Criticism of Wal-Mart

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A typical Wal-Mart Supercenter in Madison Heights, Virginia
A typical Wal-Mart Supercenter in Madison Heights, Virginia

Wal-Mart has been subject to criticism by various groups and individuals. Labor unions fund and lead community groups, grassroots organizations, religious organizations, and environmental groups in protests against Wal-Mart, the company's policies and business practices, and Wal-Mart customers.[1][2][3] Other areas of criticism include the corporation's foreign product sourcing, treatment of product suppliers, environmental practices, the use of public subsidies, and the company's security policies.[4] Wal-Mart denies doing anything wrong and maintains that low prices are the result of efficiency.[5][6][7]

In 2005, labor unions created new organizations and websites to influence public opinion against Wal-Mart, including Wake Up Wal-Mart (United Food and Commercial Workers) and Wal-Mart Watch (Service Employees International Union). By the end of 2005, Wal-Mart had launched Working Families for Wal-Mart to counter criticisms made by these groups. Additional efforts to counter criticism include launching a public relations campaign in 2005 through their public relations website,[8] which included several television commercials. The company retained the public relations firm Edelman to interact with the press and respond to negative or biased media reports,[9] and has started interacting directly with bloggers by sending them news, suggesting topics for postings, and sometimes inviting them to visit their corporate headquarters.[10]

Economists suggest that Wal-Mart is a success because it sells products at low prices that people want to buy, satisfying customer's wants and needs. However, Wal-Mart critics argue at the same time Wal-Mart's lower prices draw customers away from other businesses, "hurting the community."[11][12]

Contents

[edit] Local communities

[edit] Store openings

Wal-Mart opened its Teotihuacán Superstore near the Pyramid of the Moon (shown) amid community protests.
Wal-Mart opened its Teotihuacán Superstore near the Pyramid of the Moon (shown) amid community protests.

When Wal-Mart plans new store locations, activists sometimes oppose the new store and attempt to block its construction. Opponents to the new Wal-Mart cite concerns such as traffic congestion, environment problems, public safety, absentee landlordism, bad public relations, low wages and benefits, and predatory pricing.[13][14][15][16][17] Opposition sometimes includes protest marches by competitors, activists, labor unions, and religious groups.[18][19][20] In some instances, activists demonstrated opposition by causing property damage to store buildings or by creating bomb scares.[21][22] Some city councils have denied permits to developers if they plan to include a Wal-Mart in their project. Those who defend Wal-Mart cite consumer choice, the overall benefits to the economy, and object to bringing the issue into the political arena.[23]

A Wal-Mart Superstore opened in 2004 in Mexico, 1.9 miles away from the historic Teotihuacán archaeological site and Pyramid of the Moon.[24] Although Wal-Mart's proposal received protest and media attention, the location was supported by Mexico's National Anthropology Institute, the United Nations, and the Paris-based International Council on Monuments and Sites.[25] Local merchants, helped by environmental groups and anti-globalization groups opposed the construction,[26] and poet Homero Aridjis joined the protest characterizing the opening as "supremely symbolic" and "...like planting the staff of globalization in the heart of ancient Mexico."[27]

Archaeologists oversaw construction and discovered a small clay and stone altar along with some other artifacts where the store's parking lot is now located.[24]

In 1998, Wal-Mart proposed construction of a store off of Charlotte Pike near Nashville, Tennessee. The building site was home to both American Indian burial grounds and a Civil War battle site. Protests were mounted by American Indians and the Civil War interest groups, but the Wal-Mart was eventually constructed after moving graves and some modifications of the site so as not to interfere with the battlefield.[28] Civil War relics were also discovered at the site. The project developers, JDN Realty of Atlanta, donated land to permit access to the Civil War historic site.[29] The Indian burials were removed and re-buried.[28]

[edit] Economic impact

This Bizarro comic is an example of the criticism that Wal-Mart forces other stores out of business.
This Bizarro comic is an example of the criticism that Wal-Mart forces other stores out of business.

Wal-Mart is one of the largest corporations in the world.[30] Critics worry about the presence of Wal-Mart in their local communities. Studies have found both positive and negative effects on local businesses, jobs and taxpayers.

