Paper 2 / Uncategorized

Walmart: Ethics and Exploitation


Since chain corporations began to spread around America, they have had profound negative effects on locally owned businesses.  Out of the thousands of large businesses spread out around the country, Walmart has been one of the most intrusive and destructive to small communities.  The company is certainly successful: as shown in figure 1, in 2010, Walmart’s net sales had amounted to $405 billion, and the company had over 8,000 stores worldwide (Walmart 2010 Financial Report).  Upon closer inspection of the company’s priorities, it becomes apparent that making a profit is the chief concern of the booming business: despite its significant income, the company does much more damage than good for its staff.  Walmart is clearly a company that prioritizes maximizing its shareholder value above looking out for the needs of its stakeholders. Reports have frequently been published that Walmart violates the rights of its employees: ethicalfootprint.com reports that “the majority of Walmart associates face wages falling below the poverty line and less-than-adequate healthcare.”  The Walmart business model, while successful, is certainly far from being ethically appropriate.

Walmart employees are given the short end of the stick in a myriad of ways: quality health care, fair wages, and an encouraging company culture are all left completely absent from the company’s business portfolio.  This mistreatment has not gone unnoticed by employees: “Making Change at Walmart” is a recent development—a coalition of Walmart associates, union members, small business owners, advocacy groups, and community organizations that band together in an effort to repair economies and people that have been negatively effected by Walmart’s monopolizing business efforts.

Walmart continually targets lower-class Americans, and, though the company itself is extremely profitable, it does little to nothing to help improve the lifestyles of its dedicated workers.  On average, Walmart employees make $15,500 a year—more than $5,000 below the poverty line.  Employees working overseas (particularly those in Bangladesh and China), are exploited and paid far below minimum wage (makingchangeatwalmart.org).  Reports released on Walmart show that “the Walmart Workforce reliance on public assistance including food stamps, healthcare, and other needs is estimated to utilize $900,000 per year of taxpayer funds at just one of the company’s stores,” (enewspf.com). Walmart workers consistently battle poverty, and receive no aid from their company.  However, the owners of Walmart, the Walton family, have a combined wealth of 42% of American families.  Mike Duke, Walmart’s CEO, made an annual salary of over $12.2 million in 2010, according to ethicalfootprint.com.  Comparing the immense wealth of the owners and higher-ups in the company with the borderline poverty of Walmart employees easily puts the business’ goals and business strategies into perspective—and those goals are to make a large profit, whatever the costs.

Not only are employees not given sufficient pay, they are also continually placed in poor working conditions.  Employees in America are frequently forced to work in unsafe subcontracted warehouses (makingchangeatwalmart.org).  In 2011, John Juanitas, then a Walmart employee, was injured on the job. At the time of his injury he worked a 20-34 hour week and made $11,000 a year, but his hours were forced to be cut after his injury.  Juanitas faced abuse and bullying by his managers at work, the hostile work environment making it even harder for him to continue making ends meet to support his family (makingchangeatwalmart.org).  Walmart’s lack of support that it offers to its employees, perpetuates an overall employee inability to recover from injury.  The company also continues to allow unsafe work conditions overseas.  While the company released a list of workshops it refused to work with in Bangladesh because of unsafe conditions, it has come to light that the company continues to receive shipments from at least two of the factories it has claimed to have cut off business association with (business-ethics.com).

Workers subjected to Walmart’s harsh working conditions oftentimes try to fight back against their employers, but are unable to produce any lasting results.  Countless strikes and protests occur at Walmarts all over the world, but to no avail—the company can easily replace their workers, as their jobs typically require little skill (but much mundane work).  This presents a risky catch-22 for Walmart employees: they can go on strike to fight against the violations, which puts their job and risk and usually yields no results, or they can continue to work in unfavorable conditions.  The previously mentioned John Juanitas formed The Organization United for Respect at Walmart, and in November of 2013, Walmart workers from three different stores in the Chicago area banded together to protest their wages and working conditions, asking Walmart to make an effort to prevent illegal retaliation against employees after strikes, and to raise the minimum wage to $25,000 a year.  Additionally, the National Labor Relations Board (NLRB) has filed over 100 charges against Walmart—but the company has made no effort to appease its workers (enewspf.com).  Employees continually make claims that Walmart has never reimbursed them for “work done on their breaks or other off-the-clock intervals,” which can add up to a lot of free labor for Walmart (ethicalfootprint.com).  Walmart is genuinely a force to be reckoned with—it is “the world’s largest company with the most employee complaints,” (nydailynews.com).  And though there is a constant struggle against Walmart’s harsh treatment of its workers by those being mistreated, these problems are largely overlooked.

