Updated on 12.12.06

The Wal-Mart Question

Trent Hamm

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: Is Wal-Mart Good For America?.

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.

Loading Disqus Comments ...
Loading Facebook Comments ...
  1. David says:

    Great post…the main issue I have with Wal-Mart is the fact about so many of their employees on federally assisted health care. In a documentary I watched, they actually had the paperwork given to employees with the information on how to apply for these benefits because they wouldn’t cover those employees. They keep so many of their employees part time so that they don’t have to pay their health care, but rather they “make” them go on federal assistance, leaving you and I to pay for their health care “program”. Anyway, my couple of cents…

  2. EasyChange says:

    Excellent, excellent post. Regardless of what you think about wal-mart, you are correct; the best place to fight these battles are through the law and law enforcement, once the laws are on the books.

  3. Daniel says:

    Thank you for this post! Fresh out of college, I have a lot of friends on an anti-walmart rampage. While I try to support mostly local retailers, it’s because I live in a diverse neighborhood and can see that my buying there keeps them afloat. I don’t shop at Walmart, because frankly, it’s too time consuming to get in and out of one.

  4. Doug Alder says:

    You are making a classic error in assuming that because Wal-mart drives down THEIR cost by squeezing American suppliers that those costs are then passed on to the consumer in the form of lower prices than the competition. This is not the case, despite Wal-mart’s advertising. In general the prices that are lower in Wal-mart stores are those end-of-aisle specials but if you go down the aisles the prices are on average higher, as the email you quoted made clear. This is a variant on the old bait and switch technique.

    In addition to that the goods, of the end of the aisles, that are cheaper are more often than not crap that are not worth what you pay for them and will need replacing much quicker than better quality merchandise thereby raising a regular Wal-mart shopper’s cost of living, not lower inflation.

    Other than they exist with in the legal framework of your country and they provide some employment for the disabled there is nothing good to be said about Wal-Mart. They suck the economic lifeblood out of every community they establish their superstores in. They are heavily subsidized by federal, municipal and state governments and they cause any supplier who is foolish enough to deal with them to go offshore and America loses more jobs. Wal-mart has squeezed the life out of more than one corporation causing them to go under by squeezing prices below profitability for the supplier.

    The only time Wal-mart supports American values is in their advertising. They are amoral corporatists who have no concern for their employees, their customers, the businesses they deal with, the countries and municipalities they deal in, or any thing else except making as much money as possible. Anyone who forgets this is simply doing their PR work for them.

    They should be boycotted AND the other suggestions should be folowed. If you shop there you likely are not getting the deal you think you are getting and you are helping to support an organization that is not good for you or your country, and that is unamerican.

  5. Amy says:

    GREAT post! Kudos to you for exposing the good and the bad about Walmart.

  6. I know too many people who’ve been scheduled for 39 hours a week to keep their jobs “part-time” (thus, without benefits) to support a major retailer that treats hundreds of thousands of employees that way as a matter of policy.

    Maybe it’s not going to change the world if I don’t shop at Wal-Mart (especially since there aren’t even any locations in New York, to my knowledge), but…so? If not shopping there doesn’t do any good, that means I should shop there? That doesn’t make sense to me.

  7. Jim Lippard says:

    “If you think their wages are too low, you should join the movement to raise the minimum wage.”

    Wal-Mart supports increasing the minimum wage–they already pay above minimum wage, and benefit when their mom & pop competition is also forced to do so.

    If you’re anti-Wal-Mart and pro-local business, you should not support minimum wage increases.

    See further analysis at Catallarchy.

  8. Jim says:

    Several comments:
    1. You had better know your prices before you go to Wal-Mart or Sam’s. I agree that many times they are higher than the competition.

    2. I don’t shop at Wal-Mart anymore primarily because the one in my area is VERY poorly stocked.
    It is also in a bad location that is very hard and dangerous to get in and out of.

    3. When you add in the property tax breaks, the taxpayer subsidies for benefits, etc. Wal-Mart prices are way higher than the competition. Let’s level the playing field and see if Wal-Mart can compete.

  9. Laurel says:

    If you truly have a problem with their business practices, a boycott of Wal-Mart won’t solve the problem.

    Boycotts have often put enough pressure on major American corporations to provide results. Besides, those of us who disagree with Wal-Mart for one reason or another (my reason isn’t a usual one) are simply falling outside of their target market. If they don’t mind losing us, they don’t have to change. If we start to hurt their bottom line, they’ll be forced to listen. That’s what the free market is all about.

    Wal-Mart operates completely within the laws of the United States and the parameters of the marketplace.

    Absolutely true.

    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.

    Abwaaaah!? You just made the leap from “they’re doing perfectly legal things, and that’s just the way the market works” to “manipulate the market by introducing socialist government.”

    I like your blog, but I’ve gotta admit – I’m going to take everything you say with a major grain of salt from here on out. I just can’t take a guy seriously who thinks, rather than boycotting a certain company as a good free-market consumer should do, we should all band together and stump for inflation-pushing minimum wage increases (which raise the bottom line for all of us) and costly, inefficient universal healthcare.

    Wrong answer. Period.

    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.

    So let’s keep the market as free as the already heavy limits on it allow, and keep the minimum wage and socialized healthcare out of it.

    Wal-Mart works because people keep working there and people keep shopping there. Cut out one or both, and they will be forced to change their ways.

  10. William says:

    It’s all about Supply and Demand, do you know that for every one Wallmart worker, there are 3 lined up waiting to replace him ?

    If Wallmart didn’t provide these jobs, there would be thousands of more people lining up for Food Stamps, and it’ll be you and I who will be paying for that.

    No one cares about the oppertunities that Wallmart provides for these unkilled labors, nor the saving provided (Not for every single product of course).

    Everyone wants to cry about how these Wallmart workers are treated unfairly, but the fact is that if these workers don’t like the conditions provided, they can always quit and work somewhere else. These people choose to work at Wallmart, choose to work for minimal salary and no benefits, because they don’t have a lot of other options.

    This is the same for people complainting about Sweat Shops in foreign countries, they don’t understand that working in the sweat shop for these kids help put food on the table for those families, help put clothes on family members. Yes, the condition is bad, but it’s not like they have oppertunities like us in America.

    To make this short, Wallmart works, Wallmart provide jobs for people, provides variety of products for people. If you don’t like how they treat their employees, then don’t work there, but don’t ruine this for all the people who actually benefit from Wallmart, which is the majority of the population.

  11. Diana says:

    Oh my god, this is the best website on Wal-Mart. I got all the facts I really needed right here. Now, I can present a good debate based on these facts

  12. Maynard Altizer says:

    My friend, what you need is the DVD “High Cost for Low Prices”. In case you have not seen it, it gives you the picture of Wally World from the inside and how the top management really works and thinks of the people that work there. Also, the greed of the Walton family is sick, sick, sick. What is their goal? To have and KEEP as much money as they can regardless of what the people that work for them go through to get them there. I would like to think that if Sam Walton was still alive, he would disown the entire bunch and get rid of Lee Scott for all the lies and the underhand way that he runs the company. At least, that is what I would hope he would do. It’s not just that they have ruined so many small businesses, lied to the cities and counties that have given them money to locate there, destroyed school system and others that were not connected to the retail business. You really need to purchase the DVD. Maynard Altizer

Leave a Reply

Your email address will not be published. Required fields are marked *