Natural Food, Unnatural Prices
By Stan Cox, AlterNet
Posted on January 25, 2006, Printed on January 25, 2006
Roaming the parking lot of a San Antonio shopping center last month, my wife Priti and I came upon a Whole Foods Market. I couldn't resist hitting the brakes. For years, from our home in Kansas, we'd been reading and hearing about this king-of-the-hill among natural food retailers, and we wanted to see what all the fuss was about.
I found a parking spot between an Outback and a Prius. In moments, we had left the land of steel and asphalt behind and stepped into a world of biological wonders. The robust-looking bread, in all the right shades of toasty brown, was clearly far more than an inert sandwich-support medium; even the few lonely white-bread specimens looked good. The fruits and vegetables actually looked and smelled like fruits and vegetables. The bulk bins formed a solid base for the best of food pyramids. In the deli and packaged-food sections, it was an invigorating experience simply to read the labels.
The work day was just starting, and the employees, most of them anyway, were genuinely friendly and seemingly delighted with their lot in life -- to be young, healthy and working at Whole Foods. These "team members," as they're known in company lingo, have signed on with a major-league powerhouse. With 180 stores in the United States, Canada and the United Kingdom, annual sales of $4.6 billion and profits of $160 million, Whole Foods recently moved into the Fortune 500.
But then we started looking around for something to buy. As we stared bug-eyed at the lofty price tags, I wondered aloud what sort of income it would take to become a regular Whole Foods shopper. Priti had an idea: Why not give Whole Foods the Wal-Mart test?
Return of the cashier-shopper
Priti was referring to a June 2003 AlterNet article in which I asked this seemingly simple question: In view of Wal-Mart's vast range of merchandise and "Always Low Prices," could a family whose breadwinner worked at the Wal-Mart Supercenter in Salina, Kan., afford to supply its minimum needs by shopping there?
I'd relied on published studies that computed the cost of an "adequate but austere" life for a family with one adult and two children in Salina. The budget included only the basics: shelter, transportation, food, routine toiletries and medicines, and not much more. Housing and transportation can't be bought at Wal-Mart (yet), but almost all other necessities can be.
The bottom line: Our Wal-Mart cashier could not satisfy such a bare-survival budget even if she worked 40 hours per week, more hours than a typical Wal-Mart workweek. And as you might expect, in trying to keep the family within such a budget, I condemned them to an array of foods that were boring, unappealing, and not very nutritious -- and produced in ways that most customers would prefer not to know about.
But is that inevitable? Or is the nation's corporate food system capable of supplying people at all income levels with products of the quality we saw at Whole Foods?
Salina to San Antonio
I took Priti up on her suggestion, moving the hypothetical family from Salina to San Antonio, and having my cashier work and buy groceries at Whole Foods. I used the same list of foods -- a minimal, USDA-recommended "low-cost food plan" -- that I'd used at the Salina Wal-Mart.
Back at Whole Foods, we followed the same simulated-shopping rules, selecting the cheapest food in each food category and the cheapest brand of that type. Using those prices, I computed the monthly cost of feeding an adult female, a 12-year-old boy and a 4-year-old child.
At Salina's Wal-Mart, the bill had been $232, plus sales tax. At Whole Foods, the same basket of food cost $564. Texas has no sales tax on food, and Whole Foods employees get a 20 percent discount, bringing the cost for the San Antonio cashier all the way down to $451. That monthly price tag includes only the cheapest foods in each category, and none of the store's popular luxury items.
The starting wage for a cashier at Salina's Wal-Mart in 2003 was $6.25, which fell $146 per month short of meeting her family's survival budget. Whole Foods employees in three states told me that a starting cashier's wages tend to be between $7 and $8, but according to Whole Foods spokesperson Ashley Hawkins, a poll of all company regions showed a starting wage of $8 to $10.
