Fair Prices Without Fair Wages

In 1962 Sam Walton opened a store that has changed the face of American business forever. Wal-Mart, a super giant retailing chain, is the largest company in the world. The corporation started with a single location but now has grown to over 5,200 stores worldwide. Wal-Mart has become a force to be reckoned with. It is so large that Wal-Mart’s rank in the Chinese export market is fifth, ahead of Germany, the U.K. and Russia (Cox). The retail chain is known for its large selection of discounted items and its efficient business model. Unfortunately, on its road to success, Wal-Mart has become known for less positive things. Wal-Mart has had to deal with various accusations of gender discrimination, poor worker compensation, and overworking. Wal-Mart should be forced to change its practices because its business model thrives on the devaluing of workers.

One of the major reasons for Wal-Mart’s labor revision is its lack of gender equality. Throughout the past decade, Wal-Mart has sexually discriminated against women working in its stores everywhere. This sex-bias has only recently been acted against in what could become a very costly case for the corporation. In 2004 a gender discrimination lawsuit was filed against Wal-Mart in what is the largest private civil rights case ever (Armour A1). The 1.6 million women filing the case worked at Wal-Mart between 1998 and 2004 and claim that they were paid between five and fifteen percent less than men in similar positions. They also claimed that they received fewer promotions than men even when they were more deserving and qualified (Armour A1). A June 23 article in USA Today listed several statistics relating to the matter. In the U.S., approximately 65% of Wal-Mart’s employees are women yet only 14% of the managers are women (Armour A1). These statistics show a clear gender bias that should not exist. Although sex-bias suits similar to this one have been filed regularly throughout the nation, this particular case means more than most. Wal-Mart is estimated to employ 1/123 of all the workers in the nation. Punishing sexual-discrimination in this case could send out the message that it will no longer be tolerated in our nation. As Jocelyn Larkin, a women’s rights spokesman puts it, “They are the largest employer in America, and everyone is watching this” (qtd. in Amour A1). Wal-Mart has a decision to make, it can either choose to respect women’s labor rights, or it can be sued into submission.

Unfortunately for Wal-Mart, the pending gender discrimination case is only one of its labor woes. Another reason for labor reform in Wal-Mart has recently reared its head; Wal-Mart has been forcing employees to work through their lunch breaks without pay. On Thursday July 22, 2005 a Californian jury awarded thousands of Wal-Mart workers a combined $172 million dollars for being denied the thirty minute lunch breaks guaranteed them by California’s labor laws (Bacon A3). California law states that workers with shifts over six hours are to be given a thirty minute unpaid lunch break. The problem with this case is that it is not the only one of its kind. This class-action suit is only one of forty nationwide cases addressing similar violations at Wal-Mart stores (Bacon A3). A juror on the California case states simply that “Wal-Mart didn’t do their job, they didn’t pay their people” (qtd. in Lee A1). It is one thing to deny workers lunch breaks, but it is entirely another to make them work through the lunch breaks without compensating them for doing so. This is an outrage that should not stand. The court case was won in California, but the issue is having limited success elsewhere. The government needs to step in and show Wal-Mart who the real boss is!

These cases are only pieces of the worker abuse problem. Suppose that Wal-Mart did pay everyone what they were entitled to without being biased, would that fix things? The answer to this question is no. Unfortunately, the workers who are getting paid aren’t getting paid well. One would expect Wal-Mart to at least pay a living wage, “A wage sufficient to provide minimally satisfactory living conditions” (“Living Wage”). Oddly enough, Wal-Mart doesn’t even meet this basic need. Seventy-one cities in the U.S. have passed ordinances defining what their idea of a living wage is. The average of these values is estimated to be $9.68 an hour (EPI). Wal-Mart pays an average hourly wage of $8.23 according to an independent statistical analysis funded by the United Food and Commercial Workers (UFCW). In addition, a starting cashier’s wage at many locations is under $6.50 an hour. It’s sad to think that Wal-Mart doesn’t raise its average wage when simply increasing prices by an average of one percent would put the average wage at $9.54 an hour (Cox).