Kenneth Stone, Professor of Economics at Iowa State University, in a paper published in Farm Foundation in 1997, found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening.[31] However, he compared the changes to previous competitors small town shops have faced in the past—from the development of the railroads and the Sears Roebuck catalog to shopping malls. He concludes that shop owners who adapt to the ever changing retail market can thrive after Wal-Mart comes to their community.[31]A subsequent study in collaboration with Mississippi State University indicated that there are "both positive and negative impacts on existing stores in the area where the new supercenter locates."[32]

A June 2006 article published by the libertarian Ludwig von Mises Institute suggested that Wal-Mart has a positive impact on small business.[33] It argued that while Wal-Mart's low prices caused some existing businesses to close, the chain also created new opportunities for other small business, and so "the process of creative destruction unleashed by Wal-Mart has no statistically significant impact on the overall size of the small business sector in the United States."[23]

For the concern of jobs, a study by Global Insight, and commissioned by Wal-Mart, found that its stores' presence saves working families more than US$2,500 per year, while creating more than 210,000 jobs in the U.S.[34][35]

Another study at the University of Missouri found that a new store increases net retail employment in the county by 100 jobs in the short term, half of which disappear over five years as other retail establishments close.[36]

Studies of Wal-Mart show consumers benefit from lower costs. A 2005 Washington Post story reported that "Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion per year."[37] A study in 2005 at Massachusetts Institute of Technology measured the effect on consumer welfare and found that the poorest segment of the population benefits the most from the existence of discount retailers.[38] In 2004, two professors at Pennsylvania State University asserted that although rates of poverty actually decreased in U.S. counties with Wal-Mart stores, their data suggested that poverty increased after "correcting" the data with an undocumented mathematical formula.[39] They hypothesized, to explain their results: This could be due to the displacement of workers from higher-paid jobs in the retailers customers no longer choose to patronize, Wal-Mart providing less local charity than the replaced businesses, or a shrinking pool of local leadership and reduced social capital due to a reduced number of local independent businesses.[39]

Because Wal-Mart employs some part-time and relatively low paid workers, some of these workers may partially qualify for some state welfare programs. This has led critics to claim that Wal-Mart increases the burden on taxpayer-funded services.[40][41] A 2002 survey by the state of Georgia's subsidized healthcare system, PeachCare, found that Wal-Mart was the largest private employer of the parents of children enrolled in its program, one quarter of the employees of Georgia Wal-Marts qualified to enroll their children in Medicaid.[42] A 2004 study at the University of California, Berkeley charges that Wal-Mart's low wages and benefits are insufficient and, although decreasing the burden on the social safety net to some extent, California taxpayers still pay $86 million a year to Walmart employees.[43][44]

[edit] Allegations of predatory pricing and supplier issues

Wal-Mart has been accused of selling merchandise at such low costs that competitors have tried to sue them for predatory pricing (intentionally selling a product at low cost in order to drive competitors out of the market). In 1995, in the case of Wal-Mart Stores, Inc. v. American Drugs, Inc., American Drugs accused Wal-Mart of selling items at too low a cost for the purpose of injuring competitors and destroying competition. The Supreme Court of Arkansas ruled in favor of Wal-Mart saying that their pricing, including the use of loss leaders, was not predatory pricing.[15] In 2000, the Wisconsin Department of Agriculture, Trade, and Consumer Protection accused Wal-Mart of selling butter, milk, laundry detergent, and other staple goods at low cost, with the intention of forcing competitors out of business and gaining a monopoly in local markets.[45] Crest Foods filed a similar lawsuit in Oklahoma, accusing Wal-Mart of predatory pricing on several of its products, in an effort to drive their own company-owned store in Edmond, Oklahoma out of business.[46] Both cases were settled out of court with no fine and no admission of wrongdoing. In the Wisconsin case, Wal-Mart was so confident of its innocence they agreed that Wisconsin could double or triple fine them should Wal-Mart ever violate the predatory pricing law.[45]

In 2003, Mexico's antitrust agency, the Federal Competition Commission, investigated Wal-Mart for "monopolistic practices" prompted by charges that the retailer pressured suppliers to sell goods below cost or at prices significantly less than those available to other stores. Mexican authorities found no wrong-doing on the part of Wal-Mart.[47] However, in 2003, the German High Court ruled that Wal-Mart's low cost pricing strategy "undermined competition" and ordered Wal-Mart and two other supermarkets to raise their prices. Wal-Mart won appeal of the ruling, then the German Supreme Court overturned the appeal.[17] Wal-Mart has since sold its stores in Germany.

