My Walmart Paper

High and Low Costs of Wal-Mart

One can easily get lost browsing the endless aisles of discount products that range from toiletries to electronics. However, the low priced Garden of Eden has a bleak underbelly that America's favorite company has failed to acknowledge for the last ten years or so: the high cost of low prices. Wal-Mart, founded by Sam Walton in 1962, has enjoyed over 30 years of successful growth and profits, and in the last 15 years has helped stimulate and stagnate the American economy. While single-handedly holding down the inflation rate for the past decade, Wal-Mart has also successfully eliminated thousands of jobs, while treating its employees poorly and abusing federal and state funding to help boost profits.

Jobs are Migrating South

"There is no questioning the company's incredible efficiency and shrewd market sense. The innovative business strategy of Sam Walton has transformed the retail industry. But along the way his successors have lost track of the community and worker focused values on which Walton built his success." (UFCW, 2005) After marveling in the success of the largest corporation in the world, one only needs to look at the economic impact on small mom and pop shops and even into large corporations that have crumbled under the "Wal-Mart effect."

"When Wal-Mart enters a town, (it) undeniably harms small and medium-sized entrepreneurs. Not only does the company sell numerous types of goods (a list that is sure to grow), it often prices them below cost in order to drive out local competition. Using predatory pricing, "Wal-Mart (enters) a town, charges below cost until their competition is gone, and then raises prices. Examples include Conway, AK where Wal-Mart's attempted to undercut drug stores and Fresh Farms in Virginia, where the prices of goods near the competing supermarket were markedly lower than at another Wal-Mart 20 miles away without much competition. (Neighborhood Retail Alliance, 2005)

Large corporations are not exempt from destruction. Take Levi Strauss for example. An American icon for nearly 150 years had resisted selling its denim jeans in Wal-Mart only to see their sales shrink to the cheaper version sold on the Wal-Mart racks. In 2003, "Levi introduced its less expensive Signature jeans line. With fewer detail finishes than Levi's other lines, these jeans are sold for around $23 per pair." (Girard, 2003) In order to keep any profits from the new line, Levi "closed its last two U.S. factories, both in San Antonio, and laid off more than 2,500 workers. Now, Levi Jeans are predominately made in China and Mexico for half the cost of American Labor. A company that 22 years ago had 60 clothing plants in the United States - and that was known as one of the most socially responsible corporations on the planet- no longer makes any clothes at all; it just imports them." (Fishman, 2003)

Help Wanted: Must Take Low Pay and Abuse

Thinking about a career at Wal-Mart? According to the company website, approximately 1.3 million Americans are Wal-Mart employees. None are union. "Wal-Mart jobs offer low pay, inadequate and unaffordable healthcare, and off the clock work. Having a job at Wal-Mart means relying on family, the community, or the government to pay the bills and provide health care." (UFCW, 2005)

Wal-Mart workers make around $17,500 a year and a significant percentage are on public assistance of some sort. Trying to increase profits, an internal Wal-Mart memo recently leaked