Wal-Mart’s Influence on the Economy
Wal-Mart is the America’s leading retailer and the second largest store in the world. It is a private employer with over 1.3 million workers across the globe (“The Good, the Bad, and Wal-Mart”). It is hard for Wal-Mart to boost profits by increasing the output of goods it sells to consumers. Since its inception, Wal-Mart has practiced questionable business ethics. Its problems date back to fighting unions of the 1970s, labor organizations and more importantly its employees. The firm has always controlled its labor costs to remain profitable. The venture made headlines at an alarming rate in the past year. Despite being listed as the US most admired enterprise, it has recorded breaking lawsuits across America and China due to its labor practices. It has been sued for anti-union stance, exploitation of the staff, wage law infringement and healthcare issues. The multinational corporation has also been charged with illegal firing, making threats, and unpaid overtime work (“The Good, the Bad, and Wal-Mart – Wal-Mart”, 2017). By reviewing Wal-Mart’s negative minimum wage policies one will be able to understand the effects it has on the economy and the company.
A case will be outlined to support the paper’s point by highlighting the minimum wage violations in Wal-Mart. The staff exploitation is increasing in developed countries due to the availability of cheap labor from refugees from the nations torn by war (The United Nations Office on Drugs and Crime (UNODC). A glaring example of Wal-Mart’s law violation is a class-action suit filed by the International Labor Rights Fund (ILRF). The non-governmental organization complained about Wal-Mart’s exploitation of employees in foreign states, especially it concerns the labor, which the company provides to Asian countries by paying low minimum wages. It is further alleged that in some cases, particularly in Bangladesh, several staff members worked from 7.45 am to 10.00 pm with break for six months without additional payment and low minimum wage (“The Good, the Bad, and Wal-Mart”). The giant retailer has been able to manipulate laws to its advantage; the example is the Department of Labor settlement. The corporation was charged with using child labor and paying poor salaries from 1998 to 2002. The settlement fined Wal-Mart $135,540 and an agreement of 15-day notice to investigate its stores (Falk). The 15-day provision led to the grievance from legislators and rights groups concerning why such a notice should be provided to a company, which asserts that it adheres to all the labor laws. In 2001, federal agencies raided 60 Wal-Mart stores in 21 states and upheld 245 illegal immigrants who were paid less than half of the minimum wage required in all states in America and internationally. However, it was noted that the executives were aware of the presence of these workers in the retail outlets. The case was settled for $11 million with a claim that the senior staff members had no idea about the illegal immigrants in the stores (Falk). Besides, Wal-Mart’s urge for saving labor costs has increased to an extent where employees are not provided with safety equipment. According to Wal-Mart’s cost-benefit report, the firm preferred washing blood of garments to purchasing gloves for seamstresses and fabric cutters. The staff were paid less than $5 in Bangladesh. After a massive public outcry, the retailer decided to conduct abrupt inspection of suppliers, but this was considered lip service since Wal-Mart was not able to do that. Hence, the following question arises: why cannot Wal-Mart make the suppliers abide by the state payment laws, and why in case of their violation the firm ceases from purchasing from the supplier? While this issue remains not tackled, the retailer was again accused of child labor in the overseas factory with full awareness of the corporate management. Therefore, Wal-Mart’s minimum wage strategy has devastating consequences.
Exploitation of workers by Wal-Mart has crucial economic implications about the living conditions of the staff. Since the firm is a large employer, its actions have the ripple effect on the economy of respective countries. Due to the considerable number of retail outlets, one store can be a drain in the economy according to the report by the U. S. Congressional Democrats on the cost of Wal-Mart. The report states that one Wal-Mart store negatively influences the economy where underpaid employees resort to government aid programs. Since most Wal-Mart employees cannot afford the basics of life, the taxpayers use the space spending huge chunks of money. A case study in Wisconsin confirmed that for the venture with 300 workers, the government spends between $904,542 and $1,744,590 per year. On average, each employee gets $5,815. The recent research indicated that if the corporation increased its wage for a full time staff member to $25,000, poverty would greatly reduce. In addition, the GDP will rise from around $11.8 to $15.2 billion in the following year just from decent wages (Falk). Moreover, Wal-Mart tends to hurt communities by creating unsustainable economic models. The latter make other small businesses close since they cannot compete with the firm’s low prices. The Los Angeles City Council revealed that Wal-Mart is not good for the community where the city accrued an additional $9 million from health care costs. The loss of retirement benefits and pension was so great that the Council could not compensate it with property sales and taxes (Osterndof). Besides, Wal-Mart’s anti-union stance is aggravating the labor situation by neglecting unions or representative members within its workforce who want to address some issues. The standoff has deprived the company o five stores in four states in a public relation act of “plumbing problems”, but to the real reason is the pressure of labor unions. Hence, this has led to job loss in the five retail outlets and limitation of intake from suppliers. However, the impact of unions does not always paint a rosy picture of the economy. Union leaders raised wages thus restricting the number of workers in a company. In certain instances, unions are referred to as “labor cartels”. The unions bring benefits to their members but affect the economy by hurting consumers, reducing job opportunities, and retard the economic growth in the long run.
In conclusion, Wal-Mart’s exploitation of employees is highlighted by numerous media stations around the world creating disdain for the retailer. The company has been identified through many lawsuits to have violated labor rights on many occasions. The low fines and settlement do not strongly promote rights and privileges of the staff. The firm has bad working conditions aside small wages. Nevertheless, some studies have shown that Wal-Mart cannot afford to pay high salaries; moreover, it will not generate substantial profits. It has one of the largest wage bills in the world. Therefore, low pay still influences the economy by increasing government assistance and inducing poverty thus affecting the living conditions of people.
Falk, Tyler. “How Walmart’s Low Wages Impact the Economy.” ZDNet, 5 June 2013, http://www.zdnet.com/article/how-walmarts-low-wages-impact-the-economy/. Accessed 24 June 2017.
Osterndof, Chris. “10 Reasons Walmart is the Worst Company in America.” The Daily Dot, 21 May 2015, https://www.dailydot.com/via/walmart-labor-unions-bad-company/. Accessed 24 June 2017.
“Protect Human Rights and Workers’ Rights to End Labour Exploitation.” United Nations Office on Drugs and Crime (UNODC), 2017, http://www.unodc.org/unodc/en/frontpage/2011/June/protect-human-rights-and-workers-rights-to-end-labour-exploitation.html. Accessed 24 June 2017.
“The Good, the Bad, and Wal-Mart.” Workplacefairness, 2017, https://www.workplacefairness.org/reports/good-bad-wal-mart/wal-mart.php. Accessed 24 June 2017.