Former Labor Secretary Blasts Wal-Mart for Growing Divide Between Rich, Poor

Former U.S. Labor Secretary Robert Reich warned against a growing economic divide in the country and placed the blame on deregulation and large companies such as Wal-Mart that keep wages low while reaping massive profits.

An estimated 500 people packed Santa Rosa’s Glaser Center Monday night to hear Reich, now a professor of public policy at UC Berkeley, argue that low wages at companies such as Wal-Mart were directly responsible for rising poverty levels. Reduced wages mean less money for 115 million of the poorest Americans and decreased consumer spending.

“It’s not businesses who create jobs, but customers who buy products that leads to job growth,” Reich said.

Sixty years ago, the largest employer in the country was General Motors where an average hourly wage, when adjusted for inflation, was $50 an hour. Today, Wal-Mart is the largest employer, but pays its (non-unionized) employees an average wage of about $9 an hour, creating a growing class of poor who can’t afford to support their families, Reich said.

As a result, low-wage workers are more likely to need social services including at local health clinics or federal programs such as Medicaid, food banks and other community resources just to make ends meet.

“What happens is that the public ends up subsidizing Wal-Mart,” Reich said.

Wal-Mart says the average full-time wage for California employees is $12.89 an hour and that an entry-level job often leads to more lucrative positions in the company.

“At Wal-Mart, you can climb the ladder from a stocker to a department manager and beyond,” wrote Steven Restivo, a spokesman for the mega-retailer in a recent editorial in the Press Democrat. “About 75 percent of our store management started as hourly associates and they earn between $50,000 and $170,000 a year.”

Wal-Mart also says it provides a broad array of products at low prices, something  Reich says is true and important for many. But the company also has a negative impact on local businesses, with 1.4 jobs leaving the community for every job created, he said.

“We create the system we want to live in,” he said. “We want a decent society and have a responsibility to our communities.”

Wal-Mart disputes that it has a negative impact on local businesses, pointing to its Chicago store, opened in 2006, which it says has since attracted close to two dozen new businesses to the neighborhood, in addition to significant revenue for the city.

It also prizes community involvement, which locally has included assistance to victims of the Beverly Drive Apartments fire and donations to Redwood Empire Food Bank, Solar Sonoma County and Sonoma County Bicycle Coalition.

What’s your take? Is Wal-Mart good or bad for our community? Sound off in the comments below.