Walmart: The High Cost Of Low Price

Published Date: 23 Mar 2015 Last Modified: 09 May 2017

The release of the film Wal-Mart: The High Cost of Low Price interviewed with employees and former managers, the documentary presented a critical view of Wal-Mart's policies, particularly with respect to treatment of Wal-Mart employees. In response to the film's release, Wal-Mart hired several former presidential advisers to establish a "rapid-response public relations team." In December, Wal-Mart formed an advocacy group, called Working Families for Wal-Mart, which was headed by former Atlanta mayor and UN Ambassador Andrew Young. Unfortunately for Wal-Mart, this public relations campaign hit a snag in August, as Young told the Los Angeles Sentinel that Wal-Mart should displace traditional mom-and-pop stores. Young elaborated further: "You see those [small store owners] are the people who have been overcharging us, and they sold out and moved to Florida. I think they've ripped off our communities enough. First it was Jews, and then it was Koreans and now its Arabs." Young resigned hours after the interview was published.

Wal-Mart's anti-union stance made headlines once again this year. After workers at a Wal-Mart store in Quebec successfully unionized, Wal-Mart announced that it would close that store, citing "economic reasons." Last September, Quebec's labor relations board rejected Wal-Mart's argument and found that Wal-Mart's firings were illegal. Wal-Mart employees had some success this past year in organizing non-union groups. In the fall of last year, Wal-Mart employees in central Florida formed a workers group, the Wal-Mart Workers Association, in an attempt to improve working conditions and air grievances against the company. By January, the group had enlisted approximately 300 employees from 40 stores. The United Food and Commercial Workers (UFCW) Union is among the sponsors of the new group. So far, the group has been able to restore hours cut by the store, reinstate a fired employee, and get the company to install a bike rack-all through non-unionized collective action campaigns. In November of last year, Wake Up Wal-Mart, a UCFW-sponsored group critical of the retailer, formed a national association, called the Wal-Mart Workers of America, in an attempt to organize Wal-Mart workers, albeit without forming a union. In January, the 8th Circuit Court of Appeals handed Arkansas Wal-Mart employees a victory, reinstating a lawsuit alleging that Wal-Mart engaged in anti-union activities. In August, at the same time Wal-Mart was agreeing to work with Chinese officials to establish unions for 30,000 store employees, the retailer reaffirmed its anti-union stance in North America. Wal-Mart explained that its motivation for permitting unions in China was to comply with Chinese laws, while the company's critics argued that the move was not done for the interests of workers and instead only demonstrated Wal-Mart's desire to please its biggest trading partner. Last September, the International Labor Rights Fund filed a class-action lawsuit against Wal-Mart for violating workers' rights in foreign countries, alleging that Wal-Mart denied minimum wage, required overtime, and punished union activity. In some cases, workers alleged they were beaten by supervisors. If certified, 100,000 to 500,000 workers could be included. Specifically, the suit alleged that one Bangladesh worker worked seven days a week from 7:45 a.m. to 10:00 p.m. without a day off in six months. In another instance, Wal-Mart was accused of failing to provide adequate safety equipment (gloves) for its fabric cutters and seamstresses overseas. According to one report, in Wal-Mart's cost-benefit analysis, it was cheaper to wash workers' blood from clothing before shipping the clothing overseas for sale than it was to provide gloves. In any event, Wal-Mart appeared to take notice of the public outcry over rights exploitation. In October of last year, Wal-Mart announced that it would start holding suppliers more accountable for workers' rights violations. In March, it was reported that Wal-Mart was increasing the number of unannounced inspections at foreign factories. Critics urged the retailer to use outside experts to verify the inspections. In November, the Office of Inspector General released a report critical of the Department of Labor's settlement agreement with Wal-Mart over child labor violations, claiming that the Department made "significant concessions" and that "serious breakdowns" in the negotiation and approval of the agreement were present. Under the agreement, Wal-Mart was fined $135,540 for child labor violations occurring between 1998 and 2002. Lawmakers and child advocate groups questioned the agreement's provision that Wal-Mart would receive 15-day advanced notice before certain stores would be investigated. When Hurricane Katrina hit the gulf region, Wal-Mart contributed $17 million to the relief effort, in addition to more than $3 million in merchandise, which led one commentator to observe: "A company capable of operating in such a coordinated, humane way should do so not just in a disaster but every day. There is no reason Wal-Mart could not operate in an equally streamlined, well-organized manner to make sure that labor laws (on overtime, child labor, discrimination) are followed. There is no reason its impressive resources could not be marshaled to remedy the daily, ongoing disaster that so many of its workers face: low wages and inadequate healthcare." In November, a federal agency affidavit revealed that Wal-Mart executives were aware of systematic hiring of illegal immigrants by Wal-Mart's cleaning contractors. In 2003, immigration officials conducted a raid on 60 Wal-Mart stores in 21 states, arresting 245 workers. Wal-Mart settled the case for $11 million in March of last year, but claimed that corporate executives were unaware that illegal immigrants were hired. In California, some 116,000 Wal-Mart employees joined in a class-action lawsuit against the retailer, claiming that Wal-Mart violated a California law requiring employers to provide an unpaid 30-minute lunch break to employees who work at least six hours. In December, three days before Christmas, California Wal-Mart employees prevailed on their claims in front of a jury, collecting $57 million in compensatory damages and $115 million in punitive damages. The California verdict came on the heels of a $50 million settlement in Colorado and a separate victory in Oregon. By June, however, lawyers of Wal-Mart employees were back in court, asking for an injunction to compel Wal-Mart to follow the same state lunch-break laws. A California judge has since ordered the retailer to obey these laws and provide compliance reports for the next 3 years. Similar wage and hour class-action suits were filed in other states against Wal-Mart. In January, a Pennsylvania judge certified a class-action lawsuit against the retailer that alleged that workers were not compensated for hours worked-in one instance, one employee claimed 8 to 12 unpaid hours a month, on average. Wal-Mart denied the allegations, which could include 150,000 Pennsylvania workers, claiming that "Wal-Mart's policy is to pay associates for every minute they work." In August, Wal-Mart announced that it would raise starting wages at one-third of its stores by about 6% in an effort to stay competitive with other retailers. Just weeks after this announcement of a modest pay raise, Wal-Mart was once again making headlines for all the wrong reasons-this time for a Texas class-action lawsuit alleging hour and wage law violations. After letters were sent to Wal-Mart employees inviting them to join the class-action suit, some Wal-Mart store managers allegedly pressured employees, by threat of termination, to hand over the invitations and sign a statement saying that they did not work off the clock. Lawyers for the Wal-Mart employees have requested that a federal judge order that Wal-Mart cease this practice.

"We want development but development that contributes to building community," argues Madeline Janis-Aparicio, director of Los Angeles Alliance for a New Economy. "If Wal-Mart wants to come on those terms, they have a place."

Work citation:

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Ghemawat, Pankaj. "The Real Wal-Mart Effect." N.p., 23-07-2006. Web. 7 Mar 2011. <http://hbswk.hbs.edu/item/5474.html>.

moberg, david. "the wal-mart effect." in these times. N.p., 10/06/2004. Web. 21 Mar 2011. <http://www.inthesetimes.com/article/the_wal_mart_effect/>.