The opening of the Wal-Mart distribution center in Lewiston was certainly a festive occasion with all the theatrics that normally accompany such “grand openings.”
It brought me back to my days on the Lewiston City Council, and I hasten to add that it was a bittersweet remembrance. I recall being livid that as city councilors we were kept in the dark about the identity of the company and the details of the negotiations that were going on until the very last minute – a day or so before we were called upon to vote on a significant outlay of taxpayer cash to a highly profitable company. It was a soul-searching time for many of us on the council. I ended up voting for the deal with all of the other members of the council. It was the hardest vote I cast, and I have repeatedly returned to that moment, often wishing I could have the vote back even though it would have made no difference in the final outcome.
Wal-Mart is an enormously successful company. It is among the most effective retail operators on the face of the planet. It has mastered the art of technical supply chain organization to the most exquisite level imaginable. It squeezes profits out of the process in a manner unparalleled by competitors.
Why did I have concerns about my vote on the distribution center, and why do I continue to have those concerns?
On the big picture level, Maine cannot link its future to this kind of development. That is not where the future is on this planet. The technologically driven economy of the 21st century will reward those who have knowledge and skills, as well as entrepreneurial instincts, to function effectively in a fast changing world. If we put our economic development dollars into these dead-end types of economic activity, the future for our young people will not be very bright.
Do the simple math. The average wage is $13 per hour. That average includes all employees, meaning that many are receiving less than the average. However, for the average employee, the annual income is less than $27,000. Subtract F.I.C.A., taxes, health insurance payments off the top. Then add in the costs of food, rent or mortgage, utilities, clothing, car payments and you get the picture. This is a person who may well qualify for food stamps.
Put another way, what young person is going to be lured into staying in Maine for this kind of employment. It is not going to happen.
And companies like Wal-Mart are not known for their generosity to their employees. New York Times columnist Thomas Friedman, in his stimulating book, “The World Is Flat,” notes that Wal-Mart provided health insurance for only 45 percent of its employees. Those health plans have employee premiums of as much as $264 per month, and out-of-pocket expenses as high as $13,000 in some cases for serious illnesses. Of course, Wall Street likes that because it allows Wal-Mart to produce pre-tax profits almost three percentage points higher than its nearest competitor.
So, as Liza Featherstone has pointed out in her study of the impact of Wal-Mart’s employee approaches on women, “American taxpayers chip in to pay for many full-time Wal-Mart employees because they usually require incremental health insurance, public housing, food stamp. …”
That is an ongoing indirect subsidy. Sam Walton stood for self-sufficiency. Republicans and many Democrats stand for self-sufficiency. They support Wal-Marts of the world, which create economic dependency. Go figure.
The most obscene part of this picture is the nerve that these companies have in seeking taxpayer dollars as direct subsidies to their bottom line. In the Lewiston case, replicated all across the country in similar ways, they were able to get $17 million from Maine folks. The MO is simple. They set up a competition between communities, which are hungry for development, and they force them to vie for the development. Secrecy shrouds the process from public scrutiny, and some us even wondered if there was a competitor in Connecticut, as claimed by Wal-Mart officials in the Lewiston case, for the distribution center.
So, get this: We contribute directly to the profits of a highly profitable company in the name of free market economics. It just defies a straight-face test, doesn’t it?
What is the point of all this? I am not trying to bring down Wal-Mart. I am trying to say that Maine needs to look well beyond the Wal-Marts of the world to create an economy that is part of the 21st century. It must be built on an educational system that provides young people with the knowledge and skills that are necessary to succeed in the future. And we must invest in companies that will provide opportunities for our young people that will allow them to have a better life than their parents. That is central to the American Dream – and the Wal-Marts represent a significant step back from that reality.
We are dangerously close to a path that will consign our young to a reduced standard of living. Is that what we want for our kids?
Jim Carignan is a retired educator who lives in Harpswell. His e-mail address is [email protected].
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