Countervailing Powers: Labor Unions Against the Buyer Power of Walmart Supercenters

Abstract:

Power is central to sociological accounts of economic inequality; however, buyer power—market conditions in which one or a few dominant employers can limit workers’ outside options for employment—has received little attention relative to worker power. We study how the entry of Walmart Supercenters, the archetype of a high-buyer-power employer, affects the size and protective strength of union membership (a key dimension of worker power). We analyze (1) whether greater worker power dissuades Walmart Supercenters from entering a local labor market, (2) whether a successful Supercenter entry subsequently erodes local union membership, and (3) whether unions provide a protective effect against declining earnings after a successful Supercenter entry. We apply stacked difference-in-differences estimates based on county-year variation in Walmart Supercenter openings using restricted-access Panel Study of Income Dynamics data. We find that Walmart Supercenters are less likely to enter a local labor market that has high levels of union membership, even when conditioning on attempted Walmart entries. When Walmart Supercenter openings do occur, union membership declines by an average of 3.5 percentage points, and this is channeled through declining union membership in retail. Remaining union members are not protected against Walmart’s downward pressure on earnings; in fact, annual earnings among workers who were unionized pre-treatment decline faster than for non-union members after a Walmart Supercenter opens. Worker power can be effective at preventing a rise in buyer power, but conditional on increases in buyer power, worker power tends to decline in terms of both size and protective strength. The sociological study of labor market power ought to consider how prevailing levels of buyer power can moderate the ability of organized labor to achieve its social and economic aims.