By Tom Gilmore

Is the labor movement dead in the United States? One compelling argument says yes. Unions no longer hold much political power and in recent decades, due to feeble headcounts, they’ve been forced to concede to politicians’ demands because they have little leverage with which to make their demands heard. In 2004 union membership in the private sector fell to under 8%, the first time since the ‘30s, and it shows no promising sign of a turnaround. Moreover, union members themselves are divided and many vote Republican, which shouldn’t surprise anybody familiar with the centrist Democrat position on NAFTA, CAFTA, outsourcing, and right-to-work laws.

The question of whether or not the labor movement still has a pulse is a fair one. If it is alive, how and in what measurable ways? Unions still exist, even if in a weakened state, but you can’t realistically say too much beyond that. On an optimistic day you might point to the fact that they haven’t gone the way of the dinosaur yet. That’s the good news.

For signs of their diminished standing look no further than the high-profile grocery store strike in southern California last year, which included a handful of chains and 59,000 striking workers. After three months the United Food and Commercial Union was forced to back down. The chains suffered financially but held their ground, understanding that a short-term loss was better for them than the long-term effects of a compromise.

This was a monumental victory for management, and a huge blow for organized labor, with workers returning to a contract that looked identical to the one they were offered pre-strike. This could also signal what lies ahead. What hope is there when a three-month strike effectively results in defeat? What incentive for those workers to join the picket line next time?

What’s significant is that the company in the background of the strike, but in no way affected by it, was Wal-Mart. Southern Californian retailers, like retailers across the nation, are worried about Wal-Mart moving to town. Like most companies, they understand they can’t compete because Wal-Mart is so successful in lowering overhead by sparing considerably on employee pay and benefits. The way to anticipate Wal-Mart’s arrival, smaller retailers figure, is to play its game in advance. And so they do.

Simon Head recently wrote about the effect that Wal-Mart has on their competition in the New York Review of Books, in an article that summarized Wal-Mart’s dubious legacy. “If Wal-Mart had been a union company and its employees had the same wages and benefits as other California store employees, Safeway and Albertsons could not have used Wal-Mart’s planned entry into the California market as an excuse to beat down employee wages and benefits,” Head wrote. This effect is what has been named “the race to the bottom.”

Beyond just driving down standards, a non-unionized Wal-Mart is having another barely commented-upon effect. Many foreign companies are now starting to see the U.S. as an attractive place to do business due to the decline in labor power. In particular, these companies often come from Europe where unions have a much stronger presence. This might be the greatest surprise of all: foreign companies now see the U.S. in the same way that U.S. companies have historically viewed other countries – as a place filled with cheap labor and lax regulation.

For their part, Wal-Mart maintains that their low prices do not come from the drastic shortcuts they take on employee wages and benefits. The official word from them, which was published as a letter to the editor in The Nation, is that “most of our savings come not from the exploitation of employees but from things like large-volume buying, inventory management and distribution technology.” Sounds good, right? But even Sam Walton knew better, as Simon Head reminds us. Walton wrote: “Payroll is one of the most important parts of overhead, and overhead is one of the must crucial things you have to fight to maintain your profit margin.”

At just more than $8 an hour, Wal-Mart pays considerably less than the retail average. Moreover, their employees pay for nearly half of their health care premium, if they can afford to purchase the package. This pushes employees to look for help from the state and federal government, with Wal-Mart employees collecting an estimated $2.5 billion in welfare annually. In other words, government has become the default caretaker where Wal-Mart is negligent. Corporate disregard has, in a final kind of irony, become one of the best arguments for maintaining social programs.

Wal-Mart is more than just the largest private employer in the United States. As Head points out: “With 1.4 million employees worldwide, Wal-Mart's workforce is now larger than that of GM, Ford, GE, and IBM combined. At $258 billion in 2003, Wal-Mart's annual revenues are 2 percent of U.S. GDP, and eight times the size of Microsoft's. In fact, when ranked by its revenues, Wal-Mart is the world's largest corporation.”

This is sobering when considering the future, especially if it's a future designed by Wal-Mart, which seems likely. Many feel that where they aren't the dominate player, the business model they created will dominate eventually. This is anything but good news for those on the business end of their stick – i.e. their employees. They’ve opened stores in China, and they’re the largest retailer in Canada and Mexico; in Britain they’re now number three. While Wal-Mart has faced setbacks in some countries, such as Indonesia, their stamina and resources suggest the setbacks are temporary. Nike faced a public relations backlash when their slave-like practices were exposed a few years ago. But those practices could seem like nothing if Wal-Mart’s eagerness to return to the 19th century is fully realized.

