The Wal-Mart Question

Many of my friends refuse to shop at Wal-Mart for various reasons. Here’s a quote from a recent email I received on this very topic (which I’m fairly sure originated with a consumer advocacy group):

  1. Wal-Mart’s prices aren’t lower.
    • For one month, a newspaper in Arkansas tested the prices of 6 Wal-Marts against other stores. Out of 19 household items, Wal-Mart was cheapest on only 2. The lowest total for all 19 items was $12.91. The highest total for all items? Wal-Mart, at $15.86.
    • When Wal-Mart first enters a town, they intentionally undercut the prices of local retailers. Once the local main street has become a ghost town, Wal-Mart’s prices start to drift upward.
  2. Wal-Mart wastes American tax dollars.
    • One half of Wal-Mart’s 720,000 U.S. employees qualify for federal assistance under the food stamp program.
    • Only 40% of Wal-Mart workers can afford the healthcare plan that Wal-Mart offers. Unless the employee has a spouse with medical benefits, healthcare is usually paid for by the government.
    • Wal-Mart has liability insurance, but there is no medical pay out. An injured person is forced to sue Wal-Mart to collect medical expenses, lost wages and legal expenses; Wal-Mart chooses to spend taxpayer dollars in court rather than pay the entire medical expenses of injured parties.
  3. Wal-Mart uses sweat-shop labor.
    • Wal-Mart buys enough of a product to become the major source of income for its suppliers, then forces the suppliers to lower their prices. The only way companies can reach these lower prices is to move manufacturing jobs out of the U.S. into foreign sweatshops. Levi, Heinz, and Vlasic have all faced this problem.
    • Garments carrying a “Made in the USA” label generally indicate products made by American workers protected by U.S. labor laws, but some of Wal-Mart’s “American made” products are made in sweatshops in Saipan, a U.S. territory not subject to labor laws.
    • Workers in Honduras work 88-hour weeks in 14 hour shifts, making 43 cents an hour, which only meets 54% of the cost of survival. (Wal-Mart’s annual sales are 98 times greater than the entire national budget of Honduras, yet Wal-Mart doesn’t even pay any taxes there.)
  4. Wal-Mart discriminates.
    • The National Labor Relations Board has ruled that Wal-Mart has threatened and penalized employees attempting involvement in unions.
    • Despite greater average seniority and higher average performance ratings than her male counterpart, the average woman’s salary is proportionally lower as she moves up the ladder.
    • The average time from date of hire until first promoted to Assistant Manager is 4.38 years for women, but only 2.86 years for men.
    • On June 19, 2001, over 1 million current and former female Wal-Mart employees filed the largest class action lawsuit ever. They are suing Wal-Mart for sex discrimination, claiming that women are predominately assigned lowest paying positions and are systematically denied promotions.
  5. Wal-Mart hurts the local economy.
    • On average, communities lose one and a half full-time jobs for every part-time job at Wal-Mart.
    • The median income of a Wal-Mart employee is about $12,000 as opposed to the national median income of $25-30,000.
    • Pre-existing malls located within half a mile of a new Super Center can experience vacancy rates of up to 30-40%.

Keep Wal-Mart from turning America into a third world country! Boycott Wal-Mart’s unethical treatment of your local community, your nation, and your globe.

That’s a laundry list of complaints, and it’s often used as justification by many people for not shopping at Wal-Mart. Admittedly, many of the complaints are disconcerting: low wages, excessive importation, and poor employee relations indicate someone I wouldn’t want to work for.

Yet when I read through this list, there is a distinct whiff of bias against Wal-Mart. Many of the “facts” used here may be true, but they’re unsourced and the exact data isn’t clear, just broad generalizations.

To counterbalance these anti-Wal-Mart complaints and present a balanced picture of the impact of Wal-Mart’s effect on the individual pocketbook, the local economy, and the global economy, I built a list of benefits of Wal-Mart. These are not meant to supplant the criticisms above, just to provide a different perspective on the Wal-Mart question. Here goes nothing.

  1. Wal-Mart provides jobs and self-esteem for unskilled and handicapped workers. Wal-Mart regularly employs individuals with no exceptional skill as well as handicapped workers, providing them with real work in the economy, not jobs created specifically for them. Not only does this enable many people to begin a financially independent life, it also provides a sense of self-worth. If Wal-Mart disappeared from the economy, millions of unskilled laborers would be without work.
  2. Wal-Mart keeps inflation low. Wal-Mart’s “cut-throat” business model forces prices to stay as low as possible, thus reducing inflation both locally and nationally. If Wal-Mart can use their size to force product-makers to continue to sell their products cheaply, every consumer at every store benefits from lower prices. If Wal-Mart disappeared from the economy, prices would go up in every single store. If inflation goes up, everyone pays, and it’s especially hard on the lowest income earners.
  3. Wal-Mart enables convenient distribution of a wide selection of consumer products. Wal-Mart has an incredibly strong distribution chain that makes it possible for people in a town of 5,000 in the middle of Iowa to be able to choose between dozens of different toothpaste brands. Forty years ago, this type of consumer freedom of choice didn’t exist, but thanks in large part to Wal-Mart, it does today.

If you want a strong dual-sided analysis of Wal-Mart and America, look no further than Frontline’s analysis: .

Shopping at Wal-Mart presents an interesting ethical decision that is not merely solved by shopping at Target or shopping online. The fact of the matter is that Wal-Mart plays a large part in shaping the economy for consumer goods and their size makes it difficult to escape them.

If you truly have a problem with their business practices, a boycott of Wal-Mart won’t solve the problem. Wal-Mart operates completely within the laws of the United States and the parameters of the marketplace. If you think their wages are too low, you should join the movement to raise the minimum wage. If you think they’re not offered appropriate health care, you should join the movement for universal health care. Wal-Mart’s role is to provide inexpensive products to consumers and they do this very efficiently, but within what’s allowed in the United States.

In short, Wal-Mart is good for the bottom line of all American consumers, an effect made possible by operating with intense efficiency within American laws. If you don’t like Wal-Mart’s policies, you can choose not to shop there, but their effect is everywhere because they curb inflation. If you want to change their policies, you need to change their parameters, and this is done by fighting for greater social change, not by buying your toiletries at Target.

As for me, I don’t shop at Wal-Mart, but I do visit Sam’s Club regularly. I buy most of my food from a local small chain of grocers and I do most of my department store shopping at a Target that is along my regular daily route; there isn’t a Wal-Mart on my route.

I am actually indifferent on the issue as a whole; there are some ethical questions about Wal-Mart, but these issues permeate the whole economy, and if you want to do something about them, you need to look outside of Wal-Mart, as boycotting them won’t reduce their influence.