spokesman for the mega-retailer in a recent editorial in the Press Democrat. “About 75 percent of our store management started as hourly associates and they earn between $50,000 and $170,000 a year.”

Wal-Mart also says it provides a broad array of products at low prices, something  Reich says is true and important for many. But the company also has a negative impact on local businesses, with 1.4 jobs leaving the community for every job created, he said.

“We create the system we want to live in,” he said. “We want a decent society and have a responsibility to our communities.”

Wal-Mart disputes that it has a negative impact on local businesses, pointing to its Chicago store, opened in 2006, which it says has since attracted close to two dozen new businesses to the neighborhood, in addition to significant revenue for the city.

It also prizes community involvement, which locally has included assistance to victims of the Beverly Drive Apartments fire and donations to Redwood Empire Food Bank, Solar Sonoma County and Sonoma County Bicycle Coalition.

What’s your take? Is Wal-Mart good or bad for our community? Sound off in the comments below.

Barbara Andridge February 27, 2013 at 08:58 AM
By the way the associates at WALMART are organizing too.
mikeg55 February 27, 2013 at 02:53 PM
I love Walmart! It really helps me stretch my budget! If you don't like the company, don't work there. Plenty of SSU students and other people just getting started who would be be happy to have those jobs.
G Man February 27, 2013 at 04:53 PM
Here's an idea... don't like Walmart, don't shop there! And another... don't like what they pay, don't work there! One more... if you can't feed a family on $12/HR, don't start a family until you get a job that can support one! Life is simple.
Cassandra Lista February 27, 2013 at 10:42 PM
Those are very simplistic suggestions and could be workable for a young person starting out. But, for those who had jobs and lost them because of the current economic situation, they can't easily get a job and many already had established families and homes when the economic carpet was pulled out from under them.
robert aherne February 28, 2013 at 12:04 AM
The government should not be deciding which private companies they want in the economy or not. That is the the way thing are done in China today and yesterday in Eastern Europe under theUSSR. Walmart is the largest private employer in the country and they employ senior citizens, handicapped people and many other disadvantaged people who ordinarily would not have a job and otherwise might be on the welfare roles. Robert Reich is a typical Socialist Economist who would have the government run everything. Robert Aherne

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