On an optimistic note, Wal-Marts are unionized in some countries, notably Japan and Germany. This is likely the result of Wal-Mart deciding that moving into a market where labor is strong, and dealing with the consequences, was preferable to no presence at all. What seems to work as a rule is that Wal-Mart is dead intent on making unionization next to impossible in those markets where labor is not already strongly established, such as their home country.

Quite notably, in 2000, seven meat cutters at a Wal-Mart in Texas voted to unionize. Days later they were told their jobs were being eliminated due to pre-packaging arrangement that Wal-Mart had planned all along. This was news to everyone at that location. This practice has a more recent and more disturbing equivalent. In February of this year, workers overwhelmingly voted to unionize at a store in Quebec, Canada. A day later they were told the store would be closing down because it was financially under-performing. If the union at that store had been recognized, it would have set a precedent in North America, and Wal-Mart knew it. The company issued a statement in local papers shortly afterwards that read: “You, our people, are our greatest asset, and don't let anybody – or any media commentator – tell you differently.” The store will close this spring.

Unlike unions in the states, however, Canada’s tend to be more combative and willing to brawl. And since Wal-Mart is Canada’s largest retailer, it’s realistic to expect labor / management sparks, and possible fires, in Canada before we see them in the U.S. The President of the Quebec Federation of Labor, Henri Masse, has promised that organizing in Quebec and other parts of Canada will continue.

On the domestic front all eyes are on Andy Stern, President of the Service Employee’s International Union (SEIU), who has gotten an enormous amount of press since George Bush’s reelection. Stern remarked somewhat famously before the election that a Bush victory might be better than a Kerry victory in that it could bring about necessary and long needed labor reform. At the time, of course, he was thinking about silver linings, and now that labor has every reason to be on the offense people are listening to him.

Among other changes, Stern’s promised a $25 million yearly budget to organize Wal-Mart, the most ambitious attempt yet by organized labor to pierce the most unyielding and most uncompromising of all corporations. In the world of labor Stern is a contentious figure, but it’s hard to find the fault in this particular effort.

As Wal-Mart begins to expand along the East Coast it will face its strongest fight yet. This is a place where union membership tends to be higher than in most parts of the country. Wal-Mart has already faced setbacks in opening their first store in New York City, with local unions taking some credit for the indefinite delay. Wal-Mart may or may not expand along the coast, but it seems naive to thing they won’t. Whether or not they do is almost beside the point at this late date. Wal-Mart is here to stay. Boycotting is one option some people prefer, but this seems shortsighted and ineffective. Tapping consumer identity with boycotts – asking shoppers to say, “I’ll shop here, I won’t shop there” – is a highly personalized approach to a massive problem that leaves the underlying problems untouched. Wal-Mart won’t leave town because you don’t shop there, but they will leave, as we know, if workers threaten to unionize. For now, Wal-Mart can leave a town here and there, but it can’t leave them all.

The Forbes list of the 20 wealthiest individuals in the world was recently published and one quarter of the list consists of Waltons – Sam’s widow, and their four children – for a combined net worth of almost $100 billion dollars. Similarly, Wal-Mart’s earnings topped $10 billion in 2004, which is a first. With these figures in mind, it’s impossible to take the Wal-Mart claim seriously that unions would have a devastating impact on profits. No doubt they would alter statistics, but the damage would be nothing compared to the damage that currently affects their employees the globe over.

The most important reason to organize Wal-Mart is to stop the race to the bottom. We ought to be highly concerned with putting a halt to the downward spiral. Americans are experiencing a substantial decline in leisure activity at the same time they are working longer hours. And they’re working more for less. Personal savings are at all time low, consumer debt at an all time high.

Wal-Mart, it needs to be said, isn’t the problem itself as much as it is one piece of an ugly trend. Due to their sheer size and influence, however, sticking a thumb in the eye of the giant is the place to start. For centuries the labor movement has worked too hard to be pushed to the back of the line now. Will labor make a comeback? Can they do it? The future of labor in this country and others depends on it.

----------------------------------------------------------------------------