What is Wal-Mart up to?

[Law of Loud]

Dumping

Five Rivers Electronic Innovations is located in Greeneville, Tenn. It employs more than 700 workers, and is the last American-owned color TV maker in the U.S.

In May 2003, Five Rivers filed an anti-dumping petition in Washington, charging that color television makers in China were illegally dumping their larger-sized color sets in the U.S., thereby threatening to put Five Rivers out of business. The company tracked TV imports from China and found that sales of the Chinese televisions skyrocketed from just over 50,000 sets in 2001 to 1.5 million sets during the first nine months of 2003, and that Wal-Mart was the primary reason for this increase.

In May 2004, the International Trade Committee unanimously agreed that the surge of these imports from China had injured Five Rivers, and then imposed duties averaging about 23 percent on these sets.

Wal-Mart, standing to lose money if Five Rivers was successful, filed a brief in support of the Chinese suppliers during the hearing, since then it has come to the aide of several other Chinese companies found guilty of dumping.

The argument presented by Wal-Mart and the government of China claimed that the makers of these sets were pricing them fairly, and that if American companies cannot compete, that is their own fault.

Use of overseas labor

Like most major retailers, Wal-Mart purchases the bulk of its goods from countries where the cost of labor is significantly less than in the United States and other wealthy industralized nations. Wal-Mart has been criticized for failure to maintain adequate supervision over its foreign suppliers. This lack of supervision has led to incidents where Wal-Mart products have been made using sweatshops or alleged slave labor. Wal-Mart critic Greg Palast reported that Chinese dissident Harry Wu (Wu Hongda) discovered in 1995 that Wal-Mart was contracting for work done by prisoners in Guangdong Province. Wu and Palast argue that numerous items at Wal-Mart are made by the Chinese People's Liberation Army, potentially including some items described as "Made in America".

In Bangladesh, Palast reported that in 1992 teenagers were working in "sweatshops" approximately 80 hours per week, at $0.14 per hour (9.2 Bangladeshi Taki), for Wal-Mart contractor Beximco. In 1994, Guatemalan Wendy Diaz reported that, at the age of 13, she had been working for Wal-Mart at $0.30 per hour (2.283 Guatemalan Quetzales).

According to Wal-Mart, as well as many advocates of free trade, comparisons of wage levels between vastly different countries is not a useful way to assess the fairness of a trade policy. The company also asserts that wages paid to overseas workers are comparable to or exceed local prevailing wages. In that case, the company states that the overseas manufacturing jobs it creates are often an improvement in the quality of life for its employees. The company has also asserted that factory jobs with its suppliers are often safer and healthier than local alternatives, which may include prostitution, the drug trade or scavenging.

Some United States observers have criticised the company for buying too much from the People's Republic of China, contributing to the enormous U.S. trade deficit with China. Wal-Mart accounted for $12 billion dollars of the $103 billion dollar US trade deficit in 2002. Critics say this trade helps support China's government, which they describe as oppressive, and helps them fund their military to further threaten Taiwan, and leads to joblessness and poverty in the United States.

Opposition to unions

In some positions, Wal-Mart employees earn less than those performing similar jobs at other stores. As of 2001, according to US federal statistics, the average supermarket employee earned $10.35 per hour, industry-wide; in comparison, stock clerks at Wal-Mart made $8.23 per hour on average. A 2003 wage analysis reported that cashiers, the second most common job at Wal-Mart, earn approximately $7.92 per hour and work an average of 29 hours a week. This brings in annual wages of $11,948, about $1000 less than the United States federal poverty line for a parent and one child.

Wal-Mart founder Sam Walton once argued that his company should be exempt from the minimum wage, and took advantage of an exception in the minimum wage law that, at the time, excluded small businesses from having to pay the minimum wage. While the federal minimum wage in 1962 was $1.50 an hour, Walton regularly paid his employees only 50 to 70 cents per hour. Former managers have reported that they were judged by upper management based on their ability to keep payroll costs low, and that they sometimes pressured more senior, higher-paid employees, in the hopes that they would quit.

Wal-Mart has aggressively resisted unionization efforts brought forth by their employees, in several cases the company was found guilty of violating the National Labor Relations Act, which expressely forbids firing workers sympathetic to a labor union. The company also shows anti-union videos to all new employees.

In 2000, meat cutters in Jacksonville, Texas voted in a union, and Wal-Mart eliminated in-house meat-cutting jobs in favor of prepackaged meats. The UFCW believes that the switch was retaliation for the union vote, but Wal-Mart claims that the change had been planned for years. In June 2003, a National Labor Relations Board judge ordered Wal-Mart to restore the meat department to its prior structure, complete with meat-cutting, and to recognize and bargain with the union over the effects of any change to case-ready meat sales.

