Why The Wal-Mart Black Friday Protests Won't Work

Union-style tactics aren't the way to get better pay or work conditions.

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One question for the hundreds, or perhaps thousands, of Wal-Mart workers who are planning to disrupt the retailers' stores over the Thanksgiving weekend: Have you noticed what just happened to Hostess?

[PICS10 Black Friday Shopping Injuries]

If not, here's the gist: Hostess, the fabled confectioner that makes Twinkies, Wonder Bread and other baked goods, declared bankruptcy in January for the second time in eight years. The debt-saddled company asked for union concessions on pay, benefits, and work rules to lower costs and become more competitive. Several unions agreed, but one, representing bakers, went on strike, shutting down two thirds of Hostess's 36 plants. Now, Hostess says it may have no choice but to liquidate its assets, threatening the jobs of more than 18,000 workers.

In the aftermath of that, an unknown number of Wal-Mart workers plan to stage protests at 1,000 stores to draw attention to low pay, poor working conditions, and other controversial tactics that help the giant retailer keep costs down. The action may or may not involve impromptu strikes on Black Friday, the day after Thanksgiving—one of the busiest shopping days of the year.

Wal-Mart, which isn't unionized, has filed a legal complaint against the employee group, asking the government to categorize the protests as an unfair labor practice, and prohibit them.

The aggrieved workers may have some valid points about questionable labor practices at Wal-Mart, which has battled such allegations before and been subject to two formal government complaints about work conditions at its warehouses. It's clearly in Wal-Mart's interest to keep labor costs as low as possible and to fend off unionization efforts—or even union-style tactics—since that typically pushes costs up.

[See why a lot of CEOs favor higher taxes.]

 But it's the wrong decade—maybe even the wrong century—for workers protesting labor conditions to expect much for their efforts. Beyond that, old-fashioned protests and pickets seem to completely miss the point in an era dominated by high unemployment, an underskilled work force and falling pay for menial work. What we really ought to be protesting is mediocre education, naïve worker expectations and faulty thinking about what it takes to get ahead these days.

Wal-Mart epitomizes globalization and the cost-benefit tradeoffs that raise some people up and push other people down. The company obviously relies on cheap overseas labor and other cost-cutting innovations to keep prices remarkably low, which is great for consumers. The annual rate of inflation hasn't been above 4 percent since 1991, due partly to Wal-Mart and its many imitators.

But the same trends that keep Wal-Mart's prices down are bad for lower-skilled U.S. workers. A Wal-Mart salesperson earns about $9 per hour, on average, according to pay surveys by Glassdoor.com. Customer service or department managers earn a few bucks more. Such low wages make it hard for many of Wal-Mart's 1.4 million U.S. workers to make ends meet. And employee groups complain that Wal-Mart deliberately staffs its stores with part timers, to avoid having to pay costly full-time benefits.

Even if that's true, protests, work stoppages and unionization efforts would do little to change it. The success of union-style bargaining depends to a large extent on the supply and demand for labor. Union membership peaked in the 1950s, when the U.S. economy was booming and the unemployment rate was rarely above 5 percent. There were worker shortages in some parts of the economy, which gave unions a lot of leverage.

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Today it's a different story. Unemployment is stuck around 8 percent and 23 million Americans are unemployed or working less than they want. Five million people apply for jobs at Wal-Mart every year, and most of them get turned down. As economists note over and over, an oversupply of labor—especially at lower skill levels—means there is virtually no wage inflation pushing pay up. Wal-Mart keeps pay low because there's no market pressure to raise it.

The success of union-style tactics also requires societal support for those types of institutionalized protections, which has plunged. Unions have declined dramatically because globalization has helped employers gain the upper hand, but also because many union practices fell out of step with the mainstream work ethic and what seemed fair.

To many non-union workers, perks such as guaranteed work, lavish pension benefits and the old United Auto Workers "jobs bank" program—which paid laid-off workers nearly as much as they earned on the assembly line—seemed corrupt or abusive.

Many Wal-Mart employees seem to feel that tougher rules or pressure from outraged customers will help them get higher pay and better treatment. But you don't have much bargaining power when you have indistinct skills shared with millions of others. A better way to get ahead is to gain new skills that employers want and other workers don't have. Instead of attending union rallies, take a class. And above all, don't get in the way of penny-pinching shoppers who need those Black Friday bargains.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.