Always Low Prices, Always Low Wages

Around the world, even in the twenty-first century, countries are still facing violations of labor ethics, and sadly enough, we are seeing it still today in the United States.  The same country that is suppose to have high ideals and provide its citizens the ‘American dream”.  The United States unemployment rate is 7.3 percent[1], and even of those employed, 20 percent are living below the poverty line.[2]  How is this possible?  Under the federal law the United States provides a minimum wage of $7.25 [3]yet this wage has not been changed for numerous years, therefore it doesn’t account for inflation over the past years.  This has caused many people to be unable to support themselves, let alone a family.  The largest employer in the US is Wal-Mart providing 2.2 million jobs to our citizens, and is one of the wealthiest companies in the world; yet even a company like Wal-Mart is paying most of their employees a minimum wage salary.  These wages cause hundreds of thousands of Wal-Mart employees to be unable to provide for their families, forcing them to turn to public assistance. In this paper I will discuss the labor issues Wal-Mart employees are facing, and their impact on the millions of their employees.

Wal-Mart’s History:

(the original Wal-Mart)

Sam Walton opened the first Wal-Mart discount store in 1962 in Rogers, Arkansas, under the foundation of “the lowest prices anytime, anywhere”.  Within five years, the company had opened 24 stores, and went public in 1970, and by 1980 Wal-Mart reached $1 billion in annual sales, faster than any other company at that time.[4]  Wal-Mart was, and is, still growing by the day, and “by 1998 Wal-Mart had approximately 2,400 stores in all 50 states and was operating in 10 countries”.[5]

 Screen shot 2013-11-17 at 3.01.08 PM

Today Wal-Mart has been quoted in articles such as the Financial Times as “an operation whose efficiency is the envy of the world’s storekeepers”.  Walton’s strategic foundation is still being seen today around the world promising its’ consumers low prices anytime with their motto “Save money. Live Better” and “Always low prices,Always”.  This competitive factor has been their golden ticket to being the Wal-Mart we all know today. [6]  Wal-Mart currently generates approximately 469,192 million dollars in sales and controlling a large portion of its’ industry market share.[7] The question stands on how Wal-Mart is able to provide such low prices?

The Wal-Mart Effect:

If you ‘Google’ Wal-Mart today, you are immediately presented with an expansive amount of articles in the media such as ‘The Wal-Mart you don’t know’, ‘Wal-Mart vs. Union-Backed OUR Wal-Mart’, ‘Is it ethical to shop at Wal-Mart?’ and the like.  Wal-Mart is consistently being talked about amongst labor activists, business professionals, and citizens, and unfortunately it is in a negative light.  People are questioning how they are able to provide such low costs when compared to a local market or retailer in their county, and Wal-Mart associates are speaking up.

Wal-Mart prides itself not only on the ability to provide its’ customers with low prices, but on being able to increase a counties living standards.  Wal-Mart believes that they create jobs for hundreds when moving in, while increasing the areas economy.  But there have been findings throughout a variety of studies that this may not be all it is cracked up to be.  Their constant low prices have to come at cost to someone and what studies, class action lawsuits, and evidence provides, is that the ones harmed are the associates (Wal-Mart employees).

Emek Basker has completed two case studies about Wal-Mart’s effect on the labor market.  Basker was able find, through an analysis of approximately 2,380 Wal-Mart store opening, its’ effect on counties employment rates.  Basker looked at the employment rate prior to the entry of a new Wal-Mart along with the following years.  Results showed that “in the years immediately following entry, there is a loss of 40-50 jobs”.  Although Wal-Mart discount stores are suppose to provide about 300 new jobs and Wal-Mart Supercenters should provide about 500 new jobs, the loss of jobs following the entry of Wal-Mart is due to the “exit or contraction of other large retailers” (which is brought on by Wal-Mart) .  Unfortunately, this is the least of our concerns on Wal-Marts entry into a county due to in store actions; those ‘lucky’ enough to get a job at Wal-Mart are faced with a multitude of setbacks.

imagesOn average in the United States a retail employee makes approximately $12.38 an hour compared to a Wal-Mart associate’s hourly wage of $8.81. “Employees working full-time at Wal-Mart make just $17,600 a year, well below the $19,157 poverty line for a family of four”,[8] therefore many can’t live a sustainable life.  If you refer back to Wal-Mart background section you will see that annual sales are approximately 469,172 million dollars; multiplying the average yearly salary by the number of associates (about 2 million), it comes out to be about 238 million dollars spent on employee salary every year.  This would conclude, that Wal-Mart only spends .051% of its revenues on their low-level employees, while the 6 Waltons are worth 93 billion dollars, and “the CEO of Wal-Mart is earning more in an hour than his employees will earn in a year… when converting the CEO’s salary into an hourly wage, it comes out to $16,826.92”(compared to the above $17,600 average associate salary).[9]  To add to this already low wage, associates around the nation have been banding together pressing charges against Wal-Mart claiming labor violations.  There has been a range of allegations where workers have said their managers have required them to work off-the-clock hours, and work an illegal amount overtime without pay. For example, in 2012 of a class action lawsuit brought against Wal-Mart in Chicago for “ violating minimum wage and overtime laws” [10]and in California Wal-Mart stores in 2010 had to pay up to $86 million to settle a massive wage and hour labor lawsuit for failing to make full payment for vacation, overtime and other wages to California employees (232,000). [11]

