Fast Company

Shopping Our Way to Perdition

This month's letter from the editor.

One of my earliest childhood memories has to do with feet.

Colored feet, actually. All kinds of colors: blue, green, orange, red, purple, black.

They belonged to my father, a laborer in a textile finishing plant. During the day shift, he sloshed around ankle-deep in dye, in a grubby old factory in America's Silk City, Paterson, New Jersey. Every evening, he would return home and slip off his shoes and socks, revealing feet that were dyed yet another shade.

Oddly, I'm reminded of my dad when I think about Wal-Mart, the subject of this month's cover story. Why?

I've always felt remarkably fortunate to work not with my hands but with my mind, in a clean and safe environment. And I've always felt an obligation toward those who, like my dad, worked with their hands in American factories. For years, I would "look for the union label," buying U.S.-made goods whenever I could, even when it meant I had to pay a premium for the privilege or buy something of inferior quality. I was never what you might call a rational buyer.

Yet, until we reported this story on Wal-Mart, I never considered the unconscious decision all shoppers make when they enter one of its superstores to take advantage of Wal-Mart's low prices. Many people are literally shopping themselves, their children, and their friends out of work. These are jobs that the United States would eventually lose to low-wage nations anyway. But Wal-Mart, as a massively powerful force in our economy, is helping accelerate that loss by years and perhaps decades.

As economist Lester Thurow points out, Wal-Mart is often quick "to junk American suppliers and to replace them with cheaper foreign suppliers." And Wal-Mart, as our story makes clear, is also far more likely to pressure U.S. suppliers to do whatever it takes to remain in business with the retailer, even if it means sacrificing their own profit margins, closing down plants, and outsourcing jobs to China. If they don't, they're likely to be dumped by Wal-Mart in favor of suppliers who can provide the same goods made by people who make a mere fraction of what U.S. workers earn.

This is globalization at work, with all its attendant advantages and disadvantages. By rolling back prices on everything from a pair of jeans to a television set, Wal-Mart is helping to keep inflation in check. It's also helping to export tens of thousands of U.S. manufacturing jobs to other countries. Discount retailers, of course, have been doing this for years. What makes Wal-Mart different is its immense size and power in the market. Virtually overnight, any foreign supplier can efficiently tap into the company's vast network of more than 3,400 stores nationwide, including 520 Sam's Clubs.

Sam Walton understood the immense clout of the company he created--long before it was the largest retailer in the United States or the largest corporation in the world. In 1985, he launched his Buy American crusade, offering to work with U.S. manufacturers to bring production back to our shores. In his autobiography, Walton acknowledged that "we had fallen into a pattern of knee-jerk import buying without really examining possible alternatives." For a time, he took great pride in replacing everything from imported stacking chairs to apparel with U.S. products.

Since Walton's death in 1992, however, the focus on that campaign has clearly faded. Today, Wal-Mart annually buys more than $12 billion of goods from China, double what it bought five years earlier. A Wal-Mart spokesperson maintains the retailer still prefers to buy locally whenever viable. "However, some products are simply no longer manufactured in the United States in the volume we need," she says.

My father wouldn't find all of this very comforting, and neither do I. But it is the disruptive and discomforting reality of living in a connected world. Somehow, I think, my dad would've preferred to have his feet dyed a different color every night.

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