Every Day Low Prices: The Real Story of Wal-mart

In the media of today, it is quite popular to lambaste Wal-Mart for its business model. Complaints range from workers wages to access to benefits [or lack thereof]. Wal-Mart claims that every employee has access to affordable health care, for just $1 a day, amongst other claims. This essay will investigate these claims and will offer factual evidence for why Wal-Mart is dangerous and is hurting their employees. Furthermore, this essay will show that Wal-Mart consistently pays lower wages, denies employee’s access to quality health care, and pressures its distributors to comply with its business model.

The critics who support Wal-Mart say that “Well, if Wal-Mart was so bad, no one would work there.” Well that may be true; Wal-Mart is not a sweat shop. It has a business to run, and it gets those low prices by cutting costs. Those costs come at the expense of the worker. These same critics also say that Wal-Mart is helping the same people it employs because their low prices save them money every year. While, this is true, entertain this example: a shopper went into a Wal-Mart and saw a gallon-sized jar a Vlasic pickles for $2.97, and was amazed. The writer claims that this jar of pickles could last one for a year. Pat Hunn, who was the figure behind the gallon jar of pickles, said “They were using it as a ’statement’ item.” “Wal-Mart was putting it before consumers, saying, this represents what Wal-Mart’s about. You can buy a stinking’ gallon of pickles for $2.97. And it’s the nation’s number-one brand.” However, this seemingly innocuous jar of pickles stirs up a larger debate, what does this mean not only for the economy, but for Wal-Mart’s competition?

The sheer scope of Wal-Mart is simply frightening. The aforementioned article said: It’s the world’s largest company…It sells in three months what number-two retailer Home Depot sells in a year.” Not only is Home Depot affected, but Grocery Stores and ‘Mom & Pop’ Stores are as well. Wal-Mart applies pressure to its distributors to package products meeting the ‘Everyday Low Prices’ model. For example, Wal-Mart has asked Tide, maker of laundry detergent, to extract the water from its product. The end result is that Wal-Mart wants to put more products on the shelves, and the watered-down Tide does not meet Wal-Mart’s expectations. Furthermore, Wal-Mart’s stated policy is “On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year.” This leads to distributors having to pressure themselves to remain in Wal-Mart’s good graces, instead of the other way around.

One other interesting thing is that Wal-Mart, through it’s wealth of distributors allows producers outside of the US to gain direct-access to the American market. These producers come primarily from China. The switch to China has come quicker then most have expected. A producer of textiles, Carolina Mills, grew steadily until the year 2000 when Wal-Mart, the company who gave ½ of its yearly production to Wal-Mart, decided to go overseas to China. The owner of the company has said “my customers have begun to face imported clothing sold so cheaply to Wal-Mart that I could not compete even if I paid my workers nothing. The company has shrunk from 17 factories to 7 and from 2,600 employees to 1,200.

All this progress comes at a huge cost; the people that its employs suffer. These employs make low wages, lack access to quality healthcare and poor endure working conditions. For example, according to an article written by Business Week, Wal-Mart cashiers [the second most common job type]: “earn approximately $7.92 per hour and work 29 hours a week. This brings in annual wages of only $11,948. Also, the wages are not ‘designed’ to support a family, according to Spokeswomen Mona Williams, saying that most people who work for Wal-Mart are not having to support a family, thus that consideration does not factor into their talks of wages. People have said that Wal-Mart could give every employee a wage increase and not affect its bottom line of $10 billion dollars per year. All it would take is them raising prices of items by one ½ penny per dollar on every item. Wal-Mart employees, on average, make $1.00 per hour less then Sam’s Club, Super centers, and Discount Chains. They make $2.00 less, on average then workers at Neighborhood stores. While employees are underpaid, do the benefits, or access to them, make up for the disparity?