Hard Nosed Business Man

I never know why people look up to people with big piles of money. My rule of thumb is that great fortunes are made by scoundrels. It is hard to be honest and make a million. Or as Jesus put it, it is easier to camel through an eye of a needle than it is to get a rich man into heaven.

Here's a bit from a review of the book The Retail Revolution: How Wal-Mart Created a Brave New World of Business by Nelson Lichtenstein, a professor of history at the University of California, Santa Barbara. (The review is by Harold Meyerson and appears on the web site The American Prospect:

The story isn't part of the official Wal-Mart creation epic, but it tells us almost all we need to know about the company's approach to the interests of its employees and the laws of the nation. Around the time that the young Sam Walton opened his first stores, John Kennedy redeemed a presidential campaign promise by persuading Congress to extend the minimum wage to retail workers, who had until then not been covered by the law. Congress granted an exclusion, however, to small businesses with annual sales beneath $1 million -- a figure that in 1965 it lowered to $250,000.

Walton was furious. The mechanization of agriculture had finally reached the backwaters of the Ozark Plateau, where he was opening one store after another. The men and women who had formerly worked on small farms suddenly found themselves redundant, and he could scoop them up for a song, as little as 50 cents an hour. Now the goddamn federal government was telling him he had to pay his workers the $1.15 hourly minimum. Walton's response was to divide up his stores into individual companies whose revenues did not exceed the $250,000 threshold. Eventually, though, a federal court ruled that this was simply a scheme to avoid paying the minimum wage, and he was ordered to pay his workers the accumulated sums he owed them, plus a double-time penalty thrown in for good measure.

Wal-Mart cut the checks, but Walton also summoned the employees at a major cluster of his stores to a meeting. "I'll fire anyone who cashes the check," he told them.

Besides its Dickensian shock value, this story -- told by Nelson Lichtenstein in his new book about Wal-Mart -- points to a phenomenon of wider significance. The company that was willing to break the law to avoid paying the minimum wage is now the largest private-sector employer in the nation and the world, with 1.4 million employees in the United States and 2 million overall, more than 6,000 stores, and revenues that exceed those of Target, Home Depot, Sears, Kmart, Safeway, and Kroger -- combined. By virtue of its size and its mastery of logistics, Wal-Mart is able to demand low prices from its thousands of suppliers and thus inflict low wages on their employees. Its low prices have also forced reductions in wages and benefits at the unionized supermarkets with which it threatens to compete.

...

But Wal-Mart's distinctive identity came from fusing its brilliant use of new technology with its rigorous adherence to the old exploitative Southern labor practices. The Southern traditionalism of Walton and his lieutenants dictated that the stores' managers would be men and its salesclerks women, and no federal statute or class-action lawsuit has been able to dethrone that tradition yet. Wal-Mart is also famously, pathologically anti-union, but its antipathy toward its nonunion work force is no less remarkable. The firm prohibits overtime pay (even before the current recession, the average Wal-Mart employee worked 34 hours a week), offers health-insurance plans that fewer than 50 percent of its U.S. workers opt to purchase (the most common plan contains a $3,000 annual family deductible, a great deal of money for workers making a little more than the minimum wage), and keeps its labor costs down to 10 percent of sales, in contrast to levels of 11 percent to 13 percent for its discount retail competitors.

Go read the review, it has a lot of interesting detail. Better yet, go read the book!