Working at Wal-Mart, Part One: Wages and Benefits

Published November 19th, 2013 -  - 11.19.1313


What is it like to work at America’s largest private employer? Wal-Mart’s labor and business practices matter deeply, not only for the ripple effects the company causes throughout the retail industry and the economy as a whole, but more directly, for the 1.3 million American workers it employs. Because of its sheer size and economic power, Wal-Mart is constantly a target of criticism, debate, and investigation. In fact, there are whole books about Wal-Mart’s business practices, as well as the numerous controversies the company has generated. Amidst these big picture critiques, it’s easy to lose sight of the fact that this one company has such a great impact on the daily lives of millions of Americans.

This two-part post tables the larger policy debates about Wal-Mart, and instead tries to shed some light on what it’s like to actually work there. While it’s difficult to generalize the experiences of individual employees to the company as a whole, at the very least these stories can help illuminate the challenges that Wal-Mart workers face in their jobs. Part one, below, examines Wal-Mart’s wage policies and the company’s treatment of employees of its international suppliers.

  

Wal-Mart’s Wage Policies

Wal-Mart continually takes hits for its low hourly wages: it says its average salary for a full-time worker is $12.83 an hour, though some accounts place it much lower, even under $10. Several studies have suggested that a full-time worker making this wage with a family to support would fall below the poverty line.

The company often claims, in response to criticism, that 74% of Wal-Mart associates are “full-time,” a much higher percentage than in other retail companies, and that the company pays well above the federal minimum wage. At least one author would qualify these claims: “Wal-Mart…defines “full-time” as any employee who works at least thirty-four hours a week. And even with an hourly wage of $10, someone stocking shelves forty hours a week…is, after taxes, taking home $1,280 a month. That’s without having any money deducted for health insurance. Even in Bentonville [the company’s base in Arkansas], $1,280 a month is austere living. (And, of course, if Wal-Mart’s “average” hourly wage is “around” $10 an hour, that means that hundreds of thousands of Wal-Mart workers don’t even take home $1,280 a month.)”

In response to criticism of its low-wage structure, Wal-Mart often claims that it employs workers who are not the primary breadwinners of their families. Professor Lichtenstein writes that “only 7 percent of the company’s hourly employees try to support a family with children on a single Wal-Mart income. The company therefore seeks out school-age youth, retirees, people with two jobs, and those willing or forced to work overtime.” Wal-Mart believes this in part justifies the inequalities in its wage structure.

On the issue of intra-company inequality, Lichtenstein compares Wal-Mart with General Motors, the largest American corporation fifty years ago. At Wal-Mart, store managers earn more than ten times the pay of the average full-time hourly employee, whereas in its heyday, GM managers of similar numbers of employees took home only five times the average worker’s salary. The disparity pervades the corporate structure too. In 1950 GM’s President earned about 140 times more than an assembly line worker; in 2003, Wal-Mart’s CEO took home at least 1,500 times as much as one of his full-time hourly employees.  

In the end, however, Professor James Hoopes reminds us of how much is unknown about the effect of Wal-Mart’s wages: “Beyond the fact that the majority [of employees] are women who are not proportionally represented in management ranks, we do not know as much about Wal-Mart’s employees as would be useful in answering its defense of poverty-level wages. It is not known how many Wal-Mart workers have real prospects of moving on to better-paying jobs, how many have working spouses or partners, how many are single, how many are supporting children, how many are pensioners supplementing Social Security, how many live below the poverty line, how many are homeless. A study answering these questions would be a great contribution to our understanding of society today.”

 

The International Effects of Large Superstores

Large retailers like Wal-Mart also have a large impact on their suppliers in foreign countries, which often have to ramp up production exponentially to keep up with the retailers’ exploding demand. One book examined the effect that the increasing demand for salmon is having on Chile, a primary supplier to large US retailers. The author found that large-scale salmon farming has moved workers from subsistence agriculture to food processing plants. While they are modern and clean, “the processing plants suffer by most accounts from the kinds of sweatshop issues more commonly associated with garment factories in developing nations.” He is referring to problems with sexual harassment, workers not being allowed to use the bathroom, being forced to work extremely long hours while standing, etc. While most accounts of retailers’ labor practices focus on their American workers, their business practices have important ramifications for the even larger groups of people who work for their suppliers. 

In fact, at least one US court has considered the obligations of large US companies to the rights of employees working for their “subcontractors” in foreign countries. In 2009, a group of plaintiffs, who were “employees of Wal-Mart’s foreign suppliers in countries including China, Bangladesh, Indonesia, Swaziland, and Nicaragua,” sued Wal-Mart in California. The plaintiffs alleged that “in a factory making clothing for Wal-Mart, to Wal-Mart’s design and price and schedule demands, in a factory essentially controlled by Wal-Mart, [they were] not even provided with the basic wages, overtime pay, and protection from physical abuse that Bangladeshi law provides.” Wal-Mart’s
own standards promise that the company will conduct inspections of its foreign suppliers to make sure they are in compliance with Wal-Mart’s approved labor conditions. However, the plaintiffs alleged that Wal-Mart knew its suppliers often violated the standards and did little to effectively monitor them. The California district court granted Wal-Mart’s motion to dismiss, and the Ninth Circuit heard the appeal.  

The plaintiffs employed several legal theories to substantiate their claims. First, they claimed that they, as employees, were third-party beneficiaries of Wal-Mart’s promise to inspect suppliers, but the Court found that Wal-Mart had only pledged the right to inspect suppliers, not a contractual obligation to do so. The plaintiffs also claimed that Wal-Mart was their joint employer, which would allow them to sue Wal-Mart directly for any labor violations. However, the Court found that the relationship between a supplier and its parent company, in this particular case, did not establish the type of “control” that would make that theory plausible. The Court also denied the plaintiffs allegations of Wal-Mart’s negligence and unjust enrichment from profiting from companies it knew to be violating labor standards.

In sum, while this case shows the hurdles that foreign workers have to clear in order to hold their “parent” company accountable in US court, it is undeniable that these companies’ business practices affect the day-to-day lives and working conditions of millions of affiliated workers around the world.

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