Wal-Mart Denies Workers Basic Rights
Wal-Mart accused of ‘climate of fear’ violating the basic rights of its employees through exploitation of “weak” U.S. labor laws, Human Rights Watch says.
In a 210-page report Monday, the largest U.S. retailer was accused of creating “a climate of fear” through a “relentless anti-union drumbeat” at its stores.
“Wal-Mart workers have virtually no chance to organize because they’re up against unfair U.S. labor laws and a giant company that will do just about anything to keep unions out,” said Carol Pier, a Human Rights Watch senior researcher.
The report said its investigators found in most cases Wal-Mart begins to indoctrinate workers and managers to oppose unions from the moment they are hired.
All efforts to organize among the company’s 1.3 million employees in the United States are immediately squashed, it charged.
The group urged Wal-Mart to stop its alleged anti-union activity and called on Congress to pass the Employee Free Choice Act to protect workers’ rights.
The History of Wal-Mart
The first Wal-Mart store opened in Rogers, Arkansas, in 1962.38 At first, Wal-Mart’s founder, Sam Walton, expanded by opening Wal-Mart stores throughout rural Arkansas in towns with fewer than 25,000 people, believing that small, rural towns were an overlooked and fertile ground for discounters. Walton did not open a store outside of Arkansas until six years after founding the company. A year later, Wal-Mart incorporated as Wal-Mart Stores, Inc., and a year after that, the company established its headquarters in Bentonville, Arkansas, where it remains today. By 1979, only seventeen years after opening, Wal-Mart operated 276 stores in eleven states and reached $1 billion in sales—the first company to reach this total in such a short time period.
Wal-Mart has been the largest retailer in the United States since 1990 and is currently also the country’s largest seller of groceries. Roughly 127 million shoppers reportedly visit Wal-Mart every week in the United States,and in a letter to Human Rights Watch, Wal-Mart noted that “every year more than 84 percent of Americans shop at our stores, according to a recent Pew Research Center poll.”
Since 1997, Wal-Mart has also been the largest private sector employer in the United States and since 1999, the largest private sector employer in the world. Wal-Mart currently employs approximately 1.8 million workers, called “associates,” worldwide, 1.3 million of whom work in the United States. Approximately 176 million customers reportedly shop at Wal-Mart around the world every week.
Wal-Mart’s total revenues of $315.65 billion for the fiscal year ending January 31, 2006, would rank it as the twenty-first wealthiest country in the world, according to Gross Domestic Product (GDP), just below Sweden and just above Saudi Arabia. Wal-Mart total sales are also over three times that of the world’s second largest retailer, Carrefour, and almost four times that of the second largest retailer in the United States, Home Depot. Wal-Mart’s net annual income is over five times that of Carrefour and roughly twice that of Home Depot, and Wal-Mart employs over twice as many workers worldwide as Carrefour and Home Depot combined.
Wal-Mart opens an average of roughly 250 new stores a year worldwide. From 2002 through 2005, the company topped the Fortune 500 listing of corporations ranked by revenues; it fell to second in 2006 behind Exxon Mobil and was back on top in 2007. Wal-Mart’s annual global sales are expected to double by 2010, reaching $500 billion.
Wal-Mart’s Retail Division
Wal-Mart asserts that its primary goal is to grow “by improving the standard of living for . . . customers throughout the world” by providing cheaper household goods. It refers to this approach as “Every Day Low Prices” (EDLP). The company states, “EDLP is our pricing philosophy under which we price items at a low price every day so that our customers trust that our prices will not change erratically under frequent promotional activity.”
To achieve EDLP, Wal-Mart has made efficiency a primary tenet of its business philosophy. The company has developed a technologically advanced system for manufacturing, inventory, and distribution. For example, all products at Wal-Mart are computerized on an international network via barcode that allows the company to track product sales. When an item is sold at a store in the United States, a supplier across the world is automatically notified through the network of the need for an additional unit. Wal-Mart also recently began requiring suppliers to provide microchips for “radio frequency identification” (RFID). An RFID tag contains “a unique string of numbers identifying the item to which it is attached” that is far more detailed than a bar code. The opening remarks at a 2004 University of California (UC) Santa Barbara conference on Wal-Mart explained, “Wal-Mart is noted for its low-price, low-wage, globally-sourced business model, a strategy that has achieved precision control of manufacturing, inventory, and distribution by taking full advantage of the world’s new telecommunications infrastructure.”
Wal-Mart operates four types of retail stores, all based on EDLP: the Wal-Mart conventional discount store, the company’s flagship facility; the Wal-Mart Supercenter, the company’s largest store; the Wal-Mart Neighborhood Market, the company’s smallest store; and Sam’s Club, Wal-Mart’s wholesale club. Unless otherwise specified, this report uses “Wal-Mart” to refer collectively to these four operations.
Wal-Mart’s discount stores offer thirty-six departments, including apparel, electronics, toys, jewelry, and other household items. There are currently 1,075 conventional discount stores in the United States and 1,431 abroad, employing, on average, 225 workers. First opened in 1988 in Missouri, the larger Supercenters feature all of the departments of the discount stores plus grocery departments and, in most cases, specialty shops, such as vision centers, the Tire and Lube Express (TLE), and one-hour photo centers, among others. Supercenters average 185,000 square feet and typically employ 350 or more workers per store. Wal-Mart operates 2,256 Supercenters in the United States and 416 internationally. The Neighborhood Markets, first opened in 1998 in Arkansas, are generally located in areas that already have Supercenters, but these smaller stores specialize in groceries, pharmaceuticals, and other general merchandise. Neighborhood Markets average only 41,000 square feet and ninety-five employees each. There are 113 Neighborhood Markets in the United States and 335 abroad. Wal-Mart’s wholesale club, Sam’s Club, first opened in Oklahoma in 1983 and is currently the second largest wholesale club in the United States, behind Costco. Access to Sam’s Club is based on an annual membership fee, and although Sam’s Club accepts individual members, its main focus is on providing wholesale goods to “specific business segments.” Sam’s Clubs employ an average of between 160 and 175 workers per store. Through its 569 stores in the United States and 103 abroad, Sam’s Club has roughly $39.8 billion in annual sales, accounting for 12.7 percent of Wal-Mart’s total sales.
Wal-Mart operates approximately 2,770 stores in thirteen markets outside the United States, including Puerto Rico, employs over 500,000 workers abroad, is the largest retailer in both Canada and Mexico, and is the largest private employer in Mexico. The company opened its first discount store abroad in Mexico in 1991, followed by Puerto Rico in 1992, Canada in 1994, Hong Kong in 1994, Argentina and Brazil in 1995, China in 1996, Germany and South Korea in 1998, the United Kingdom in 1999, Japan in 2002, and Central America in 2005. Over three quarters of Wal-Mart’s international operations are concentrated in five countries: Mexico, Japan, the United Kingdom, Brazil, and Canada. There are roughly 896 Wal-Mart stores in Mexico, 392 in Japan, 336 in the United Kingdom, 299 in Brazil, and 298 in Canada.
Despite the company’s intense opposition to union formation, Wal-Mart has recognized unions at some of its international operations, including in Argentina, Brazil, Mexico, England, Japan, and most recently in China, where a company spokeswoman told reporters that their new openness to Chinese unions, “does not signal a change in our strategy in the U.S. . . . China’s labor laws and its only union are much different than what you find in the U.S.” In most cases, Wal-Mart has inherited the foreign unions from the companies whose operations it purchased. In others, most notably in Canada where workers at only a few stores have successfully organized, Wal-Mart has vigorously attempted to thwart union formation efforts but at times has failed.