Walmart also misleads the public about its health care plan—though they show off the fact that they have low health care premiums, employees have to pay more than $5,000 of their own money before the company makes any payments at all (ethicalfootprint.com).

As the largest food seller in the United States, Walmart is easily able to maintain control over its employees.  Walmart monopolizes the industry—the company is able to have control over what type of food the American population eats, the amount of money they pay for that food, and the way in which their food is produced.  For this reason, Walmart also causes a severe amount of damage to locally-run businesses.  A 2008 study mentioned in a forbes.com article sheds light on this phenomenon: “each [Walmart] store caused a net decline of about 150 jobs… and lowered total wages paid to retail workers” after every opening.  But chains like Walmart do more harm than just taking away jobs from its direct competitors: when local businesses fail, there is also “less demand for services like accounting and graphic design, less advertising revenue for local media outlets, and fewer accounts for local banks,” (money.msn.com).  Walmart openings in communities, while a cause for celebration for some, lead to significant job loss and wage decrease.  And unfortunately, Walmarts are no longer confined to large urban areas: small suburban and even rural areas frequently have a store nearby, changing the focus of many towns from being community centered to mass-produced supplies and food.  Dr. Kenneth E. Stone followed Walmart for 10 years, and in 1997, published a report declaring that small rural areas (particularly his town in Iowa) can lose up to 47 % of retail trade within ten years of a Walmart being introduced to the area.  Stone demonstrates his findings with a graph (Figure 2), which projects a decrease in general merchandise sales in neighborhoods surrounding towns in which Walmarts were introduced.  Though general sales in the Walmart towns by and large increase in the years following the introduction of Walmart (and we can assume that much of the sales revenue is going to Walmart itself), sales in surrounding towns drastically decline.

The corporation has also, on multiple occasions, been linked to serious environmental damage.  This year, a Walmart was discovered to be disposing of “liquid pollutants and solid waste” improperly in California and Missouri.  Though a spokesperson from the company claims to have “fixed the problem,” this is not, in fact, the first time something like this has happened with Walmart: in 2010, the company was ordered to pay a $27 million fine for similar environmental damage (inhabitat.com).  It seems as though Walmart is set in its ways, as a few million dollars is not much for this financial business leader.

Additionally, it has also been reported that Walmart’s offshore factories violate many labor laws and regulations. In July 2008 The China Labor watch conducted an inspection in Walmart’s Hatai Shoe Factory. The violations they witnessed included “Overtime only paid up to Wal-Mart’s limits. When overtime surpasses this limit, extra wages weren’t paid until the following month. Inspectors also witnessed workers were forced by their managers to the Wal-Mart inspectors about the true conditions of their work On average workers worked 5 hours overtime daily.  The inspectors witness that when workers requested not to work overtime once, they were denied any overtime opportunities for a month. Factory managers were able to get away with abusing workers and disguising in order to layoffs to avoid paying severance payments to workers.   Workers were forced to switch to undesirable jobs until they quit voluntarily. (Chinalaborwatch.org

Walmart’s net sales in 2010 were over $405 billion, meaning that they earned more than any other corporation in that year.  Walmart has an influence on this country that is both prominent and, unfortunately, unlikely to go anywhere anytime soon.  It is important that a leading business in America whose ethical standards are so corrupt faces some kind of legal consequence, but Walmart has thus far been untouchable by any of its employees.  A corporation this large and this important needs to have better funding and more support behind its opponents—and hopefully, in the upcoming years, struggling workers will find that backing.Screen Shot 2013-11-17 at 11.40.47 PM Screen Shot 2013-11-18 at 12.29.06 AM

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