Walmart is the largest importer in the United States. It also employs its workers at very low wages. Walmart reports its average wage for full-time employees in the U.S. is $12.67 an hour, although it pays many part-timers the minimum wage of $7.25 per hour.
In contrast, Costco pays its hourly workers an average of $20.89 an hour, not including overtime.
The chart below shows the relationship between our trade deficit and the rise in income inequality:
The blue line is the trade deficit, or "U.S. Trade in Good and Services--Balance of Payment." As labor's share drops, more and more goes to the richest one percent. Or, as a Cleveland Federal Reserve paper by Paul Gomme and Peter Rupert remarked, "the recent strength in productivity growth has largely accrued to capital, not to labor." The black line shows our rising inequality. In 1980 the top one percent earned just 10% of all income. By 2007, just before the Great Recession, that percentage had increased to 23.7%.
Correlation is not causation. But it makes sense that the trade deficit would drive wages down while increasing the already-large fortunes of those at the top, because setting low-wage workers in China against workers in the U.S. obviously creates tremendous pressure on working people's wages -- and not just in manufacturing. When you release millions of people into the job market everyone will accept less just to keep their job. Meanwhile as the cost of labor drops the owners of companies are able to grab a bigger share of the pie for themselves, which is exactly what happened. Note: look at how much money that trade deficit is sending out of our economy. Hundreds of billions every single year, seven hundred billion this year alone. That is two thousand dollar per person taken out of the domestic economy.
The Cure
Since Walmart is one of the causes of our trade deficit (10% of our total trade deficit is caused by Walmart alone), it can be part of the cure. Walmart has committed to increasing its purchases of American-made goods by $5 billion per year over the next ten years.
Consumers can also refuse to buy products from China and other low-wages nations like Bangladesh where workers are subjected to subhuman, unsafe working conditions. Most clothing imports are from these two nations. Vote with your wallet for American-made products.
The Federal government should lead the way by requiring federal purchases to be Made in the USA. Did you know that the Defense Department supplied Russian-made helicopters to the Afghan government? And the shelves of U.S. government owned Army and Navy Pxs are filled with sweatshop imports from China, Bangladesh and Central America. We should not enter into any more "Free Trade" agreements until we get out trade deficit under control.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