Of the few stores that have successfully organized, at least one (Jonquière in the province of Québec) was closed down within that year, before management had negotiated with the union regarding a contract. Although Wal-Mart denies that the vote in favor of unionization was the motive for this closure, the Quebec Labor Board has ruled that this action was taken to punish workers for excercising their right to organize, and has ordered that Wal-Mart pay the workers appropriate damages. The board will determine the appropriate remedies for the former employees at a later point in time. In a separate ruling, the labor board rejected Wal-Mart's request to turn over the names of all employees who signed up to unionize in some of their other stores.

Wal-Mart had an illegal section of its anti-handbilling/anti-solicitation policy that said that workers were not allowed to meet with union representatives or receive union literature while they were off-the-clock and in a non-sales area; Wal-Mart amended this policy in an informal settlement with the National Labor Relations Board

Wal-Mart has an anonymous survey given to each one of its employees, called "Grassroots". The UFCW claims that the purpose of this survey is to let Wal-Mart calculate a Union Probability Index number for each facility, that tells them how likely a union is to form there. UFCW representatives also claim that Wal-Mart listens in on store telephone calls and e-mails, looking for signs of unionization, and sends in union busters in order to dissuade employees from unionizing.

In March of 2005, Tom Coughlin was forced to resign from Wal-Mart's board of directors. The company claims that they found evidence of embezzlement by Coughlin, Coughlin claims that the money was used for an anti-union project involving cash bribes paid to employees of the United Food and Commercial Workers union in exchange for a list of names of Wal-Mart employees that had signed union cards; Coughlin also claims the money was unofficially paid to him, by Wal-Mart, as compensation for his anti-union efforts.

Wages

In some positions, Wal-Mart employees earn less than those performing similar jobs at other stores. As of 2001, according to US federal statistics, the average supermarket employee earned $10.35 per hour, industry-wide; in comparison, stock clerks at Wal-Mart made $8.23 per hour on average. A 2003 wage analysis reported that cashiers, the second most common job at Wal-Mart, earn approximately $7.92 per hour and work an average of 29 hours a week. This brings in annual wages of $11,948, about $1000 less than the United States federal poverty line for a parent and one child.

Wal-Mart founder Sam Walton once argued that his company should be exempt from the minimum wage, and took advantage of an exception in the minimum wage law that, at the time, excluded small businesses from having to pay the minimum wage. While the federal minimum wage in 1962 was $1.50 an hour, Walton regularly paid his employees only 50 to 70 cents per hour. Former managers have reported that they were judged by upper management based on their ability to keep payroll costs low, and that they sometimes pressured more senior, higher-paid employees, in the hopes that they would quit.

Critics of Wal-Mart have argued that Wal-Mart indirectly incurs costs for federal social service programs, due to the low wages it pays its employees. A report by U.S. Democratic Party congressman George Miller argued that a 200-employee Wal-Mart store may indirectly cost federal taxpayers $420,750 to finance free-lunch and health-care programs for children of low-income Wal-Mart employees, tax credits for low-income families, and similar programs.

In 2000, Wal-Mart paid $50 million to settle a class-action suit that asserted that 69,000 current and former Wal-Mart employees in Colorado had worked off-the-clock. These employees, as well as several former managers, have testified that Wal-Mart had an unofficial policy requiring off-the-clock work, to keep the cost of payroll down; as of the time of printing of Wal-Mart's 2005 Annual Report, the company faced 44 wage and hour lawsuits in states including California, Indiana, Minnesota, New Jersey, Oregon, and Washington.

Labor laws and working conditions

In January 2004, the New York Times reported on an internal Wal-Mart audit which found “extensive violations of child-labor laws and state regulations requiring time for breaks and meals.” One week of time records from 25,000 employees in July 2000 found 1,371 instances of minors working too late, during school hours, or for too many hours in a day. There were 60,767 missed breaks and 15,705 lost meal times. The report by congressman Miller alleged that in ten percent of Wal-Mart's stores, nighttime employees are sometimes locked inside, making them unable to leave. In some cases employees who had sustained injuries requiring medical attention were forced to wait inside the store for hours for a manager to arrive and unlock the door.

Under an arrangement, disclosed by the New York Times, Wal-Mart will be allowed 15 days to investigate and rectify employee complaints before the Department of Labor conducts any investigation. Upon receiving a complaint about a potential violation of wage and hour laws, DOL’s field offices around the country are now instructed to notify the DOL office in Little Rock, Arkansas, which will then notify Wal-Mart’s headquarters in Bentonville, Arkansas of the complaint. The Department will not launch its own investigation during that time and it remains unclear under what circumstance it would launch an investigation after the 15 day period ends, Representative George Miller (D-California) requested an investigation by the DOL’s Inspector General to determine whether the arrangement represents a sweetheart deal between the Bush Administration and Wal-Mart.

Today Wal-mart gets a fifteen day's notice before child labor inspections.

