Pros & Cons of Walmart: The High Price of Low Cost

Wal-Mart has been apart of our lives for over 50 years, becoming a dominant force in the retailing sector. There are several disputes amongst economists about whether Wal-Mart has a positive or negative influence on our economy and society, many criticizing the Wal-Mart Corporation for its negative and careless approach to becoming the powerhouse it is today.

Sam Walton founded the Wal-Mart Corporation in 1962. He was once quoted stating that “if some community, for whatever reason, doesn’t want us in there, we aren’t interested in going in and creating a fuss.” What happened to that policy today? Instead, Wal-Mart has become the largest private employer and grocery retailer in the United States and is also recognized all over the world.

During this uprising as America’s retailing powerhouse, the Corporation lost almost all of Walton’s visions and values and today will do whatever it takes to maximize revenue amongst other things at the expense of its employers and consumers.

Wal-Mart’s several downfalls

Wal-Mart’s employee health care coverage

Critics and haters of the Wal-Mart Corporation are often appalled when they hear and see some of the statistics with regards to Wal-Mart’s health care policy. For such a popular, highly regarded household name that the Wal-Mart corporation has become, they have one of the worst health care policies in all of corporate America. To account for low wages, they push employees to get on several government-funded programs such as public assistance, Medicaid, and public housing.

Since Sam Walton, the founder of the Wal-Mart Corporation’s death, it has been stated that several Wal-Mart policies have been changed for the worst. It’s not that Wal-Mart doesn’t offer health insurance to their employees, but it comes at a high price for workers on minimum wage. It costs around 75$ out of each paycheck with pay being minimum wage to have health insurance through Wal-Mart, that is not the legacy that Sam Walton built. Statistics are heavily in favor of these claims also, as you will see with the following:

• Alabama: 3,912 children of Wal-Mart employees are enrolled in Medicaid
• Arizona: 2,705 workers are on Medicaid
• Arkansas: 4009 workers are on public assistance
• Connecticut: 835 workers have children on state health care plan
• Florida: 12,300 workers and their dependants are on Medicaid
• Georgia: 10,265 are enrolled in Peach care for kids
• Massachusetts: 4,175 workers and families depend on state health care
• Tennessee: 9,620 workers depend on state health care
• Texas: 4,368 children of Wal-Mart employees are on state health care
• Wisconsin: 1,255 employees and dependants on Badge care

These statistics are quite startling taking into consideration that Wal-Mart is a multi-billion dollar company, it suggests that Wal-Mart only looks out for Wal-Mart, and nothing else.

Wal-Mart is an anti-employee Corporation

Wal-Mart has no respect for the employees that they hire, employees are severely mistreated and their only purpose is to fit into the philosophy that Wal-Mart only looks out for Wal-Mart. An interesting statistic shows that from 1999 to 2005 alone, Wal-Mart had been part of 44 class action lawsuits in 31 states involving several hundreds of thousands of current and former employees who had their wages and hours tampered with and abused.

An example of this is in 2005 when three Wal-Mart employees in Alameda County, California filed suit in Alameda County Superior Court claiming that Wal-Mart manipulated their time cards to cut their pay. (http://www.sfgate.com/cgi-bin/article.cgi?file=/gate/archive/2005/01/20/walmart20.DTL&type=printable)  The charges were that Wal-Mart had deleted thousands of hours of time worked from employees’ payroll records by erasing overtime hours and by penalizing employees who forgot to punch in after their meal breaks by denying them pay for the remainder of those days.

Wal-Mart does not care about their employees at all and each year they try and find new ways to cut down retail wages. A study by UC Berkeley’s Labor Center has been able to show society an approximate numerical value to what has happened to retail wages at Wal-Mart, backed up with 15 years of data. The study shows that in 2004, Wal-Mart drives down wages in urban and rural areas, enabling Wal-Mart to reduce the take-home pay of retail workers by 4.7 billion dollars annually.

Due to this annual cut, taxpayers are paying the price. It costs tax payers 1.6 billion dollars to support Wal-Mart employees in the United States alone. 

The Democratic Staff of the Committee on Education and the Workforce estimates that one 200-person Wal-Mart store may result in a cost to federal taxpayers of $420 750 annually, approximately $2,103 per employee. (http://www.walmartmovie.com/facts.php) Multiply this number by the number of Wal-Mart stores in the United States in 2004, which is approximately 3700, and you get the staggering 1.6 billion dollar figure. We must also take into consideration that the number of Wal-Mart stores will have gone up since 2004, increasing the amount taxpayers will have to pay.

