Everyday Low Prices at a High Cost

Wal-mart has recently come under fire for what some are calling unfair work practices.

The retail store that employes over a million associates is being accused by the union as well as labor advocates of underpaying and not providing insurance for their associates as well forcing him to work off the clock.

The website wakeupwalmart.com reports

• The average two-person family (one parent and one child) needed $27,948 to meet basic needs in 2005, well above what Wal-Mart reports that its average full-time associate earns. Wal-Mart claimed that its average associate earned $9.68 an hour in 2005. That would make the average associate's annual wages $17,114
• Wal-Mart's 2006 Annual Report reported that the company faced 57 wage and hour lawsuits. Major lawsuits have either been won or are working their way through the legal process in states such as California, Indiana, Minnesota, Oregon, Pennsylvania, and Washington. [Wal-Mart Annual Report 2006]
• In December 2005, a California court ordered Wal-Mart to pay $172 million in damages for failing to provide meal breaks to nearly 116,000 hourly workers as required under state law. Wal-Mart appealed the case. [The New York Times, December 23, 2005]
• A Pennsylvania court, also in December 2005, approved a class-action lawsuit against Wal-Mart Stores Inc. by employees in Pennsylvania who say the company pressured them to work off the clock. The class could grow to include nearly 150,000 current or former employees.

Although the accusations could be damaging to Wal-mart's image these accusations are really just the tip of the iceberg.

While Wal-mart does indeed supply goods at very low cost to consumers does it come at a high cost to America as a whole?

I will admit that I'm more then pleased when I walk into Wal-mart and find exactly what I was looking for at next to nothing, but for Wal-mart to be able to offer such low prices and still make a profit they have to get the goods they sale at a equally low price and that's were things get complicated.

On the pbs.org website for the documentary "Is Wal-mart good for America", they talk about a RCA television-manufacturing plant in Circleville, Ohio that offered good pay and benefits. It was a good source of employment to people in the area. In 2003, RCA's owner, Thomson Consumer Electronics, lost a large amount of its production orders and in just a few months the plant was closed and a 1,000 people out of work. Those jobs like many after them have since moved to China. According to the website, Wal-Mart estimates it imports $15 billion of Chinese goods every year and that number could be higher, but they defend that decision by saying that they not only do business with China, but they look all over the world in an effort to offer the lowest prices to American consumers.

It is no shock that manufacturers all over the world want to do business with the largest retail store in the world, but to be attractive to Wal-mart they have to continuously drop their prices which cuts into their own profit but that's not all. If American manufacturers drop their prices to low then they pretty much bankrupt themselves and thousands if not millions of Americans lose work, but if they don't drop their prices then Wal-mart buys their goods from overseas manufacturers who can offer lower prices due to cheap labor and they end up like the RCA plant in Ohio. So either way American manufacturers find themselves in trouble and Americans find themselves without jobs.

Mom and pop retail stores are also feeling the wrath of Wal-mart. According to Wal-mart's 2004 annual report to their shareholders, at that time they had over 2400 discount stores worldwide not to mention over 1700 supercenters, 600 Sam's Clubs and about a 100 neighborhood stores and still growing. With such massive growth Wal-mart is easily monopolizing the retail market which could mean the end for smaller retail shops that just can't compete with the sheer size of the retail giant. Over the years several cities and neighborhoods have fought has hard as they could to prevent Wal-mart from opening in their neck of the woods out of fear that the other business would suffer.

In the documentary they talk to a local small businesswoman, Bonnie Neisius. She owns a UPS franchise in Las Vegas, Nevada. While talking to the filmmakers she describes how she's watched surrounding businesses close and her own business decline since Wal-Mart moved in down the road, but a spokesperson for Wal-mart says that the company tries to work with communities and isn't just coming in and bulldozing their way in.

In the midst of all this bad press Wal-mart advocates contend that it's not as bad as it seems. Wal-mart does offer millions of jobs to Americans as well as low cost quality goods to consumers. It's also been said by Wal-mart advocates that the only reason that the union is making such harmful accusations is because Wal-mart won't unionize, but at the end of the day the decision whether Wal-mart is good for America and Americans is going to be left up to the individual consumer.