'We Have Split Brains'
As a member of Ironworkers Local 416, the 50-year-old father of four is well aware of the retailer's anti-union stance. But when the family's credit card debt topped $10,000, Wal-Mart's deals suddenly looked irresistible.
"Where else are you going to find a computer for $498?" he asked, looking for a PC with his wife, Debbie, at the Supercenter on Serene Avenue, far from the glitz of the Las Vegas Strip. "Everyone I work with shops here."
Surveys by the Teamsters and the United Food and Commercial Workers — the two unions most threatened by Wal-Mart — show that many of their own members shop at the discounter.
"We have split brains," said Robert Reich, U.S. secretary of Labor under President Clinton and now a professor of economic and social policy at Brandeis University in Waltham, Mass. "Most of the time, the half of our brain that wants the best deal prevails."
The connection may be lost on many, Reich said, but consumers' addiction to low prices is accelerating a shift toward a two-tiered U.S. economy, with a shrinking middle class and a growing pool of low-wage workers.
"Wal-Mart's prices may be lower," he said, "but that's small consolation to a lot of people who end up with less money to spend."
Others insist there is a net benefit whenever consumers can get more for less. "If you have lower real prices, you're saving money," said Arthur Laffer, a key advisor to President Reagan who is now an economic consultant in San Diego. "The prices' falling, in effect, raises the wages of everyone who buys their products."
That's basically the way the Miraflors saw it as they cruised the aisles of the Supercenter — Wal-Mart Store No. 2593 — and snapped up deals: Ragu pasta sauce for 89 cents, Aunt Jemima pancake mix for 48 cents, pork shoulder steaks for $1.49 a pound and five cans of Del Monte vegetables for $2.
After making their way through the groceries, the Miraflors turned their attention to the housewares section, stopping in front of a 20-inch box fan. Glenn Miraflor checked the price and made room for it in their cart.
"Ten bucks," he said. "You can't beat that. That's why we come here."
The fan was made 1,700 miles away in Chicago at Lakewood Engineering & Manufacturing Co. A decade ago, the same fan carried a $20 price tag.
But that wasn't low enough for Wal-Mart. So Lakewood owner Carl Krauss cut costs at every turn. He automated production at the red-brick factory built by his grandfather on the city's West Side. Where it once took 22 people to put together a product, it now takes seven. Krauss also badgered his suppliers to knock down their prices for parts.
In 2000, he took the hardest step of all: He opened a factory in Shenzhen, China, where workers earn 25 cents an hour, compared with $13 in Chicago. About 40% of his products now are made in China, including most heaters and desktop fans. The Miraflors' box fan was assembled in Chicago, but its electronic guts were imported.
"My father was dead set against it," Krauss said of the move overseas. "I have the same respect for American workers, but I'm going to do what I have to do to survive."
Survival in an age when consumers are hyper-vigilant about prices means shaving expenses again and again. "Nobody wants to be on the shelf with the same item for $1 more," Krauss said.
All the retailers he supplies — including Home Depot Inc. and Target Corp. — drive a hard bargain with manufacturers. But none is as tough as Wal-Mart, Krauss said.