How Big Box Stores Get Away With Bad Behavior
By Mary T. O’Sullivan, MSOL
“It’s Not Just Wages. Retailers Are Mistreating Workers in a More Insidious Way.” – Adele Waldman in The New York Times
When I was growing up, the mantra in my family was “Do you want to be a ditch digger? Well, then you better go to college.” I was repeated told that I had three choices of education, a secretary, a schoolteacher, or a nurse. I didn’t want to sit behind a desk all day, and the idea of sticking people with needles didn’t appeal to me, so I became a schoolteacher in the 1970s. The idea of doing anything less was out of the question. No pink-collar jobs, like waitress, cleaning lady, retail clerk, nanny, factory worker, or hair stylist for me, I was bred to be a professional woman. I worked hard and enjoyed the latitude to switch jobs when the opportunity came my way, never looking back at my peers who lacked the encouragement or financial resources to get ahead.
Today, the labor market has transformed. More recently, with a changing economic picture, more discount “big box” stores have emerged on the scene bringing major employment revolutions wherever they established their domains. Not only was the impact of these giants felt by the local mom and pop economy – Main Street – but the displaced employeees these behemoths hired were in for a huge culture shock. At the same time, globalization came into fashion and cheap products flooded the American market, allowing middle class people the chance to live on a level never before imagined. Now they could afford a huge TV, oversized furniture, and other amenities. Goods made in the United States, France and other western countries became expensive luxuries, afforded only by people of greater means, increasing status.
The big box chains began to reassess how to continue keeping prices low, while meeting high demand for more quality goods. While many companies treasure and develop their talent pool, every company knows that the most expensive investment in any business is its human capital. So, the logical move for Target, Walmart, Costco, IKEA, etc., was to figure out how to maintain the same number of people, only cheaper. Of course, avoiding unionization was a key feature of keeping wages, health care benefits, and pensions out of the equation. At the same time, federal and state labor laws were cracking down on exploitation of workers with rules governing the number of hours needed to qualify for health insurance.
This strategy called for a different business model for the big box giants. In a memo released in 2005, Walmart promoted cutting costs by hiring more part time workers from 20% to 40% of their workforce. As of this writing, they have already exceeded that number. By hiring two part time workers, each working 20 hours a week, the company avoided any obligation to pay any benefits or overtime. If employees complained about their meager hours, their pay, or threatened to unionize, the company retaliated by cutting people’s work hours even more. According to the New York Times, other big box stores have followed suit: T.J. Maxx, Kohl’s, and Starbucks report that their average employees are all part time workers. The era of working 40 hours a week, and making a decent living, at one of these businesses is long gone. If you get a job at any one of these places as your chief source of income, you will barely be able to squeak by. The choice between rent, food, and other necessities becomes more consequential. And due to the notorious fluctuating work schedules, you’re not sure if you will even get hours the following week. Due to the inconsistent work schedules, people can’t rely on other part time work which may interfere with their regular big box work hours, thus keeping their incomes low.
The condition of these workers and the actions of the big box stores seems to have escaped the Wall Street analysts and certainly the management textbooks. The big management firms whose analyses we depend on are not factoring in the split hours and erratic schedules big box store employees face. They simply calculate the average hourly wage, say $17.50 an hour, which annualized comes to $36, 400 per year. But that’s not reflective of reality. Counting the irregular hours and unpredictable schedules, the average Walmart employee is more likely to take home around $27, 326. And it gets worse, TJ Maxx workers bring home around $13, 884; Kohl’s employees make $12, 819 per year, and the average Starbucks worker brought home $12,254, which is less than the federal poverty level for a single person. And these statistics are based on post-COVID numbers, where the demand for these types of workers actually rose.
The business case for shifting workers to part time status reflects capitalistic values gone horribly wrong. Businesses expect to take on a certain amount of risk in their enterprise, it’s the cost of doing business. But by shifting the risk to its most vulnerable employees, businesses purport to be increasing shareholder value. But what’s the value in grinding down the neediest and less fortunate of the American workforce and creating a permanent underclass?
The irony now, is that many companies are hiring workers with no high school education for good money and training them on the job. Why? Because the gap between having an education and not having one has created a huge gap in some essential professions. There is now a shortage of electricians, plumbers, carpenters, welders, and pipe fitters. A local major manufacturer is recruiting in high schools to train students to take the jobs some people never wanted. It seems learning a trade for pay and benefits makes a lot more sense than unloading a Walmart truck at 4:00AM for $15.00 per hour. So, there is hope for some workers who are in the right place at the right time.
In the 1960s and 1970s, my family could not have foreseen the indignities of working in today’s big box retail environment. They didn’t want me to be a ditch digger, but I’m pretty sure they wouldn’t want to see me working less than 30 hours a week for a meager take home wage and no benefits. They did everything in their power to get me into college and well educated so my opportunities upon graduation were considerable.
I’ve had a long and fruitful career, and I only wish the white-collar analysts and textbook writers would catch up with the truth of what the real cost of that “Samsung 75” Class CU7000B Crystal UHD 4K Smart Television” for $598 at Walmart is. It’s driven by the workers who couldn’t find anything else and are always looking for something better. The cost of that TV is also the cost of the turnover rate which is the highest among part-time hourly store employees: it averages 76%. Jobs like the one I had for many years averages a 17% turnover rate. So, you can see, my family was right in pushing me to reach my educational goals and encouraged me to keep learning. Now, I’m going to think twice before I make another purchase at Walmart. I have to ask, who is really benefiting?
“As studies have found, national retail chains in general pay lower wages and benefits than do locally owned businesses. By that measure…, it has found that the chains generate fewer ripple effects in local economies: they procure less, bank less, contribute less, and participate less.” – Good Jobs First, a national policy resource center
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