Wal-Mart has been accused of using monopsony power to force its suppliers into self-defeating practices. For example, Barry C. Lynn, a senior fellow at the New America Foundation, argues that Wal-Mart's constant demand for lower prices caused Kraft Foods to "shut down thirty-nine plants, to let go [of] 13,500 workers, and to eliminate a quarter of its products."[48] Kraft was unable to compete with other suppliers and claims the cost of production had gone up due to higher energy and raw material costs. Lynn argues that in a free market, Kraft could have passed those costs on to its distributors and ultimately consumers.[48] However, only in a non-free market could Kraft or any other company "pass those costs on" without losing business because in a free market, consumers are free to choose another, less expensive brand.

In some cases, predatory pricing or unfair competition laws can hurt consumers. For example, most Wal-Mart store pharmacies fill many generic prescriptions for $4 for a month's supply. However, in California and ten other states, complaints from other pharmacies has resulted in Wal-Mart being required to charge at least $9 for a month's supply of certain drugs.[49]

[edit] Employee and labor relations

With close to two million employees worldwide, Wal-Mart has faced a torrent of lawsuits and issues with regards to its workforce. These issues involve low wages, poor working conditions, inadequate health care, as well as issues involving the company's strong anti-union policies. Critics point to Wal-Mart's high turnover rate as evidence of an unhappy workforce, although other factors may be involved. Approximately 70% of its employees leave within the first year.[50]

On the other hand, positions at Wal-Mart are in great demand. When the Wal-Mart store in Evergreen Park (near Chicago, Il) opened, 25,000 people applied for the 325 positions. Previously, the Wal-Mart in Oakland, California received 11,000 applications when it opened.[51] Wal-Mart's Chicago-area manager Chad Donath said “we got an amazing response” and “that incredible number of applications shows the community thinks Wal-Mart is a great place to work.” He noted that generally stores receive between 3,000 and 4,000 applications for about 300 to 450 positions.[52]

[edit] Wages

The activist group Los Angeles Alliance for a New Economy said "in 2006 Wal-Mart reports that full time hourly associates received, on average, $10.11 an hour." They further calculated that working 34 hours per week an employee earns $17,874 per year and claimed that's about 20 percent less than the average retail worker. (The number of hours the "average retail worker" worked was not specified) The report from LAANE further opines that this pay is "over $10,000 less than what the average two-person family needs."[53] Wal-Mart managers are judged, in part, based on their ability to control payroll costs. Some say this puts extra pressure on higher-paid workers to be more productive.[54]

By contrast, Wal-Mart insists its wages are generally in line with the current local market in retail labor.[55] Although direct comparisons are complicated because Wal-Mart employs more part time workers and the company's more extensive training, supervision and automation provides opportunity to workers with little or no experience or skills and this may account for wage differences. Wal-Mart grants "full time" benefits to those working as little as 34 hours per week but does not limit workers to just 34 hours per week. The company does control labor costs by discouraging overtime.

Other critics have noted that in 2001, the average wage for a Wal-Mart Sales Clerk was $8.23 per hour, or $13,861 a year, while the federal poverty line for a family of three was $14,630.[56] The company has hired low-skilled workers since its inception. Wal-Mart founder Sam Walton once said, "I pay low wages. I can take advantage of that. We're going to be successful, but the basis is a very low-wage, low-benefit model of employment."[57]

In August 2006, Wal-mart announced that it would roll out an average pay increase of 6% for all new hires at 1,200 U.S. Wal-Mart and Sam's Club locations, but the same time would institute pay caps on veteran workers.[58] While they maintain that the measures are necessary to stay competitive, critics believe that the salary caps are primarily an effort to push higher-paid veteran workers out of the company.[58]