Taxes

Until the mid-1990s, Wal-Mart took out corporate-owned life insurance policies on low level employees, such as janitors, cashiers, cart pushers, and stockers. This type of insurance is usually purchased to cover a company against financial loss when an executive or other high ranking employee dies. In this case it is usually known as "Key Man Insurance", but the policies that Wal-Mart took out on its rank-and-file workers were derided as "Dead Peasants Insurance" or "Janitor Insurance". Critics (such as the U.S. Internal Revenue Service) charge that the company was trying to profit from the deaths of its employees, and take advantage of a loophole in a tax law which allowed them to deduct the premiums. The practice was stopped in the mid-1990s when the federal government, which had previously called the financing scheme "tax arbitrage," closed the tax loophole and began to pursue Wal-Mart for back taxes.

Allegations of gender discrimination

Wal-Mart is currently facing an $11 billion gender discrimination lawsuit that has been granted class action status by the district court hearing the case.

 

[Law of Loud]

Health insurance memo

On October 26, 2005, The New York Times reported that a Wal-Mart internal memo sent to the firm's board of directors advised trimming over $1 billion in health care expenses by 2011 through measures such as attracting a younger, implicitly healthier work force by offering education benefits. The memo also suggested giving sedentary Wal-Mart staffers, such as cashiers, more physically demanding tasks, such as "cart-gathering", and eliminating full-time positions in favor of hiring part-time employees who would be ineligible for the more expensive health insurance — policy proposals which may violate the Americans with Disabilities Act of 1990.

According to the article, the memo accused Wal-Mart's lower paid employees of abusing emergency room visits, "possibly due to their prior experience with programs such as Medicaid", whereas such visits may actually be due to the reduced ability of uninsured or underinsured people to make timely appointments to see a regular physician.

The memo reportedly also expressed concern that an employee with seniority earns more money, but is not more productive than a new employee.

Critics point to the story as evidence that Wal-Mart purports to be generous with its employee benefits, while in reality the company is working to cut such benefits by reducing the number of full-time and long-term employees and discouraging supposedly unhealthy people from working at Wal-Mart.

Illegal use of undocumented workers

On October 23, 2003, federal agents raided 61 Wal-Mart stores in 21 states, in a crackdown known as "Operation Rollback". When they left, the agents had arrested 250 nightshift janitors who were undocumented workers. Following the arrests, a grand jury convened to consider charging Wal-Mart executives with labor racketeering crimes for knowingly allowing undocumented workers to work at their stores. The workers themselves were employed by agencies Wal-Mart contracted with for cheap cleaning services. While Wal-Mart executives have tried to lay the blame squarely with the contractors, federal investigators point to wiretapped conversations showing that executives knew the workers were undocumented. Additionally, some of the janitors have filed a class-action lawsuit against Wal-Mart alleging both racketeering and wage-and-hour violations. According to the janitors, Wal-Mart and its contractors failed to pay them overtime totaling, along with other damages, $200,000. One of the plaintiffs told the New York Times that he worked seven days per week for eight months, earning $325 for 60-hour weeks ($5.41 per hour), and that he never received overtime pay. A legal question now being raised is whether these undocumented workers even have the right to sue their employers. This recent raid was not the first time Wal-Mart was caught using undocumented workers. In 1998 and 2001, federal agents arrested 102 undocumented workers at Wal-Mart stores around the country.

Wal-Mart eventually settled the lawsuit the government brought against them, for $11 million.

In November 2005, 125 alleged illegal immigrants were arrested while working on construction of a new Wal-Mart distribution center in eastern Pennsylvania. According to Wal-Mart, the workers were employees of Wal-Mart's construction subcontractor.

Workforce diversity

Wal-Mart has received low scores on the Corporate Equality Index, published by the Human Rights Campaign, a measure of how companies treat gay and lesbian employees and consumers. The company received a 57% rating in the 2005 edition, a 43% rating in the 2003 and 2004 editions, and a 14% rating in the 2002 edition.

According to data from the Equal Employment Opportunity Commission, Wal-Mart ranks well below its current retailing peers, which have an average of 56% female managers, female employees at Wal-Mart make up 73% of its workforce, but only one-third of its management, a percentage that was typical in 1975.

The EEOC has had to file more lawsuits against Wal-Mart for cases of disability discrimination than any other corporation. A top EEOC lawyer told the magazine Business Week, "I have never seen this kind of blatant disregard for the law."

Product controversy

Wal-Mart's product selection is a controversial subject. As a privately-controlled corporation, Wal-Mart may retain the right to control what products are sold in its stores, but many criticize the company for allowing right-wing, conservative and religious viewpoints to influence its product selection and thereby effectively impose their own view of morality onto their customers instead of allowing the customers to make their own decisions.

