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Retail's Weak Case for Business as Usual

David Callahan

If I were a top executive in the retail or restaurant industries, or one of their hired guns in Washington, I'd be very nervous right now. 

Tomorrow will see what may be the first-ever national strike against restaurant and retail chains, with workers expected to walk off the jobs in 35 cities -- including at retail giants like Sears, Macy's, and Walmart.

The retail and restaurant industries now find themselves roughly where the coal and steel industries were a century ago: in the crosshairs of a fast growing labor movement that threatens to end a golden era of worker exploitation. We know how that earlier story ended. The workers won, grabbing a bigger piece of industry profits. Ditto for the auto industry.

If you think that can't happen today, think again. Despite the watering down of labor laws over the past few decades, these laws are much stronger today than they were when unions took on the industrial trusts of an earlier era. Workers also have far better tools for organizing now than did a century ago, including the social media networks that just helped to bring down multiple dictators in the Middle East. Additionally, our political system is more capable of responding to exploitation, as evidenced by minimum wage hikes already passed in a number of states. 

And, yes, I'm consciously using the word "exploitation." When corporations pay people $7.25 an hour simply because they can, while pocketing record profits, it's hard to find a more apt word for what they are doing. 

The growing anxiety in retail must explain why I found myself reading about the virtues of this industry in Mike Allen's Playbook this morning. Politico charges top dollar to allow various interest groups to make their pitch in Allen's morning email that is read by thousands of Washington elites. Here's how the industry framed it's role in the economy: 

Retail is about more than providing consumers with great products. Retail supports 42 million American jobs. Think those are all behind a cash register? Retailers hire more finance employees than Wall Street; more engineers than Silicon Valley; and a whole lot of creative minds like photographers, web designers, marketers and writers. Career opportunities within the industry are endless.


Retail companies play a critical role in the communities they serve. From product donations and monetary aid in the wake of natural disasters to company-branded social responsibility programs and volunteer initiatives, retail companies and their employees give back and bring people together like it's their business.

Get ready to shoot some fish in a barrel.

Let's start with the laughable claim about "great products." Tell that to anyone who's ever bought a laptop computer -- one of the more expensive products out there -- only to have it go kaput within two years, if not sooner. Or tell that to parents who routinely watch presents opened on Christmas morning expire within hours. 

In fact, there's a substantial body of research that documents the declining quality of consumer goods over the past few decades amid the rise of contemporary big box retail. One team of researchers laid blame in a 2010 paper squarely on Walmart and other low-end retailers who deliberately reduced quality to capture greater market share, forcing other retailers to also lower quality. 

But the more problematic claim by the National Retail Federation is about about all those great jobs. It's no wonder, in a message to professional elites within the Beltway, that retail lobbyists would play up all the white collar jobs created by retail in finance and technology.

Of course, as we all know, those "good" jobs constitute a small fraction of the overall jobs created by retail. It's disingenous at best to shift the focus to such unrepresentative jobs on the eve of a nation-wide strike by far more typical retail workers. 

As for those "endless" career "opportunities" in retail, a recent study of the fast-food industry -- a very close cousin of retail -- found that very few front-line workers have much chance of climbing upward. 

While managerial, professional, and technical occupations make up 31.1 percent of jobs throughout the U.S. economy, only 2.2 percent of jobs in the fast food industry are managerial, professional, or technical occupations. Front-line occupations make up 89.1 percent of all jobs in the fast food industry and have a median hourly wage of $8.94 per hour.  
I haven't seen the same numbers crunched for retail, but it sure looks like a similar picture whenever I walk into a big box store, which require lots of clerks and cashiers to operate, but not that many managers. 
As for all the benefits to communities from retail, that may have been true in the old days, when store owners actually were part of their communities. But now the exact opposite is often true: When Home Depot puts the locally owned hardware store out of business, or CVS knocks out the local pharmacy, money starts to get vacuumed out of the community and sent to top executives and shareholders who live far away. 
It's no surprise that retail is making such patently weak arguments on its behalf. They are under attack and they have to say something. It just all sounds fake and spurious. 
So let me suggest another possible approach. Retail could point to the good guys in their midst -- stores like Trader Joe's and Costco that pay decent wages -- and say, hey, we know we're not perfect. But some retailers are doing things right. And we as an industry understand that these outliers need to become the norm. So we are hereby committing ourselves to a sweeping and voluntary effort to raise labor standards among all retailers. Give us time. We can and will change. 
If you think this will never happen, consider that many industries have said something similar about the environment and sustainability. You can dismiss how genuine these efforts have been, but they stand as evidence that beseiged industries can be responsive to public pressure. 
All the more reason for the big strike tomorrow.