[edit] Working conditions

Wal-Mart has also faced accusations involving poor working conditions of its employees. For example, a class action lawsuit in Missouri asserted approximately 160,000 to 200,000 people who were forced to work off-the-clock, were denied overtime pay, or were not allowed to take rest and lunch breaks.[59] In 2000, Wal-Mart paid $50 million to settle a class-action suit that asserted that 69,000 current and former Wal-Mart employees in Colorado had been forced to work off-the-clock.[59] The company has also faced similar lawsuits in other states, including Pennsylvania[60] and Oregon.[61] Class-action suits were also filed in 1995 on behalf of full-time Wal-Mart pharmacists whose base salaries and working hours were reduced as sales declined, resulting in the pharmacists being treated like hourly employees.[62]

On October 16, 2006, approximately 200 workers on the morning shift at a Wal-Mart Super Center in Hialeah Gardens, Florida walked out in protest against new store policies and rallied outside the store, shouting "We want justice" and criticizing the company's recent policies as "inhuman."[63] This marks the first time that Wal-Mart has faced a worker-led revolt of such scale, according to both employees and the company.[63] Reasons for the revolt included cutting full-time hours, a new attendance policy, and pay caps that the company imposed in August 2006, compelling workers to be available to work any shift (day, swing or night), and that shifts that would be assigned by computers at corporate headquarters and not by local managers. Wal-Mart quickly held talks with the workers, addressing their concerns.[63] Wal-Mart asserts that its policy permits associates to air grievances without fear of retaliation.[64]

The report by Congressman Miller alleged that in ten percent of Wal-Mart's stores, nighttime employees were locked inside, holding them prisoner.[65] There has been some concern that Wal-Mart's policy of locking their nighttime employees in the building has been implicated in a longer response time to dealing with various employee emergencies, or weather conditions such as hurricanes in Florida.[66] Wal-Mart said this policy was to protect the workers, and the store's contents, in high-crime areas and acknowledges that some employees were inconvenienced in some instances for up to an hour as they had trouble locating a manager with the key. However, fire officials confirm that at no time were fire exits locked or employees blocked from escape. Wal-Mart has advised all stores to ensure the door keys are available on site at all times.[66] The issue has become less of a problem with the increase in the number of twenty-four hour stores.

[edit] Child labor violations

In January 2004, the New York Times reported on an internal Wal-Mart audit conducted in July 2000, which examined one week's time-clock records for roughly 25,000 employees.[67] According to the Times, the audit, "pointed to extensive violations of child-labor laws and state regulations requiring time for breaks and meals," including 1,371 instances of minors working too late, during school hours, or for too many hours in a day.[67] There were 60,767 missed breaks and 15,705 lost meal times.[67] Wal-Mart’s vice president for communications, Mona Williams, responded that company auditors had determined that the methodology used was flawed. "This audit is so flawed and invalid that we did not respond to it in any way internally."[67]

[edit] Use of illegal workers

Wal-Mart has been accused of allowing illegal immigrants to work in their stores. In one case, federal investigators say Wal-Mart executives knew that contractors were using illegal immigrants as they had been helping the Federal government with an investigation for the previous three years.[68] Some critics said that Wal-Mart directly hired illegal immigrants, while Wal-Mart claims they were employed by contractors who won bids to work for Wal-Mart.[69]

On October 23, 2003, federal agents raided 61 Wal-Mart stores in 21 U.S. states in a crackdown known as "Operation Rollback," resulting in the arrests of 250 nightshift janitors who were undocumented.[70] Following the arrests, a grand jury convened to consider charging Wal-Mart executives with labor racketeering crimes for knowingly allowing illegal immigrants to work at their stores.[70] The workers themselves were employed by agencies Wal-Mart contracted with for cleaning services.[70] Wal-Mart blamed the contractors, but federal investigators point to wiretapped conversations showing that executives knew some workers didn't have the right papers.[70] The October 2003 raid was not the first time Wal-Mart was found using unauthorized workers. Earlier raids in 1998 and 2001 resulted in the arrests of 100 workers without documentation located at Wal-Mart stores around the country. [71]

In November 2005, 125 alleged undocumented immigrants were arrested while working on construction of a new Wal-Mart distribution center in eastern Pennsylvania.[72] According to Wal-Mart, the workers were employees of Wal-Mart's construction subcontractor.

