Brewed Fresh Daily

Although her book Selling Women Short is a powerful indictment of how Wal-Mart has treated its female employees, Liza Featherstone nonetheless acknowledges the lure of the Wal-Mart store for female shoppers, who delight "in spending as little as possible, all in one place." At a Wal-Mart "supercenter":

you can change a tire, buy groceries for dinner, and get a new pair of shoes and some yard furniture�a set of errands that once would have required a long afternoon of visits to far-flung merchants.

All these innovations contribute to Wal-Mart's remarkable productivity record, and this in turn has opened up another major source of competitive advantage for the company, its policy of "Every Day Low Prices" ("EDLP"), which makes it possible for it to undersell its competitors by an average of as much as 14 percent. Here the picture darkens because Wal-Mart's ability to keep prices low depends not just on its productivity but also on its ability to contain, or even reduce, costs, above all labor costs. As Sam Walton wrote in his memoirs:

You see: no matter how you slice it in the retail business, payroll is one of the most important parts of overhead, and overhead is one of the most crucial things you have to fight to maintain your profit margin.

One of the ways to win this particular fight is to make sure that the growth of labor's productivity well exceeds the growth of its wages and benefits, which has in fact been the dominant pattern for US corporations during the past decade. From a corporate perspective, this is a rosy outcome. When the productivity of labor rises and its compensation stagnates, then, other things being equal, the cost of labor per unit of output will fall and profit margins will rise. Wal-Mart has carried this strategy to extremes. While its workforce has one of the best productivity records of any US corporation, it has kept the compensation of its rank-and-file workers at or barely above the poverty line. As of last spring, the average pay of a sales clerk at Wal-Mart was $8.50 an hour, or about $14,000 a year, $1,000 below the government's definition of the poverty level for a family of three. Despite the implied claims of Wal-Mart's current TV advertising campaign, fewer than half - between 41 and 46 percent - of Wal-Mart employees can afford even the least-expensive health care benefits offered by the company. To keep the growth of productivity and real wages far apart, Wal-Mart has reached back beyond the New Deal to the harsh, abrasive capitalism of the 1920s.