REALITY COMES TO CALIFORNIA:

Wal-Mart, Driving Workers and Supermarkets Crazy (STEVEN GREENHOUSE, 10/19/03, NY Times)

In February Wal-Mart will open its first grocery supercenter in California, offering everything from tires to prime meats, and that could be a blessing for middle-class consumers. The reason is simple: Wal-Mart's prices are 14 percent lower than its competitors', according to a study by the investment bank UBS Warburg. [...]

Many factors explain Wal-Mart's ability to charge low prices, including economies of scale, the pressures it puts on suppliers and its embrace of imports — it imported $12 billion in goods from China last year, one-tenth of American imports from China.

Another big factor is Wal-Mart's relatively low wages. Its sales clerks average about $8.50 an hour, or about $14,000 a year, while the poverty line for a family of three is $15,060. In California, the unionized stockers and clerks average $17.90 an hour after two years on the job. Mr. Flickinger said wages and benefits for Wal-Mart's full-time workers average $10 to $14 per hour less than for unionized supermarket workers.

"The strike out here involves workers who enjoy decent wages, vacations and health benefits," said Kent Wong, director of the Center for Labor Research and Education at the University of California at Los Angeles. "These things were taken for granted, they made them part of the middle class, but now these workers are threatened with having these things taken away."

A big savings for Wal-Mart comes in health care, where Wal-Mart pays 30 percent less for coverage for each insured worker than the industry average. An estimated 40 percent of employees are not covered by its health plan because many cannot afford the premiums or have not worked at Wal-Mart long enough to qualify.

"What this means is, if I'm a Wal-Mart employee and I hurt my hand and go to the emergency room, who's going to pay for it? The taxpayer is," said Mr. Brown, the supermarket executive. "Wal-Mart's fringe benefits are being paid by taxpayers."

Hard to believe any rational economy can afford a regime where one essentially unskilled laborer working just 40 hours per week makes enough to lift a family over the poverty line.

Posted by Orrin Judd at October 19, 2003 9:06 AM