[edit] Health insurance

As of October 2005, Wal-Mart's health insurance covered 44% or approximately 572,000 of its 1.3 million U.S. workers.[73] In comparison, Wal-Mart rival Costco insures approximately 96% of its eligible workers, although Costco has been criticized by investors for its high labor costs.[74] Wal-Mart spends an average of $3,500 per employee for health care, 27% less than the retail-industry average of $4,800.[75] When asked why so many Wal-Mart workers choose to enroll in state health care plans instead of Wal-Mart's own plan, Wal-Mart CEO Lee Scott acknowledged that some states' benefits may be more generous than Wal-Mart's own plan: "In some of our states, the public program may actually be a better value - with relatively high income limits to qualify, and low premiums."[76] Critics of Wal-Mart in "Wal-Mart: The High Cost of Low Price" argue that employees are paid so little they cannot afford health insurance.

According to a September 2002 survey by the state of Georgia, one in four children of Wal-Mart employees were enrolled in PeachCare for Kids, the state's health-insurance program for uninsured children, compared to the state's second-biggest employer, Publix, had one child in the program for every 22 employees.[77] A December 2004 nationwide survey commissioned by Wal-Mart showed that the use of public-assistance health-care programs by children of Wal-Mart workers was at a similar rate to other retailers' employees, and at rates similar to the U.S. population as a whole.[78]

On October 26, 2005, a Wal-Mart internal memo sent to the firm's Board of Directors advised trimming over $1 billion in health care expenses by 2011 through measures such as attracting a younger, implicitly healthier work force by offering education benefits.[79] The memo also suggested giving sedentary Wal-Mart staffers, such as cashiers, more physically demanding tasks, such as "cart-gathering," and eliminating full-time positions in favor of hiring part-time employees who would be ineligible for the more expensive health insurance and several policy proposals which may violate the Americans with Disabilities Act of 1990.[79] The memo also accused Wal-Mart's lower paid employees of abusing emergency room visits, "possibly due to their prior experience with programs such as Medicaid," whereas such visits may actually be due to the reduced ability of uninsured or underinsured people to make timely appointments to see a regular physician.[79] Critics point to this story as evidence that Wal-Mart purports to be generous with its employee benefits, while in reality the company is working to cut such benefits by reducing the number of full-time and long-term employees and discouraging supposedly unhealthy people from working at Wal-Mart.

On January 12, 2006, the Maryland legislature enacted a law requiring that all corporations with more than 10,000 employees in the state spend at least eight percent of their payroll on employee benefits, or pay into a state fund for the uninsured.[80] Wal-Mart, with about 17,000 employees in Maryland, was the only known company to not meet this requirement before the bill passed. On July 7, 2006, the Maryland law was overturned in federal court by U.S. District Judge Frederick Motz who held that a federal law, the Employee Retirement Income Security Act (ERISA), pre-empted the Maryland law. In his opinion, Motz said that the law would "hurt Wal-Mart by imposing the administrative burden of tracking benefits in Maryland differently than in other states."[81]

On January 19, 2006, the, "Fair Share Health Care," legislation in Wisconsin was defeated. Wal-Mart spokesperson Nate Hurst stated, "that this bill failed even to make it out of committee in the Wisconsin Assembly is a big setback to the Washington, D.C. union leaders driving these state-by-state attacks against large employers. We're hopeful that more state legislators across America -- like those in Wisconsin -- will come to realize that these bills are harmful to working families. Not only will they do nothing to control the cost of health care or improve access to health coverage, they will cost jobs and hurt economic growth. The American people want their legislators to resist special interest pressure and instead work with colleagues and businesses of all sizes to solve the health care challenges facing America."[82]

On April 17, 2006, Wal-Mart announced it was making a health care plan available to part-time workers after 1 year of service, instead of the prior 2 year requirement.[83] One criticism of the new plan is that it provides benefit only after a $1,000 deductible is paid ($3,000 for a family). These deductibles may financially be out of reach for eligible part-time workers. Wal-Mart estimates this change can add 150,000 workers to health coverage plans, if all who are eligible take part. By January 2007, the number of workers enrolled in the company's health care plans increased by 8%, which Wal-Mart attributed to the introduction of less expensive insurance policies.[84] However, even with this increase, less than half of Wal-Mart's employees, or 47.4%, received health insurance through the company, with 10%, or 130,000, receiving no coverage at all.[84]

