Wal-Mart: The Prices Don’t Offset the Costs

Originally posted: July 15, 2005

Wal-Mart is the world’s largest corporation, having recently surpassed General Motors and ExxonMobil. In 2003, it took in nearly $250 billion in revenue–more than the entire GDP of Israel and Ireland combined. It generates nearly $7 billion a year in profits. It has 4,400 stores worldwide–3,600 of them in the United States. It is the world’s largest employer, with 1.3 million “associates.” It is the world’s biggest seller of groceries, jewelry, photo processing, dog food, and vitamins–and it’s now moving into gasoline, banking, used cars, flower delivery, banking, and Internet access. Five of the ten richest people in the world are Waltons.

I have never spent a dime at Wal-Mart. And I never will. Why? Let me count the ways:

  • Wal-Mart pays low wages. In 2001, Wal-Mart sales clerks earned an average of $8.23 an hour, or $13,861 a year. That’s nearly $800 below the federal poverty line for a family of three.
  • Employees receive no health-care benefits unless they have worked for the company for two years. With a turnover rate average above 50 percent a year, only 38 percent of Wal-Mart’s employees have health care coverage.
  • Wal-Mart employees in Georgia are nearly six times more likely to rely on state-provided health care than are employees of other large companies.
  • Each year in California, reliance on public assistance programs by Wal-Mart workers costs the state’s taxpayers $86 million.
  • Wal-Mart destroys local businesses. Wal-Mart practices “predatory pricing.” They come into a community and sell their products at below cost until they have driven local firms out of business. Prices go up once they have captured the market. An Iowa State University study found that in the first decade after Wal-Mart arrived, the state lost 111 men’s and boys’ apparel stores, 116 drug stores, 153 shoe stores, 158 women’s apparel stores, 161 variety stores, 293 building supply stores, 298 hardware stores, and 555 grocery stores.
  • The company boasts that 70 percent of its employees are full-time, but it counts anyone working 28 hours a week or more as “full-time.”
  • Wal-Mart portrays itself as super-patriotic–but every year Wal-Mart purchases $15 billion worth of products from China. Wal-Mart uses over 3,000 Chinese factories to produce its goods. It is the world’s largest importer of Chinese-made products.
  • The company is the record-holder for the most suits filed against it by the Equal Employment Opportunity Commission. They had to pay a $750,000 fine for blatant discrimination in Arizona against the disabled. An incensed judge ordered them to air commercials confessing their guilt!
  • Wal-Mart is rabidly anti-union. Officials stand ready to jump on a corporate jet on a moment’s notice to bust whispers of union organizing. For example, when eleven meat cutters at the Super-Center in Jacksonville, Texas signed union cards, Wal-Mart announced that it was closing its meatcutting operations in all stores; from now on, it would buy its meat prepackaged from companies using nonunion labor. Wal-Mart would rather close an entire operation than allow unionization.
  • Nearly 1 million women are involved in the nation’s largest class action lawsuit against a corporation. While women comprise over 65 percent of Wal-Mart’s work force, only 10 percent of them are managers. On average, the women who become store managers make $16,400 a year less than the men.
  • Wal-Mart has been cited by the National Labor Relations Board for numerous labor law violations, including illegal spying on employees, falsying time cards for avoid paying overtime, fraudulent record keeping, and illegal firings for union organizing.

The next time you’re tempted to go to Wal-Mart for the convenience and the low, low prices, don’t. Economic justice, community sustainability, workers’ rights, gender equality, and the American national interest are all far more important.

Ted Rueter is an assistant professor of political science

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