Let's assume that the cost of nonfood necessities in present-day San Antonio is similar to Salina circa 2003 (although it's undoubtedly higher, and the San Antonio cashier might not have access to the full day-care subsidy that low-income Kansas workers get). A $10-per-hour employee determined to shop at Whole Foods could manage to do so. An $8-per-hour employee could meet the bare-survival food budget, but with nothing left over. At $7, she would miss the mark by more than the Wal-Mart cashier-shopper. The situation would be worse in a state like Kansas that taxes food sales.
Hawkins says Whole Foods' full-time turnover rate is 24.7 percent, so the above wages would apply to approximately one-fourth of employees. She says the companywide average wage is $15, and that health care, 401(k), stock option and stock purchase plans (after about 10-12 months' employment) have helped earn Whole Foods a place on Fortune magazine's list of the "100 best companies to work for" for the past nine years.
Blinded by uniqueness
But not all employees agree with Fortune's assessment. Jeremy Plague was among the Madison, Wis., Whole Foods employees who managed to form a union (the only one in the company's history) for a period between 2002 and 2004, eventually succumbing to Whole Foods' fierce anti-union policies.
Says Plague, "In my experience, most people really liked working at Whole Foods for the first few months, blinded by the uniqueness of the store and by their hippie rhetoric of how we all mattered. But then people hit the six-month wall where they realize that it's all a bunch of BS, and Whole Foods is just like every other money-hungry corporation … It's all a great, worker- and environment-friendly system until you get to the actual people working in the stores, stocking the shelves and ringing you up at the register."
A website created by the Madison organizing effort, wholeworkersunite.org, remains active as a gathering place for current and former Whole Foods employees critical of company policies.
Critics of my cashier-shopper analysis argue that jobs with retailers like Whole Foods or Wal-Mart aren't meant to support families. But to the extent that that's true, neither employer can be viewed as a model for the economy at large. And given the wage and price policies of the two companies, one thing is clear: Customers who frequent Whole Foods are unlikely to be Wal-Mart cashiers or other low-income earners.
Whole Foods CEO John Mackey is frank about that. He recently told The Independent (UK), "You can't have it both ways. If you want the highest quality, it costs more. It's like complaining that a BMW is more expensive than a Hyundai. Yes, but you're getting a better car."
And few Whole Foods Markets are situated in economy-car country. Of the 170 stores in the U.S., none are located in zip codes with average 2003 household incomes at or below $31,000 -- the approximate income earned by a full-time employee earning the average Whole Foods wage.
Only nine of the 170 stores are in zip codes with incomes of $43,300 or lower. That was the median income in the United States that year (that is, half of U.S. households had incomes lower, and half of them higher, than $43,300).
Half of the zip codes with Whole Foods stores lie above $72,000 in average income. A fourth of them exceed $100,000.
Mackey's defense of high prices is mirrored in Wal-Mart CEO Lee Scott's defense of his company's low wages, which he summed up in an address to employees last October: "I ask anyone to do the math. Even slight overall adjustments to wages eliminate our thin profit margin." And, said Scott, price increases are out of the question because even as it is, "our customers simply don't have the money to buy necessities between paychecks."
Is it possible for a corporation that sells everyday, necessary products like food to do three things at once: (1) pay a living wage, (2) charge prices that most people can afford and (3) provide an acceptable return to its shareholders?
Clearly, Wal-Mart gives top priority to shareholders. Then come customers and, bringing up the rear, workers. As expected, its degrees of success follow in that same order, with workers sacrificed to satisfy the first two priorities. But what would happen to its wages and prices if Wal-Mart, notorious for putting the price squeeze on its suppliers, were to commit itself to marketing only sustainably produced, high-quality goods?
And, returning to Whole Foods, the same question can be put another way: Does it manage to make the list of "best companies to work for" only because of the premium prices paid by its customers? How would Whole Foods' merchandise quality, pay and benefits look if it tried to match Wal-Mart's customer base, maybe not in size but in socioeconomic diversity?
Whole-food, nonmarket solutions
Many academics and grassroots activists in the sustainable-agriculture movement are asking those kinds of questions, doing some hard thinking about how society can pay farmers (preferably noncorporate farmers) adequately to raise nutritious food in less ecologically destructive ways while keeping the end products affordable for all.