Following standard corporate practice, in March 2008, Wal-Mart sued a former Wal-Mart employee to recover the money it spent for her health care. The employee, Deborah Shank, was brain-damaged in a car accident. Wal-Mart sued her after she received a settlement from the accident, citing that company policy forbids them from receiving coverage if they also win a settlement in a lawsuit. After a wave of bad publicity, Wal-Mart dropped its suit.[85]

[edit] Labor union opposition

Wal-Mart has been criticized for its policies against labor unions. Critics blame workers reluctance to join the labor union on Wal-Mart anti-union tactics such as managerial surveillance and pre-emptive closures of stores or departments who choose to unionize.[86] Wal-Mart states that it is not anti-union but, "pro-associate," arguing that its employees do not need to pay third parties to discuss problems with management as the company's open-door policy enables employees to lodge complaints and submit suggestions all the way up the corporate ladder.[87] In 1970, company founder Sam Walton resisted a unionization push by the Retail Clerks International Union in two small Missouri towns by hiring a professional, John Tate, to educate workers on the negative aspects of unions.[88] On Tate's advice, he also took steps to show his workers on how the company had their best interests in mind, encouraging them to air concerns with managers and implementing a profit-sharing program.[88] A few years later, Wal-Mart hired a consulting firm, Alpha Associates, to develop a union avoidance program.[88]

In March 2005, Tom Coughlin was forced to resign from Wal-Mart's Board of Directors, facing charges of embezzlement.[89] Coughlin claimed that the money was used for an anti-union project involving cash bribes paid to employees of the United Food and Commercial Workers Union in exchange for a list of names of Wal-Mart employees that had signed union cards.[89] He also claimed that the money was unofficially paid to him, by Wal-Mart, as compensation for his anti-union efforts.[89] In August, 2006, Coughlin pleaded guilty to stealing money, merchandise, and gift cards from Wal-Mart, but avoided prison time due to his poor health. He was sentenced to five years probation and required to pay a $50,000 fine and $411,000 in restitution to Wal-Mart and the Internal Revenue Service. U.S. Attorney Robert Balfe has stated that no evidence was found to back up Coughlin's initial claims, and Wal-Mart continues to deny the existence of the anti-union program, though Coughlin himself apparently restated those claims to reporters after his sentencing.[90]

In 2000, meat cutters in Jacksonville, Texas voted to unionize. Wal-Mart subsequently eliminated in-house meat-cutting jobs in favor of prepackaged meats on the claims that it cut costs and was a preventive measure to lawsuits.[91] Wal-Mart claimed that the nationwide closing of in-store meat packaging had been planned for many years and was not related to the unionization.[91] In June 2003, a National Labor Relations Board judge ordered Wal-Mart to restore the meat department to its prior structure, complete with meat-cutting, and to recognize and bargain with the union over the effects of any change to case-ready meat sales.[92]

Wal-Mart's anti-union policies also extend beyond the United States. The documentary Wal-Mart: The High Cost of Low Price, shows one successful unionization of a Wal-Mart store in Jonquière, Quebec (Canada) in 2004, but Wal-Mart closed the store five months later because the store had become unprofitable due to the costs of union demands.[93][94] In September 2005, the Québec Labor Board ruled that the closing of a Wal-Mart store amounted to a reprisal against unionized workers and has ordered additional hearings on possible compensation for the employees, though it offered no details.[95]

Wal-Mart has also had some run-ins with the German Ver.di labor union as well.[96] These issues, combined with cultural differences and low performing stores, led Wal-Mart to pull out of the German market entirely in 2006.[97]

In August 2006, Wal-Mart announced that it would allow workers at all of its Chinese stores to become members of trade unions, and that the company would work with the state-sanctioned All-China Federation of Trade Unions (ACFTU) on representation for its 28,000 staff.[98][99]

[edit] Imports and globalization

As the a large customer to most of its vendors, Wal-Mart openly uses its bargaining power to bring lower prices to attract its customers. The company negotiates lower prices from vendors. For certain basic products, Wal-Mart "has a clear policy" that prices go down from year to year.[100] If a vendor does not keep prices competitive with other suppliers, they risk having their brand removed from Wal-Mart's shelves in favor of a lower-priced competitor.[101] Critics argue that this pressures vendors to shift manufacturing jobs to China and other third world nations, where the cost of labor is less expensive.

