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Company store: Pullman to Wal-Mart

Wal-Mart’s effort to move into Pullman invites a comparison of the 21st century company store with the 19th century version.

“The parallels are almost too obvious too mention,” said Jeff Helgeson, a Pullman resident who teaches labor studies at the University of Illinois-Chicago.  “There’s a sense in which [Wal-Mart] is very much like the model community of Pullman.”

Built by George Pullman as a planned community for workers at his railroad car plant, the town of Pullman was “celebrated internationally as a utopia,” but “within 15 years was the scene of one of the largest labor strikes in U.S. history,” Helgeson said.  He’s one of a group of neighborhood residents who’ve organized Labor Day celebrations to mark Pullman’s history.

Like Wal-Mart, the Pullman Company paid lower wages than other employers. (In 2004 a University of California-Berkeley study found Wal-Mart’s wages for non-managerial employees were 31 percent lower than the average retail wage; Chicago’s Center for Labor and Community Research estimated that Wal-Mart wages were $2 to $3 below those of its competitors.)

Both companies banned trade unions.  Both companies are known for spying on their workers to prevent any stirrings of organization.

The Pullman Company also owned every home, every store, every school, and every church in the town – even the town library – until the Illinois Supreme Court ordered the sale of all non-manufacturing property in 1898, ruling that company towns are “opposed to good public policy and incompatible with the theory and spirit of our institutions.”

A low-income cycle

Wal-Mart has commonly been called a “company store” because, in economist R.J. Eskow’s words at Huffington Post, “Wal-Mart lowers your living standards then sells you cheap goods that are all you can afford.”

“Wal-Mart has created and perpetuated a low-income cycle of worker/consumer,” said Al Norman of Wal-Mart Watch in an interview with Grist.  “Wal-Mart’s 1.5 million workers have to shop at the company store because they can’t afford to shop elsewhere. It’s a great closed-loop system, akin to a plantation where the field workers went to the company store with their day’s wages.”

“In a chilling reversal of Henry Ford’s strategy, which was to pay his workers amply so they could buy Ford cars, Wal-Mart’s stingy compensation policies…contribute to an economy in which, increasingly, workers can only afford to shop at Wal-Mart,” wrote Liz Featherstone in the Nation in 2004.

A couple years later Barbara Ehrenreich wrote of “signs… that Wal-Mart was beginning to be priced out of the reach of its own employees.”  Workers getting $8 or $9 an hour buy their clothes at thrift stores, she pointed out, and the store’s electronics and lawn and garden products “weren’t even on the distant horizon.”

In at least one other country, an old-school solution was attempted – company scrip.  But in September 2008, the Mexican Supreme Court ordered Wal-Mart’s Mexican subsidiary to stop paying its employees in vouchers redeemable only at Wal-Marts.  (The company called the program its “Social Welfare Plan,” according to one report.)

The court held that the practice was “similar to what happened in old company stores” that were outlawed by the constitution of 1917, Reuters reported.

Food stamps: a double boost

Another approach may be on view in Wal-Mart’s store on Chicago’s West Side.  Employees there interviewed by Chicagoist said “the company purposely cut worker’s hours [so they] can remain eligible for the Link Card,” the state’s food assistance program.

“There’s a lot of workers on Link,” says one employee, and when workers’ hours are cut, their Link Card allocation goes up.  And “shoppers that use their Link card at Wal-Mart include many Wal-Mart employees,” according to Chicagoist.

The use of public assistance programs like food stamps and Medicaid by underpaid Wal-Mart employees has long been an issue.  In 2004 California Assemblywoman Sally Lieber released Wal-Mart’s “Instructions to Employees” telling them how to sign up for food stamps and health assistance.  “Public assistance is very clearly part of the retailer’s cost-cutting strategy,” Featherstone wrote.

But with Wal-Mart supercenters now selling food – and accepting Link Cards – the company gets a double boost to its bottom line.

The old company store merely recouped the wages the employer had paid out.  In this innovative twist, the money paid by taxpayers to supplement Wal-Mart’s low wages can now be spent at Wal-Mart, contributing even further to the Walton family’s riches.

It gives an entirely new meaning to the term “corporate welfare.”

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Category: development, food, jobs, labor, Pullman, retail, Wal-Mart

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5 Responses

  1. D lofquist says:

    I don’t appreciate the tone of your article. You make it sound as though people who happen to work at Walmart aren’t smart enough to handle their finances. No one forces poorer people to shop at walmart, even if they work there. There are enough places in the city to find deals. Also, cutting hours for link eligbilty helps the workers. They get more benefits than just money. Furhermore, 8 dollars an hour stacking shelves is a lot better than waitressing for 5 plus tips, which aren’t reliable, and a lot more stressful. If you were a journalist, you would present facts that let the reader decide, instead of twisting facts. Also, if you spent any time in the area, you would know that there has been little to no retail in the area for decades. Residents here are begging stores to invest. Walmart is the only business willing to invest here. I think another article with balanced facts is in order.

  2. T Shepherd says:

    For the average person who lives in nearby Pullman, the analogy of the “company store” was pretty clearly understood.

    That people who work hard to make a living need to have link cards, food stamps, and government-paid health care is a sad commentary on Walmart and what they’re trying to project themselves as.

    A fair and just employer they are not.

  3. Curtis says:

    To D Lofquist: You are confused. The information you complain about actually comes from people who work at Wal-Mart, who are quite evidently “smart enough” to understand what’s going on there. As for the notion that cutting their hours (and thus their pay) somehow “helps the workers” – you are just very confused.

  4. […] to food is high on the company’s priorities.  (With Walmart now accepting food stamps, Newstips pointed out a couple years ago, “the money paid by taxpayers to supplement Walmart’s low wages can now […]

  5. […] Company store: from Pullman to Wal-Mart […]


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