Wal-Mart, illegal citizens, and racism

In 2003, Wal-Mart was charged and exposed to society for hiring illegal citizens to clean their stores after hours. The case led by Immigration and Customs Enforcement agents was more than a four-year project and produced 245 arrests of undocumented workers in 2003. Wal-Mart managed to evade criminal sanctions by settling to pay 11 million dollars. In 2004, Wal-Mart disputes the claims made by Mrs. Edith Arana who said she was the victim of racial and gender discrimination during her time working at Wal-Mart.

This incident was part of a much larger case, in addition to her claims, Cleo Page and Betty Dukes, who were both involved in the Dukes v. Wal-Mart Stores, the largest gender discrimination class-action lawsuit in history, both filed individual race claims against Wal-Mart. More evidence of racism from Wal-Mart stores is evident in the following facts. (http://www.walmartmovie.com/facts.php)

The EEOC noted that only one of the 20 drivers Wal-Mart hired in 2002 was black. The EEOC also noted that Wal-Mart hired some white drivers with more serious driving violations and less experience than black applicants. (Tammy Joyner, “Truck Driver Applicant Accuses Wal-Mart of Racial Bias,” Cox News Service, September 23, 2004.)

In 2001, the Mexican-American Political Association initiated a boycott of a Fresno, CA Wal-Mart. Ben Benavidez, president of MAPA, claimed that “MAPA received complaints from current and past employees about the store manager and some of his assistants making remarks such as, “You see one Mexican, you’ve seen them all,” “We don’t want our storefront to look like a Mexican flea market,” and something to the effect of, “Have you noticed how Mexican women like to buy body-revealing clothes?” (Louis Galvan, “Fresno Wal-Mart Mistreatment Alleged,” Fresno Bee, November 24, 2001)

Wal-Mart and the environment

In 1999, the Pennsylvania Department of Environmental Protection signed a consent order and agreement with the Wal-Mart Corporation to improve environmental construction throughout Pennsylvania. The agreement was made due to the violation of water quality laws and regulations at a construction site in Honesdale Borough, Wayne County. There was a $100 000 civil penalty to the Commonwealth and a $2 800 fine to the Wayne County Conservation District. Again in 2001 Wal-Mart was fined 1 million dollars for clean water violations.

The Justice Department and the United States Environmental Protection Agency reached an agreement with the Wal-Mart Corporation to try and solve the issue of clean water violations at 17 locations ranging in 5 states. This was the first-ever federal enforcement against a company for multi-state violations and the settlement forced Wal-Mart to create a $4.5 million environmental management plan, which was made to improve Wal-Mart’s compliance with the laws at each site and to minimize the result of building on streams and watersheds. (Press Release, U.S. Environmental Protection Agency/Department of Justice, June 7, 2001.)

Wal-Mart’s few upsides

Team Obama praises the “Wal-Mart economy”

James Furman, a top new economic advisor to President Obama thinks that Wal-Mart and “the Wal-Mart economy” has been excellent for the American workers, low-income families who can’t afford to buy more expensive products made in America, and finally American taxpayers who pay part of the health care costs of thousands of Wal-Mart employees.  

Furman states in his work titled “Wal-Mart: A Progressive Success Story” that there is no question that the Wal-Mart Corporations price reductions have benefited the 120 million American workers employed outside the retail sector. (http://www.manufacturingnews.com/news/09/0309/furman.html)   

Furman seems to be one of few who see the prosperity of the Wal-Mart Corporation as many other owners and executives of domestic manufacturing companies believe that the “Wal-Mart economy” has destroyed the American manufacturing sector, and ultimately a considerable factor in the demise of the American middle class.

Works Cited

• The Wal-Mart Economy. Manufacturing and Technology News. January 14, 2010.

o   < http://www.manufacturingnews.com/news/09/0309/furman.html>

• Wal-Mart Pros and Cons. Hub Pages. January 14, 2010.

o   <http://hubpages.com/hub/Walmarts-pros–cons>

• Wal-Mart: The Movie. Wal-Mart. January 14, 2010.

o   <http://www.walmartmovie.com/facts.php>

• Alameda County Lawsuit. Sfgate.com. January 14, 2010.

o   <http://www.sfgate.com/cgi-bin/article.cgi?file=/gate/archive/2005/01/20/walmart20.DTL&type=printable>

• Sam Walton. Wikipedia. January 14, 2010.

o   <http://en.wikipedia.org/wiki/Sam_Walton>

• Wal-Mart. Wikipedia. January 14, 2010.

o   <http://en.wikipedia.org/wiki/Wal_Mart>