BUSINESS EXCHANGE: What's The Deal with Wal-Mart?

William Reed | 9/25/2013, 3 p.m.
If you don't know about it, there is an ongoing fight between Wal-Mart and the union movement. The political battle ...
Wal-Mart had planned to build six stores in the District. Courtesy Photo

If you don’t know about it, there is an ongoing fight between Wal-Mart and the union movement. The political battle fought in Washington, D.C. is over the “living wage bill.” But that is just the latest ploy of a longer war in years to come between the retail giant and America’s primarily-Black, democratic-and-union-controlled urban enclaves.

The retail behemoth won its game of chicken with the D.C. city council over a living wage bill it had passed requiring large retailers operating in the District to pay its workers a "living wage" minimum of $12.50 an hour (minimum wage in D.C. is $8.25 an hour). Despite strong ties with unions, Mayor Vincent Gray vetoed the council’s bill on the premise Wal-Mart will open six stories there, creating an estimated 1,800 much-needed jobs. The consumer majority has won. The promise of jobs - even low wage ones - and cheap consumer goods proved more attractive to D.C. residents than the wage issue.

Depicted as the Grinch who stole Christmas, Wal-Mart is simply a successful business operation that has been subjected to criticism by numerous groups and individuals. Among these are labor unions, community groups, grassroots organizations, religious organizations and environmental groups that have spent years protesting against Wal-Mart, the company's policies and business practices, including charges of racial and gender discrimination.

A major factor in the issue is that Wal-Mart currently faces its most serious unionization threat since its founding in 1962. For decades, the company's strategy of placing stores in small towns and rural areas kept it largely free of exposure to unions. But in recent years, Wal-Mart has been pushing into the heavily unionized supermarket industry, as well as into big cities where workers are more familiar with organized labor. In 2009, Wal-Mart generated 51 percent of its $258 billion sales in the U.S. from their grocery businesses. In the grocery business, union members average $30,000-a-year wages and benefits. In 2005, labor unions created new organizations and websites to influence public opinion against Wal-Mart, including Wake Up Wal-Mart (United Food and Commercial Workers) and Wal-Mart Watch (Service Employees International Union).

Wal-Mart is a dominant force in the world. Wal-Mart has 8,500 stores in 15 countries, under 55 different names. Wal-Mart is the largest private employer in the U.S., with nearly 1.4 million workers in 4,602 stores. The company’s efficiency in stores and throughout its supply chain has remade the retail industry. Wal-Mart is a success because it sells products that people want to buy at low prices, satisfying customers' wants and needs. However, Wal-Mart's critics argue that Wal-Mart's lower prices draw customers away from other smaller businesses, hurting the community. They also claim that Wal-Mart hurts the U.S. economy because of excessive reliance on Chinese products. Wal-Mart is the largest importer in the U.S. among most categories like electronics (fast-moving consumer goods).

Wal-Mart Stores, Inc., branded as Wal-Mart. The company was founded by Sam Walton in 1962 and is headquartered in Bentonville, Arkansas. Wal-Mart is primarily a family-owned business and is controlled by the Walton family, who own a 48 percent stake. The Company operates in three business segments: Wal-Mart U.S., Wal-Mart International, and Sam's Clubs. The Sam's Club retail warehouses in North America are under the leadership of an African woman, CEO Rosalind Brewer.

When will Blacks realize that there are bigger stakes for them in entrepreneurship than squandering resources on “minimum wage” entry-level jobs? It’s a matter of mindset. Instead of protesting Wal-Mart, wouldn’t it make sense to invest in the world’s fastest-growing retailer? Black investment clubs may find that Wal-Mart is a good place for their money. During the late 1980s and early 1990s Wal-Mart rose from a regional to national giant. By 1988, Wal-Mart was the most profitable retailer in the U.S. and by October 1989 it had become the largest in terms of revenue. Unions and the Democratic Party are frequently allied in urban settings, but "living wage" minimums are not economic development strategies that will yield the kind of benefits urban residents need or desire.

William Reed is publisher of “Who’s Who in Black Corporate America” and available for projects via the BaileyGroup.org.