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Published: Winter, 2006; Vol 8, Num 1

Wal-Mart’s Sorry Saga

Wal-Mart, the largest employer in the U.S. and the world, got its start back in the 1960s with an “innovative” business plan. Basically, as the company’s actions over the years indicate, the plan called for hiring part-time employees at minimum (or near minimum) wages and paying nothing for employee health care coverage.

Early in its operation, Wal-Mart concentrated on opening big box stores near small towns across rural America. Relying on both its low labor costs and the ability to pass along the lower costs of merchandise purchased at high volume, Wal-Mart easily undermined a lot of small town businesses, turning Downtowns into ghost towns.

When its low-paid employees were in financial need, Wal-Mart systematically directed them to local charities. When their children were sick, employees were directed to state Medicaid programs.

Amassing huge profits through this business model, Wal-Mart increasingly focused its newer expansion to suburban or exurban centers that are less rural, opening bigger and bigger stores with more and more workers. What had begun as a rural problem, largely out-of-sight for most Americans, has now moved next door, and the impact is increasingly apparent to everyone. Competitors, most of whom have traditional health care obligations to their employees, dislike the unfair competition. State health officials feel the pinch of increasing numbers of uninsured Wal-Mart employees. Unions see the threat to traditional middle class life and are organizing. Moreover, many of the company’s own employees and customers are reacting to the low wages and poor benefits that are associated with the company’s business model.

In short, after more than four decades of vast profit taken at the expense of small towns, part-time employees and the public health system, Wal-Mart and its business model are finally being called on the carpet. City councils are blocking the stores from entry to their communities. Workers are signing union cards. Public health advocates are advancing state legislation that requires employers to either provide health insurance for their employees or contribute to the state’s Medicaid program. A broad public information and awareness campaign has unfolded.

By its complete omission of any responsibility for the health care and general well-being of its employees and their families, Wal-Mart has now emerged as the nation’s most obvious symbol of corporate greed and a key target of efforts to reform health care in America.