So, Wal-Mart doesn’t pay equally, fairly, or sometimes even at all. The company must at least give good benefits or people wouldn’t work there right? Wrong. Yet another area of Wal-Mart’s labor practice that needs a change is its healthcare benefits which are drastically inferior to the rest of the nation. In October the Center for a Changing Workforce examined Wal-Mart’s 2006 health insurance plan. The report this organization filed stated that Wal-Mart’s least expensive family health plan has a $6,000 deductible and can cost families as much as $10,200 in out-of-pocket expenses (qtd. in Adams). This amounts to 60% of an average worker’s wages (qtd. in Adams). Wal-Mart of course claims different numbers. Despite all the evidence against them, Wal-Mart executives claim that the healthcare costs no more than $11 a month for individuals and thirty cents a day for children. They clearly have been trying to cover up any information that would lead to a bad public image. So far its working but we can change that by exposing Wal-Mart for what it really is, a monster sucking the blood out of this nation.

In China, the conditions are much worse. The legal minimum hourly wage in China is set at $0.31 an hour (Cox). That isn’t too much for Wal-Mart to pay, is it? The answer to this question surprises most. In 2001, 15 factories manufacturing products for Wal-Mart in China were only paying $0.23 an hour! (Cox). In addition, the average number of hours worked per week per worker at those locations was 73 (Cox). The really sad part of this story is that CEO Lee Scott was paid an average of $23 million a year during his career at Wal-Mart (Cox). Wal-Mart is paying a wage so low that it is illegal in China (which is saying something) while also forcing people to work so many hours in a week that some workers are on the verge of death from exhaustion. It’s not hard to see how Wal-Mart became so profitable of a corporation. The sheer lack of worker compensation makes unbelievably low prices possible but it also increases the cost to human beings.

Perhaps the biggest problem Wal-Mart poses is not about its own labor practices, but instead about the corporation’s effect on labor practices elsewhere. Wal-Mart is a mega giant retailer that pays its workers next to nothing in order to maintain its unbelievable low prices. The problem with this is that other stores are being forced to apply many of the same labor principles to keep up. The story of how a Wal-Mart affected Spencer, West Virginia is a perfect example of what happens when a Wal-Mart comes to town. The town was slowly losing retail business and was hoping that allowing a Wal-Mart in would increase the retail sales by drawing sales to the small town’s other businesses. The arrival of the new store did increase retail sales in the town. Unfortunately, all of these sales went to the Wal-Mart. A local smalltime grocer stated that “We fared [well] against them the first year” but he admits, “I don’t know how we stayed afloat the past two years. We struggle every day to keep the doors open” (qtd. in Ginsburg). The grocer claims that he can’t compete on price. Other local businesses are struggling as well. The cities previous number one employer closed less than a year after Wal-Mart arrived and several other businesses followed suit. Since then, almost 500 jobs have been cut (Ginsburg). The city is now lacking in jobs and has had its economic structure nearly shattered under the weight of the Wal-Mart. This is the story of many other small towns around the country that have been taken over and become dependent on the Wal-Mart that was once dependent on them.

There are more problems still with Wal-Mart. One is that Wal-Mart single handedly established outsourcing by forcing corporations like Levi-Strauss to go out of the country for cheap labor. Levi-Strauss experienced a 45% decrease in sales between 1996 and 2003 mainly due to competition from cheaper jeans that were being sold at Wal-Mart (Cox). The sales increased six percent after Levi-Strauss began selling jeans made mainly overseas at Wal-Marts around the country (Cox). This seems all well and good but when you look at the number of jobs lost in the U.S. during this time, you notice otherwise. Levi-Strauss had sixty factories operating in the U.S. in 1981 when the company was at its peak (Cox). In 2004, after moving completely overseas, Levi-Strauss closed its remaining two U.S. factories (Cox). This change cost the nation thousands of jobs. Rubbermaid had many of the same problems with Wal-Mart as did many other large-scale manufacturing companies. The nation has lost numerous jobs because of Wal-Mart’s demanding low prices, yet the problem continues. 

Wal-Mart is a monster that must be killed. It is swallowing the nation with its corrupt business practices and business ethics. In addition, it devalues workers by taking away all of the compensation guaranteed them by law. Its workers are paid poorly and have little or no usable benefits. They have been denied breaks and in some instances even pay. By encouraging outsourcing, the corporation has encouraged taking advantage of soft international labor laws. In China, children are working overtime for less than the price of a pack of gum per hour. The United States is losing its jobs to these same children and there is only one way to stop the process. We must force Wal-Mart to reform its labor practices and strengthen our labor policies at the same time. Once the super giant falls, the rest will soon follow. If we do not do something now, I fear that our nation will be overtaken economically by Wal-Mart to the point where we are fully dependent on its poor paying jobs. If this happens we might as well throw our entire lifestyle away. We as a people have two options, we can either watch as our nation crumbles under the strain of Wal-Mart or we can take the fight to the government and demand better labor practice to ensure a safe future for our kids.