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Wal-Mart: world's largest company

Chain's low-price, low-wage ascent is triumph of post-industrial economy

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Some 100 million people a week buy into the "we're just like you" message. The company's annual sales rival the gross domestic product of Austria, the world's 22nd largest economy.

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There are many ways to measure a company's size. Wal-Mart still trails General Electric and Microsoft in stock value. Nevertheless, the company displays unrivaled reach.

Besides being the world's largest retailer overall, it sells more groceries, toys, and jewelry than any other US chain.

But increasingly, the success and spread of Wal-Mart is generating a backlash of criticism. For example, while Wal-Mart didn't invent sprawl, it has taken it to its logical conclusion. It is moving from large discount stores to even larger super-centers where shoppers can buy briefs, bean sprouts, and big-screen TVs all under the same roof.

"Personally, I can't bear shopping in them," says Roberta Brandes Gratz, co-author of a 1998 book about the rebirth of downtown shopping areas. "There's a definite indication out there that people are bored with the sameness of the mall atmosphere."

Mr. Norman, whom CBS's"60 Minutes" dubbed "the guru of the anti-Wal-Mart movement," successfully kept Wal-Mart from locating in his hometown of Greenfield, Mass. Now, several dozen anti-sprawl groups are trying to do the same around the country.

Just as worrying to some is Wal-Mart's impact on workers' earnings. As the world's largest private employer - more than 1.2 million at last count - Wal-Mart is hardly a pacesetter in boosting people's take-home pay. Union officials claim the company typically pays its workers $2 an hour less than unionized supermarket employees. Nearly two-thirds of its workers don't participate in the company's health plan, they add, because of high insurance premiums and huge deductibles.

That's quite a change from the just-ended era when GM and Exxon stood at the top of the corporate heap. They paid solidly middle-class wages. Wal-Mart illustrates the danger of what happens when well-paid industrial jobs give way to low-paid service positions.

In 1954, for example, when Fortune Magazine first put out its Fortune 500 list and anointed General Motors as No. 1, the average autoworker brought home $91.30 a week. Retail workers averaged just over half that. By 1974, retail workers' weekly take-home pay had slipped to 43 percent. Last year, it stood at a third of autoworkers' weekly pay, according to preliminary estimates by the Bureau of Labor Statistics.

Such data alarms some economists.

"We're losing something in the process," says Willard Radell Jr., an economics professor at Indiana University of Pennsylvania in Indiana, Pa. "I worry that we're developing a caste system in America."

But other economists point out that the service sector includes many highly paid positions as well. "I would say that the core of what we would try to call the working class, what is now the middle class, are not the [workers at] Wal-Marts," says Ben Fischer, professor of labor studies and public policy at Carnegie Mellon University in Pittsburgh. Those who do work there either "have other income or they're very young or they're very old."

So far, Wal-Mart has managed to keep these workers satisfied. After years of trying, the United Food and Commercial Workers has only managed to organize one department in one Wal-Mart in Jacksonville, Texas. With the company's stock splitting 11 times since Wal-Mart went public in 1970, its profit-sharing plan has made many longtime employees quite comfortable financially.

"I could retire right now and I would never have to worry," says Mrs. Hartgrave, who started with the company in 1976.

But questions loom about the future. It seems unlikely such a huge corporation can keep up its breakneck growth. And as the empire becomes more far-flung, it may encounter difficulties instilling its corporate values in its new workers.

SUCH worries may explain why the company has adopted such an aggressive, anti-union stance in recent years. Last fall, the National Labor Relations Board charged the company with threatening employees, questioning them about union sympathies, and firing pro-union workers at the Jacksonville location. According to some estimates, Wal-Mart has the dubious distinction of being the most sued private entity, second only to the US government itself.

On the other hand, Wal-Mart repeatedly has defied conventional wisdom since its founding 40 years ago. And size, if anything, has enhanced the corporation's bargaining power.

"It's more likely that they would stumble because of complexity," not size, says Mr. Schulsinger of Management Ventures. But "I wouldn't bet against them.... They're successfully running the largest commercial organization in the world."