Fact Sheet on Wal-Mart: The Death Star of American Commerce

The Organic Consumers Association

Wal-Mart’s True Cost to Taxpayers

Because Wal-Mart fails to pay sufficient wages, U.S. taxpayers are forced to pick up the tab. In this sense, Wal-Mart’s profits are not only made on the backs of its employees-but on the [back] of every U.S. taxpayer.” Representative George Miller (CA)

The cost of a single Wal-Mart

    $36,000 a year for free and reduced lunches for just 50 qualifying Wal-Mart families
    $42,000 a year for Section 8 housing assistance, assuming 3 percent of the store employees qualify for such assistance, at 6,700 per family
    $125,000 a year for federal tax credits and deductions for low-income families, assuming 50 employees are heads of household with a child and 50 are married with two children
    $100,000 a year for additional Title I expenses, assuming fifty Wal-Mart families qualify with an average of two children
    $108,000 a year for the additional federal health care costs of moving into state children’s health insurance…assuming 30 employees with an average of two children qualifying
    $9,750 a year for the additional costs for low income energy assistance

Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart, a report by the Democratic staff of the Committee on Education and the Workforce, U.S. House of Representatives, February 16, 2004

What Wal-Mart gets from your local, state, and federal tax dollars

    Free or reduced-price land
    Infrastructure assistance
    Tax-increment financing
    Property tax breaks
    State corporate income tax credits
    Sales tax rebates
    Enterprise-zone (and other zone) status

Good Jobs First, Walmarts’ U.S. Expansion has Benefited from More Than $1 Billion in Economic Development Subsidies

    Wal-Mart and food
    Wal-Mart started selling groceries in 1988 and 15 years later it is now the largest distributor of food in the world.
    Wal-Mart gets 68 cents of every food dollar spend in the United States, with 30 cents going to marketing, transportation and packaging. Farmers get 2 cents of every food dollar.
    For every one Supercenter that will open, two supermarkets will close.

Since 1992, the supermarket industry has experienced a net loss of 13,500 stores.

Fickes, Michael. “Big Boxers have big expansion plans.” Retail Traffic. 1 December 2002.

Wal-Mart and labor abuses

    Wal-Mart has racked up huge fines for child labor law violations. The rich company reportedly makes children younger than 18 work through their meal breaks, work very late and even work during school hours. Several states have found Wal-Mart workers younger than 18 are operating dangerous equipment, like chainsaws, and working in such dangerous areas as around trash compactors. (The New York Times, 1/13/04; The Associated Press, 2/18/05; The Hartford Courant, 6/18/05)
    By demanding impossibly low prices, Wal-Mart forces its suppliers to produce goods in low-wage countries that don’t protect workers. A worker in a Honduran clothing factory whose main customer is Wal-Mart, for example, sews sleeves onto 1,200 shirts a day for only $35 a week. (Los Angeles Times, 11/24/03)
    Wal-Mart has a shameful record of paying women less than men. Wal-Mart pays women workers nearly $5,000 less yearly than men. Some 1.6 million women are eligible to join a class-action lawsuit charging Wal-Mart with discrimination. (Richard Drogin, Ph.D., 2/03; Los Angeles Times, 12/30/04)

Wal-Mart and the environment

    In October 2004, the United States sued Wal-mart for violating the Clean Water Act in 9 states, calling for penalties of over $3 million and changes to W-M building codes. [U.S. v. Wal-Mart Stores Inc., 2004 WL 2370700]
    The United States Environmental Protection agency fined Wal-Mart $1 million, settling allegations that Wal-Mart violated the Clean Water Act with dirt discharges while building stores in Massachusetts, New Mexico, Okalahoma, and Texas. []
    Wal-Mart was fined $765,000 for violating Florida’s petroleum storage tank laws at its automobile service centers. Wal-Mart failed to register its fuel tanks, failed to install devices that prevent overflow, did not perform monthly monitoring, lacked current technologies, and blocked state inspectors. [Associated Press, 11/18/04]
    The average supercenter attracts 3,315 car trips a day (Terrain magazine)
    A 250,000-square-foot supercenter with a 16-acre parking lot will produce 413,000 gallons of storm runoff for every inch of rain. Each year, such a lot would dump 240 pounds of nitrogen, 32 pounds of phosphorus, and 5 pounds of zinc into local watersheds while creating heat islands. (Terrain magazine)

Wal-Mart general facts

    Of the 100 most powerful economies in the world, Wal-Mart ranks #19
    In 2003, sales associates, the most common job in Wal-Mart, earned on average $8.23 an hour for annual wages of $13,861.The 2003 poverty line for a family of three was $15,260. [“Is Wal-Mart Too Powerful?”, Business Week, 10/6/03]
    Wal-Mart employs 1.2 million Americans. It is the largest employer in the United States.