Clearly, our hypothetical cashiers, wherever they work, would benefit from having their own vegetable garden. But unless, against all odds, they also managed to raise a lot of staple foods on their own -- wheat, dry beans, maybe some chickens or dairy animals -- or had plenty of time for fishing, they would still be largely reliant on purchased food of some kind.
Like many in her profession, Rhonda Janke, associate professor of horticulture and a sustainable cropping systems specialist at Kansas State University, is a big advocate of locally produced food, farmers' markets and community supported agriculture, or CSA. (In a typical CSA arrangement, consumers contract with a farmer in their area to deliver a certain quantity of food on an agreed schedule during the growing season. The kinds of foods delivered depends on what's in season.)
As for making good, locally produced food affordable, Janke notes that "many CSAs have provisions for 'work shares' and reduced cost shares for low-income families, and that can be part of a 'local safety net'. But that doesn't eliminate the need for the grower to get full price from a minimum number of full-paying customers."
Janke asks, "What do you consider a living wage for a farmer, and does that make the price of food go up? If all farmers got $10 per hour, not counting [federal subsidies], what would food cost? Would the price at Wal-Mart go up? Whole Foods?"
She believes that leaving it up to the big retailers would put food out of reach for a lot of people: "I think the only conclusion one can logically come to is that market forces alone are not going to provide enough healthy food to everyone in our society."
In that spirit, a growing number of pioneering nonprofit organizations are working to put good food within economic reach of their local communities. One of them is People's Grocery in Oakland, Calif. The nonprofit, community-based organization sells fresh produce and staples through its store and Mobile Market -- a "grocery store on wheels" that travels through West Oakland making regular stops. The organization also has extensive educational programs and has helped establish a growing network of community gardens that currently provide 25 percent of the produce it sells.
I asked co-founder Brahm Ahmadi what makes it possible for People's Grocery to sell good, natural food that low-income families can afford, while Whole Foods can't. He said the fundamental difference is that "they're pursuing profit and we aren't."
Ahmadi says good food doesn't have to be expensive. "Because of its huge size, Whole Foods receives a deeper discount from its suppliers than any other natural-food retailer. Yet the prices in its stores are among the most expensive. They are purely profit-driven, so they do not allow that cost benefit to go to the customer."
Once, says Ahmadi, a Whole Foods executive told him, "We could not market food the way you do, because our shareholders simply wouldn't allow it."
People's Grocery subsidizes its efforts through charitable funding, with the understanding that the donated money will go to hold prices down. But as the low-income market strengthens, says Ahmadi, People's Grocery will try to reduce its dependency on contributions by marketing food that it obtains directly from producers, cutting out as many steps of the expensive supply chain as possible.
The growth of the natural-food industry may have been phenomenal in recent years, but Ahmadi predicts that its relatively affluent target market cannot avoid saturation: "Companies will have to project what new markets they can turn to. And there's substantial growth potential among low-income shoppers. They account for almost half of food retail in the U.S. -- that's $85 billion."
Indirectly echoing Rhonda Janke's conclusion that "market forces alone are not enough," Ahmadi says, "We need to build demand that can thrive and grow on its own," but in low-income areas "it has to be done differently. It requires a grassroots approach with community organizations that have track records."
And community organizations working in not-so-posh urban zip codes from coast to coast are establishing just such track records. They include, among others, Garden-Raised Bounty in Olympia, Wash., Growing Power in Milwaukee and Added Value in Brooklyn, N.Y.
But a more thoroughgoing overhaul of the nation's food systems may be needed to reach the majority of city dwellers, as well as vast, less densely populated rural regions between the coasts. Of the 500 poorest counties in the United States, more than 450 are rural. Ironically, it is in highly productive, ecologically threatened agricultural regions that sustainably produced, nutritious food is least widely available.
To organizations like People's Grocery, it's unacceptable that such food is accessible to some families and not to others simply on the basis of where they live or how much they earn. As Brahm Ahmadi puts it, "We're not talking about a luxury item here. Good food is a basic need."