In the mid-1990s, Wal-Mart had a "Buy American" campaign. But by 2005, about 60% of Wal-Mart's merchandise was imported, compared to 6% in 1995.[101] In 2004, Wal-Mart spent $18 billion on Chinese products alone, and if it were an individual economy, the company would rank as China's eighth largest trading partner, ahead of Russia, Australia, and Canada.[102] One group estimates that the growing US trade deficit with China, heavily influenced by Wal-Mart imports, is estimated to have moved over 1.5 million jobs that might otherwise be in America to China between 1989 and 2003.[103] According to the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), "Wal-Mart is the single largest importer of foreign-produced goods in the United States", their biggest trading partner is China, and their trade with China alone constitutes approximately 10% of the total US trade deficit with China as of 2004.[104]

While the company certainly imports many products, it points out that it purchases goods from more than 68,000 US vendors, spending $137.5 billion in 2004, and supporting more than 3.5 million supplier jobs in the US.[105]

[edit] Overseas labor concerns

Critics say Wal-Mart's doesn't supervise its foreign suppliers enough. Critics say its products have been made using sweatshops or prison labor. (Although American companies produce products in American prisons providing work for inmates.) For example, in 1995, Chinese dissident Harry Wu charged that Wal-Mart was contracting prison labor in Guangdong Province. However, Wal-Mart says they do not use prison labor.[106] There have also been reports of teenagers in Bangladesh working in sweatshops 80 hours per week at $0.14 per hour, for a Wal-Mart supplier Beximco. In 1994, Guatemalan Wendy Diaz reported that she had been working for Wal-Mart at $0.30 per hour at age 13.[106] The film Wal-Mart: The High Cost of Low Price shows images of factories that produce goods for Wal-Mart that appear in poor condition, and factory workers subject to abuse and conditions the documentary producers consider inhumane. The same film outlines the life a young girl leaving her dirt-poor village in China, lured by the promise of working in the Wal-Mart factory. [107]

According to Wal-Mart and many self-described advocates of free trade, comparisons of wage levels between vastly different countries is not a useful way to assess the fairness of a trade policy. The company also points out that wages paid to overseas workers are comparable to or exceed local prevailing wages. In that case, the company claims that the overseas manufacturing jobs it creates are often an improvement in the quality of life for its employees. They have also drawn attention to the fact that factory jobs with its suppliers are often safer and healthier than local alternatives, which may include prostitution, the drug trade or scavenging.

Wal-Mart currently uses monitoring which critics say is inadequate and "leaves outsiders unable to verify" conditions. Critics suggest an agency such as Social Accountability International or the Fair Labor Association, should do the monitoring, and since Wal-Mart will not release its audits or factory names, outside organizations are left to simply take Wal-Mart's word.[108] In 2004, Wal-Mart began working with Business for Social Responsibility, a San Francisco-based nonprofit organization, to reach out to groups active in monitoring overseas plants. BSR President, Aron Cramer, said: "Wal-Mart is at an early stage and it's likely that they, like most companies that engage in these processes, will adapt their approach over time."[109]

[edit] Product selection

Wal-Mart's product selection has been criticized by some groups in the past, primarily as viewed as a promotion of a particular ideology or as a responses to their original rural, religious target market. For example, in 2003, Wal-Mart removed certain men's magazines from their shelves, such as Maxim, FHM, and Stuff, citing customer complaints regarding their racy content.[110] Later that year, they decided to partly obscure the covers of Redbook, Cosmopolitan, and Marie Claire due to "customer concerns", and refused to stock an issue of Sports Illustrated's swimsuit special because it took exception to one photograph.[111]