This fact sheet was put together by the Organic Consumers Association

Wal-Mart’s Labor Problem

By Aaron Ludensky, CampusProgress, September 15, 2008

The company has a history of (not) dealing with workers’ rights and shirking on employee benefits.

There are a lot of reasons to dislike Wal-Mart. From running small-town businesses into the ground to its notorious environmental “green washing,” Wal-Mart has a reputation for being the big corporation everyone loves to hate.

But the company’s most egregious problems are with labor. Accusations against the company range from workers being denied overtime to union busting. The company’s corporate management insists that these accusations are unfounded and that this rhetoric is slander meant to bring down the company. But Wal-Mart continues to pay out millions of dollars in settlements from lawsuits brought against the company. In the last two years, the National Labor Relations Board (NLRB) ruled against Wal-Mart six times for activities related to union-busting. Read more

Wal-Mart Move into Mexico Paying Off, Rivals Hurting

By Alexander Hanrath, Bloomberg News, February 8, 2004

Standing in his cramped stall in Mexico City’s Bugambilla market — a concrete building teeming with food, flowers, and household items — Jorge Llerena says his profit from selling beans and rice has dropped 5 percent in the past two years.

The reason: Customers he’s had for two decades are shopping at the Wal-Mart de Mexico SA supercenter five minutes away.

“Wal-Mart has a better range of products,” says Llerena, 52, rubbing his gray stubble in his 10-by-10-foot booth. “To keep business, we’ve had to sacrifice our profit margins.”

Llerena isn’t the only one whose profits are suffering. Wal- Mart’s three biggest rivals — supermarkets Organizacion Soriana SA, Controladora Comercial Mexicana SA, and Grupo Gigante SA –say their combined earnings plunged 42 percent to 2.7 billion pesos ($249 million) in 2002 from 4.6 billion pesos in 1999 as they tried to match Wal-Mart’s prices. In the same year, Wal-Mart de Mexico earned 4.9 billion pesos.

The world’s biggest company by sales set up shop in Mexico in 1991 with a Sam’s Club warehouse in Mexico City. Its early stores were 50-50 partnerships with Mexico’s biggest retailing chain, Cifra SA.

In 1996, Wal-Mart merged its Mexican stores into Cifra and paid $1.2 billion for a 62 percent stake in the new company, which it called Wal-Mart de Mexico.

Shares of Wal-Mart de Mexico, 38 percent of which trade on the Mexico City Stock Exchange, have more than doubled since the company’s creation. Now valued at $14 billion, Walmex, as it’s known, is Mexico’s third-biggest stock, behind Telefonos de Mexico SA and America Movil SA.

Since Wal-Mart moved in, everything from Mexico’s work force to the country’s inflation rate to the efficiency of suppliers has been affected. The company makes 92 percent of its purchases, or about $8 billion a year, in Mexico. That’s equal to 1.3 percent of Mexico’s gross domestic product.

Since 2001, Walmex has added 26,000 jobs. Mexico’s unemployment rate rose to a six-year high of 4 percent in August 2003. Today, Walmex is Mexico’s largest private employer, with about 101,000 workers. That compares with 38,000 at Organizacion Soriana, its closest competitor. During the same period, rival Controladora Comercial Mexicana shed 12 percent of its employees as it acquired a smaller rival.

For some job hunters, Walmex is the only game in town. “I looked for a job for a year and a half after leaving high school, and finally, I was happy to find this,” says Jocelyn Robles, 18, who was making $1 an hour stocking shelves for the Christmas season at Walmex’s supercenter in the Buenavista neighborhood of Mexico City. She says the pay is “OK” — similar to what her friends earn.

Walmex discourages its employees from joining unions. It pays an organization to negotiate collective contracts to comply with labor laws, says Marco Antonio Torres of the Center for Labor Studies. He says Walmex keeps the contracts on hand to meet legal requirements. Walmex says it acts in line with competitors.

Walmex has helped reduce Mexico’s inflation rate, says Edgar Amador, an economist at Stone & McCarthy Research Associates in Mexico City. That’s because goods that Walmex sells, such as Lala milk and Tia Rosa tortillas, account for 42 percent of the items the central bank uses to measure prices.

“One unknown ally of the central bank’s success against inflation has been Walmex,” Amador says. “It goes all the way down the chain to the producer.” In 2002, Walmex’s demands on suppliers led Mexico’s Federal Competition Commission to investigate what it called “monopolistic practices in self-service stores.” The commission was suspicious that Walmex was using its size to force suppliers to sell at better terms than to competing stores. On March 6, 2003, it ended the probe, saying there was no evidence of monopolistic practices.