Ethical Issues: Wal-Mart

"WAL-MART SUCKS .... Life out of our communities." This bumper sticker became the start of a long thought process. As I researched and pondered this small and simple line, I decided that another should be added to this sticker. It should say, "Wal-Mart sucks... life out of our communities, our people, and smaller underdeveloped countries." In this essay I will focus on one of the many ethical issues surrounding Wal-Mart, labor rights and the continuous circle of problems it can cause.

I chose this industry because as a new business owner, I am frustrated by the amount of business Wal-Mart takes away from my community. I live in a smaller town where Wal-Mart is the largest building within 30 miles. We have a historical downtown area where there are plenty of businesses that offer the same products Wal-Mart does, at reasonable prices too. If Wal-Mart were not in our community, I can only imagine what it would do for those businesses, and the people who run them. Since the start of my studies on this ethical issues paper, I realized that I am willing to pay $.10 more for a product I know is made and handled ethically on all sides. My business will now go elsewhere thanks to the realization brought about by this opportunity.

THE ETHICAL ISSUE

Labor Rights

The ethical issue is as follows. The Wal-Mart corporation forces workers in other countries to work for small incomes, sometimes as much as 30% below their countries own minimal wage ("End Wal-Mart", 2007). Wal-Mart pays low wages and does not provide adequate health care options for its employees. Also, Wal-Mart expects high production which causes managers to encourage employees to work during breaks, therefore engaging themselves and the employees in unfair and unethical practices. The scope of Wal-Mart's unethical practices extends all across the world. I would like to discuss just a few issues Wal-Mart has faces in the last 10 years dealing with executives who push employees to work overtime for free, and for hardly any money at all.

Wal-Mart defines sweatshop labor. In Bangladesh, workers at a factory that make shirts and pants sold in Wal-Mart stores, are required to work 12 hours a day, 7 days a week for pay ranging from 9 to 20 cents an hour ( Wal-Mart, 2006). In China, workers in Donguan Hongyuan shoe factory that produce products for New Balance and Wal-Mart are subject to horrible conditions (China Labor, 2006). They are paid $.41 an hour and are required to work 14-16 hour days. They are also forced to work 36 hours of overtime without the legally required overtime pay.

In Central America, James W. Lynn, a whistle-blower of the Wal-Mart company was fired after he made reports of violations in a factory over which he was an inspector. Lynn reported that workers were subject to mandatory 24-hour work shifts, padlocked exits, extreme heat, and no available drinking water or toilet paper ( Greenhouse, 2005). Wal-Mart fired him for a different reason. He sued the company. Workers at a similar factory in Honduras also complained about unsatisfactory conditions. Employees reported that managers were administering pregnancy tests, screamed at them and did not pay overtime (Greenhouse, 2005).

In Pennsylvania, in October of 2006, a lawsuit was settled in which over 187,000 employees were awarded approximately $ 78.5 million dollars in unpaid wages for work done while on breaks (Wal-Mart Employees, 2006). Managers required employees to work extra time in order to meet high demands for production. This is a great example of competitive pressures on profits which force managers to encourage employees to behave in ways that are unethical and illegal. In the above example a whistle-blower, Delores Hummel, came forward and was the lead plaintiff on the suit against Wal-Mart. Apparently she was fired because she complained about work conditions.

In 2002, executives at Wal-Mart were also in ethical violation of fair labor standards. They knew for years about these problems of fair labor at Wal-Mart. An internal Wal-Mart audit of one week of time records in 2000 from 25,000 employees had alerted Wal-Mart officials to potential violations. The audit found 60,767 missed breaks and 15,705 lost meal times. It also alerted Wal-Mart executives to 1,371 instances of minors working too late, during school hours, or for too many hours in a day (Greenhouse, 2002). Not only are workers required to work during breaks, but they are often paid way less than others in a comparative workplace. According to BusinessWeek ( 2007), associates for Wal-Mart earn 20% less than the average retail worker and $10,000 less than the basic needs income for a 2 person family. Executives are aware of these issues yet do nothing about them.

In an Oregon wage-and-hour case, a former personnel manager named Carolyn Thiebes testified that supervisors, pressured by company headquarters to keep payroll low, deleted hours from time records (on a regular basis) and reprimanded employees who claimed overtime ( Olsson, 2004). In 2000, Wal-Mart settled similar lawsuits involving 67,000 workers in New Mexico and Colorado, apparently paying more than $50 million in damages. At that time there were also 38 other similar lawsuits filed due to the same issues. Wal-Mart wanted its workers to work for free, until they started to get caught.

WHY?

When it comes to employees being tempted to "do the wrong thing", the answer is simple. There is often times no other choice. Wal-Mart employees are often on welfare because they are not able to get a job otherwise. Wal-Mart can also get another employee to take the place of one that leaves, rather quickly. So many are left in the situation of either choosing to stick with the company, hoping to get a raise in position or salary, or to leave the company and deal with the hassle of finding another job. In these scenarios, Wal-Mart employees are forced to behave unethically simply because they have no other choice. They also face the possibility of being fired as Delores Hummel was, or losing their management position. Often time's employees cannot afford this chance and stick with it because they have a family or other people to support. In the case of Judy Danneman, a widow with three children, the solution was just that. She knew if she wanted to survive she would have to climb the "management ladder" (Olsson, 2004). She said that working unpaid overtime equaled saving her job. When she was finally hired as an assistant manager she knew she had to expect the same thing from her employees. She said it was an unwritten rule. Overall, both employees and managers at Wal-Mart are forced into these situations by people even higher up than they are, to produce, produce, produce. There