UntitledFor the 815,000[12] female Wal-Mart employees, they seem to get the lesser end of the stick. On top of these pathetically low wages, there is clear proof of discriminatory wages between men and women that work at Wal-Mart.  A 2001 study by Drogin showed that an average salary for a women working at Wal-Mart was approximately $5,000 less than men who have the equivalent job.  Even Wal-Mart cashiers, being the lowest paying job in Wal-Mart, with 92.6% of them being women, women are still paid less than male cashiers making $13,831 to males $14,525 salary.  During the Duke vs. Wal-Mart Store, Inc. suit (the largest class-action gender discrimination lawsuit in history)“Brad Seligman, the plantiffs’ lead counsel, stated: “It’s …undisputed on this record that [Wal-Mart’s] female retail store employees, hourly and salaried…are paid less than male employees in virtually every major job position in the retail stores.”[13]

            It seems as though Wal-Mart employees are hit with a never-ending cycle of setbacks due to the lack of labor ethics Wal-Mart has.  To add to an already deep wound, Wal-Mart’s health care benefits lack as well. In a statement in regards to health care Wal-Mart is quoted saying, “at Wal-Mart, we believe in shared responsibility and support an employer mandate that is broad and fair. We believe the mandate should cover as many businesses as possible, and cover part-time as well as full-time employees.”  This is great, that is, if they actually practiced what they preach.  In reality Wal-Mart’s health care program is so expensive that hundreds of thousands of their employees can’t afford it due to their wages discussed above.  This causes these employees to use public assistance, “ Hundreds of thousands of Associates and their family members qualify for publicly funded health insurance.  Indeed, according to data compiled by Good Jobs First, in 21 of 23 states which have disclosed information, Wal-Mart has the largest number of employees on the public rolls of any employer,” it is even said that in their Associate Benefit Book they provide steps on how ton enroll in programs such as Medicaid and CHIP (Children’s Health Insurance Program).  In recent years, Wal-Mart has also changed their health care program,

in fall 2011, Wal-Mart made it even more difficult for associates to get quality health care for themselves and their families. Beginning with the 2012 enrollment period, Wal-Mart rolled back health care coverage for part part-time employees and raised premiums for full-time employees by as much as 63% for non-smokers and their families and as much as 162% for smokers with families. . For employees earning $8.81/hour working an average of 34 hours per week, some of Wal-Mart’s 2012 healthcare plans would cost between 77% and 104% of the employee’s annual gross income.[14]

In conclusion, it is apparent that Wal-Mart’s shortcut to everyday low prices is directly affecting their associates.  From their low wages, poor health care, and gender discrimination, the steps Wal-Mart is willing to take in order to provide their consumers with the prices they have been guaranteeing since opening in 1962 has become public knowledge.

Wal-Mart Ethics:

wal-mart-what-now-488From the very foundation that Sam Walton built Wal-Mart off of “low prices anytime, anywhere”, comes a great deal of ethical issues that are still a controversial topic when discussing Wal-Mart stores.  From the research provided above there is clear data showing ways in which Wal-Mart is able to provide and sustain such low prices, that is, at the employees cost.  Looking at Wal-Mart without prior knowledge of the wages, overtime issues, and health care programs Wal-Mart comes across as a company that thinks of its’ consumers and employees first. They make it appear to be a happy, family-oriented environment even down to their mascot the big yellow smiley face.  Commercials portray the same message, welcoming families through providing that everyday low price ‘save money. Live better’.  Behind the scenes there is a clear disconnect between the portrayal of their business and their actions.  From the prospective of a consequentialist-utilitarian it would seem that the treatment of their employees outweighs their ability to provide lower priced products compared to their competitors. Seeing that this person would be identifying the alternative actions, and their consequences (harms and/or benefits) for all stakeholders, followed by mental calculation of all the costs and benefits of consequences stakeholder by stakeholder; I believe they would hold huge weight on the employees’ treatment.  It has been proven in the data above and many case studies of the direct and indirect consequences of Wal-Mart’s labor ethics.  The treatment causes many employees to rely on public assistance, and struggle with sustaining a livable-life for themselves and their families.  That being said, it would be that this person would believe that there should be a way for Wal-Mart (given its revenue) to seek out other ways in which they can still provide lower priced items while providing jobs that can actually allow people to live on.

[2] U.S Census Bureau, Current Population Survey, 2012.

[5] Basker,Emek. January 2004. Job Creation or Destruction?

[6] Basker,Emek. January 2004. Job Creation or Destruction?

[8] The Bully of Bentonville: How the High Cost of Wal-Marts’ Everyday Low Prices is Hurting America

[9] Gomstyn, Alice. July 2, 2010. Walmart CEO Pay:Making More in an Hour Than Workers Get All Year?

[10] Levine, Dan and Wohl, Jessica. October 2012. Wal-Mart Faces Lawsuit Over Unpaid Overtime as Strike Threats Grow.

[11] Beahm, Jason. May 2010. $86 million Wal-Mart Settlement in Wage Lawsuit.

[12] “Associates.” Wal-Mart Corporate., accessed 1.27.12.

[13] Featherstone, Liza. 2004. Selling Women Short: The Landmark Battle for Workers’ Rights at Wal-Mart.

[14] Calculations based on Walmart’s 2011 and 2012 Annual Enrollment Guides.


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