Since 1991, Wal-Mart also has not carried music albums marked with the Recording Industry Association of America's (RIAA's) Parental Advisory Label (contradictory to the allowance of R-rated movies and video games rated Mature), although they carry edited versions of such albums, with obscenities removed or overdubbed with less offensive lyrics.[112] In one example in 2005, Wal-Mart rejected the original cover of Willie Nelson's reggae album, Countryman, which featured marijuana leaves, in an apparent pro-marijuana statement. To satisfy Wal-Mart, the record label, Lost Highway Records, issued the album with an alternate cover, without recalling the original cover. Wal-Mart has never carried Marilyn Manson albums, solely because of the controversy surrounding the group, but recently began selling Nine Inch Nails albums after rejecting them for years.[113] In fact, some albums that do not carry "Parental Advisory" stickers, but include profanities are not edited. Such albums include Pink Floyd's Dark Side of the Moon and Arctic Monkeys' Whatever People Say I Am, That's What I'm Not. However, Wal-Mart's policy on carrying albums with the Parental Advisory Label seems to vary by country, as albums containing the label can be found in Canadian Wal-Mart stores, for example.

In 1999, Wal-Mart announced that it would not stock emergency contraception pills in its pharmacies, not citing any particular reasons except for a "business decision" that was made earlier.[114] The move was criticized by family planning advocates, citing that women in small towns where Wal-Mart pharmacies had little competition would have greater difficulties in obtaining the drug.[114] The decision was challenged in 2006, as three Massachusetts women filed suit against the company after they were unable to purchase emergency contraception at their local Wal-Mart stores,[115] resulting in a ruling that required Wal-Mart to stock the drug in all of its pharmacies in Massachusetts.[115] Expecting that other states would soon do the same, Wal-Mart reversed its policy and announced that they would begin to stock the drug nationwide,[115] while at the same time maintaining its conscientious objection policy, allowing any Wal-Mart pharmacy employee who does not feel comfortable dispensing a prescription to refer customers to another pharmacy.[115]

Wal-Mart has also been criticized for some of the products that it carries. For example, it was criticized for selling the notoriously anti-Semitic text The Protocols of the Elders of Zion on its website. It is widely believed in academic circles to be a forgery,[116] but Wal-Mart's product description suggested the text might be genuine. Wal-Mart stopped selling the book in September 2004, but many other booksellers still sell it in the interests of freedom of speech.

In October 2004, Wal-Mart cancelled its order for The Daily Show's America (The Book) after discovering a page that depicts each US Supreme Court judge nude. A week later, it returned copies of George Carlin's When Will Jesus Bring the Pork Chops?, with a cover recreating The Last Supper with Jesus' seat empty and Carlin seated next to it. The company claimed that the copies were shipped to it by mistake and a Wal-mart spokeswoman said she "didn't believe this particular product would appeal" to its customer base.[117]

In January 2006, Wal-Mart was criticized for the recommendation system on its website which suggested that some African American-related DVDs, such as Introducing Dorothy Dandridge and documentaries on Martin Luther King, Jr. were similar to the Planet of the Apes television series DVD box set. It quickly corrected the page, saying that it was a software glitch, but ultimately blamed the matter on human error.[118]

While Wal-Mart's product selection may be seen by some as censorship, others view this from a free enterprise standpoint, that criticism of Wal-Mart's product selection is seen by some as misguided because Wal-Mart is free to carry and sell whatever products it chooses and that customers are free to shop elsewhere, if able in their area, and would do so if they could afford to and were in disagreement with its perceived moral values.

[edit] Taxes

Until the mid-1990s, Wal-Mart took out corporate-owned life insurance policies on employees including "low-level," employees such as janitors, cashiers, cart pushers, and stockers. This type of insurance is usually purchased to cover a company against financial loss when a high-ranking employee dies, and is usually known as "Key Man Insurance". Critics derided them as buying "Dead Peasants Insurance" or "Janitor Insurance". Critics, as well as the US Internal Revenue Service, charge that the company was trying to profit from the deaths of its employees, and take advantage of the tax law which allowed it to deduct the premiums. The practice was stopped in the mid-1990s when the federal government closed the tax deduction and began to pursue Wal-Mart for back taxes.[119]

[edit] See also

[edit] References

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