Examples of items that Wal-Mart does not sell are music with explicit lyrics (censored or "clean" versions are offered instead), certain lad mags such as Maxim, and emergency contraception pills. Some magazines were moved to covered shelves in order to prevent alleged insult to customers. Critics point out apparent hypocrisy in that that Wal-Mart sells other controversial items such as rifles and shotguns, R-rated movies, and violent video games — although Wal-Mart did remove the video game Grand Theft Auto: San Andreas from its shelves due to an allegedly sexually explicit scene accessible by modifying the game's code via a software patch.

Wal-Mart does not carry music albums marked with RIAA's Parental Advisory Label. The store does carry edited versions of those albums. Record labels release edited versions with obscenities completely removed or overdubbed with less-offensive lyrics. Such versions, sometimes referred to as radio edits, are produced by music publishers to increase retail sales. Notably, albums critical of Wal-Mart itself have been removed from the shelves.

Wal-Mart was criticized for selling The Protocols of the Elders of Zion, a fraudulent and anti-Semitic document purporting to describe a plan to achieve Jewish global domination. Wal-Mart sold the book on its website, including a description that suggested it might be genuine; It was withdrawn from sale in September 2004, as a business decision. The document is still available for purchase from many other booksellers, who sell it in the interests of freedom of speech.

Supplier relations and predatory pricing

Wal-Mart has been prosecuted for predatory pricing behavior, temporarily lowering prices in order to drive competitors out of business and develop local monopolies. The chain has been found guilty of predatory pricing in lower courts, but those convictions have been overturned on appeal. There are also several ongoing cases alleging predatory pricing. There have been no successful federal or state actions to sanction Wal-Mart for practicing predatory pricing.

Most grocers charge several fees in order to carry a supplier's product. A slotting fee is charged for placing a product on the shelf. In addition to slotting fees, retailers may also charge promotional, advertising and stocking fees. According to an FTC study, the practice is "widespread" in the supermarket industry. According to retailers, fees serve to efficiently allocate scarce retail shelf space, help balance the risk of new product failure between manufacturers and retailers, help manufacturers signal private information about potential success of new products, and serve to widen retail distribution for manufacturers by mitigating retail competition. Vendors charge that slotting fees are a move by the grocery industry to profit at their suppliers' expense. Wal-Mart pays the supplier only for the actual cost of the goods themselves, and the supplier pays no fees to Wal-Mart.

With Wal-Mart's supreme buying position, it business relations with suppliers are at times best described as a vigorously monopsonistic. In its negotiations with suppliers, Wal-Mart requires that prices go down from year to year. If a vendor does not comply with Wal-Mart's request for reduced prices, they risk having their entire brand removed from Wal-Mart's shelves in favor of a lower-priced competitor or a less expensive store brand. This can put pressure on suppliers to shift jobs to factories in third world countries or reduce the quality of the product. A CEO of one of Wal-Mart's suppliers said that the price Wal-Mart requested from his company for a particular product was so low that he couldn't afford to keep production in America, even if he didn't have to pay his workers anything.

Local community impacts

Community activists often organize campaigns against proposed new store locations, but the effects of Wal-Mart stores on the communities in which they operate is a topic of some controversy.

Critics of Wal-Mart and some academic studies, particularly out of the University of Iowa, claim that Wal-Mart displaces locally-owned stores resulting in the reduction of locally-owned corporate assets and real estate, and the destruction or displacement of higher paying jobs. Other studies, including several recently from the University of Missouri, have claimed that Wal-Mart stores either do not have negative impacts or have been found to positively impact a community by effecting lower prices, increased employment, and increased establishment counts.

Wal-Mart claims that their entry into local grocery markets lowers prices, and that this is equivalent to an increase in consumers' real incomes in the local economy. Economists at Global Insight in November 2005 estimated that it lowered the Consumer Price Index 3.1 percent, including a reduction nationwide of food prices by 9.1%. These results were published as part of a symposium sponsored by Wal-Mart, in which Global Insight, a respected economics consulting firm, was hired to gather academically reviewed papers concerning the effects of Wal-Mart. The company increased the US economy's overall productivity by three-quarters of a percent by highly efficient distribution systems and pressure on suppliers to be more efficient. Wal-Mart increased net consumer purchasing power by $118 billion in 2004. The efficiencies created 210,000 jobs that would not otherwise exist, but at the same time reduced take-home pay for all retail workers (including the company’s competitors) by $4.7 billion.

The chain's expansion outside of the United States has been opposed by groups concerned that it would negatively impact local culture. For example, when Wal-Mart opened a Superstore in Teotihuacan, community members protested the opening as being, "like planting the staff of globalization" [36], because of its proximity to cultural landmarks such as the Pyramid of the Moon. Archaeological experts were on hand during construction, and assisted in recovering a Pre-Columbian altar.

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Courtesy of Wikipedia