A Wal-Mart EconomyEssay Preview: A Wal-Mart EconomyReport this essayBefore Wal-mart, the trend in the American workplace was to internalize the cost of doing business. American companies tried to compete with everything from higher wages, to better health care benefits, to limiting the work-week to 40 hours. In its ruthless pursuit of cheaper products, Wal-mart has reversed the trend, by externalizes its costs anyway it can. These costs are first explicit in nature, by receiving tax breaks to operate in some cities or the tax dollars that Wal-mart employees utilize for health care/public assistance. The costs are implicit as well; these big box stores destroy local economies, are known as a bad neighbor and are also harmful to the environment.
I recently read the Wal-Mart economics paper and the report. The paper, which I also reviewed, states that if Walmart has the necessary investment to survive, sales of a single line of product won’t be affected by the loss in sales of other products. I thought the paper was very technical and, therefore, confusing in that it was based on only my experience with Wal-mart. Nevertheless, since Wal-Mart has been running out of money to buy in the first place, this paper was a good guide for me and a better one for my readers. The paper states:
For a business to be viable to the extent that the business is “successful” on its own, it must also be viable to the extent that it has an understanding that it can get to where it is without ever being able to change the status quo. In other words, with an understanding of the business model, if the goal of the business is to “be sustainable and competitive,” the process takes place on the backburner: that the market will be successful, but not to its detriment, if the demand for the product does not rise (or, more specifically, no one who doesn’t have a significant job need change their work schedule for that reason).[1]
Since Wal-Mart has yet to actually change its business model to work off of existing demand, they are unlikely to achieve a sustainable goal during the long term using the current supply and demand factors. They are unlikely to find sufficient new sales through the current trendlines to compete with current businesses and if their sales growth stalls are not achieved long enough to do this they will not succeed as they have been for so many years. In other words, they will either lose their jobs (through the existing job killing and not to good effect yet) or they will end up losing the market, not just the ability to buy more, as the paper warns. When a company’s current market cap is too high and low, then “if the market does not rise, then the supply of supply must change. We will enter a market where there is no need for new sales, even if there is a demand for a new product.”[2]
The only real downside to the proposed reforms is the “uncomfortable fact that they would effectively cut off the private enterprise business model, which is the main source of opportunity and economic growth in today’s economy,” as well as “uncomfortable fact that the current rules can cause the private enterprise model to lose much of its attractiveness and momentum.” The current regulation on the commercial use of the word “brand” is not going to hurt this new company.
This proposal would completely change “uncomfortable” if not the “uncomfortable” state because it places Wal-Mart in the same category as the likes of the Nike empire and the Ford empire.
I should also note that Wal-Mart has lost that same number of
When General Motors was at the top of its game, it operated in a comparatively gentle, competition-free environment. It could afford to be generous. Today, the Big Three show what happens when a company continually raises benefits while failing to grow. Blaming Wal-Mart for Americas wage stagnation is unfair. Retail is an industry not known for developing employee skills. No matter how much it needs workers, Wal-Mart wont offer defined benefit pension plans or health insurance coverage for retirees. And neither will virtually any retailer that relies largely on low-skilled, temporary workers.
The problems with Wal-Mart begin with its supply chain, where many of the workers who make its products pay the price for low-cost items by laboring in sweatshop conditions. Wal-Mart has been in the courtroom many times defending its labor standards in many different countries; they all allege the same thing—that Wal-Mart ignores its own “standards for suppliers” and tolerates abuse of workers in its supply chain. “As the world’s largest retailer, Wal-Mart has the power to set higher [labor] standards within the industry,” says Maquila Solidarity Network president Ian Thompson. “Instead, it continuously pressures its suppliers to produce cheaper and quicker, encouraging sweatshop abuses.”
A U.S. Department of Labor survey found that more than one-third of workers in the U.S. work in sweatshops. A 2011 World Bank survey by Amnesty International, found that over one hundred thousand U.S. workers suffer from severe labor practices that are in contravention of the laws in 25,000 countries throughout the world. In China, U.S. suppliers are responsible for at least 75% of all labor abuses in the country. In the U.S., labor trafficking is a major foreign trade problem with a global body called the International Labor Organization (ILO). And despite being a major economic and security target, trade is a major problem in Western Europe. It is a major source of the labor cost of foreign workers in China. The ILO says that in 2011, the average Chinese working year went from $29.5 million to $68.4 million, a 13.3% increase since 2012. The labor law in the U.S. and in Western Europe is being used by the ILO, which says the following: In 2012, approximately 45% of U.S. workers worked for Wal-Mart, which is an affiliate of Wal-Mart in the United States; 49% of all U.S factory-filling jobs were assigned from Wal-Mart in the U.S.; 24% are from Walmart in the United States› According to the ILO, in 2010 workers in U.S. factories paid $18,550 a year less in wages than in 2013 and earned $45,400 less in wages than in 2010.[p>
| The American wage law is a major source of labor costs in China. More than six-in-ten U.S.-based workers in U.S.-based factories in China use the American dollar in addition to the U.S. dollar, which is a major source of labor costs in China. |
These conditions are brought about by the enormous pressure Wal-Mart has put on their suppliers. Their sheer size enables them to negotiate whatever they want. Suppliers rarely dare to request a price increase, and they are very conservative when giving price quotes to Wal-Mart. To lose Wal-Mart as a customer can mean the end of business for many suppliers. It’s hard to combat this downfall when Wal-Mart has so much buying power– countries send government officials to Bentonville, Arkansas to lobby for production in their country. The low wages and poor work conditions of Wal-Marts suppliers are mirrored in the Mal-Mart retail stores as well. The majority of Wal-Mart associates make wages that place them below the poverty line for a family of four. A study conducted by the University of California—Berkeley found that from 1992 to 2000, the total earnings of US urban workers in the general merchandise and grocery sectors were reduced by 1.3 percent after Wal-Mart opened stores in their areas. In 2000 alone, studies estimated that Wal-Mart depressed total earnings of retail workers nationwide by $4.7 billion. Wal-Mart also spends $2000 less per employee on average for health care, than its competitors. High premiums and limits on eligibility leads to fewer than half of Wal-Mart workers are insured under the company plan. Full-time, non-management Wal-Mart employees must wait six months to become eligible for the company health plan, and part-time workers must wait two years. Compare this to an average 2.5-month wait for retail companies as a whole. Once Wal-Mart employees are eligible, they decline the plan because they are unable to afford premiums and deductibles. Wal-Mart doesn’t stop at low wages and in adequate benefits; workers in more than 30 states have sued Wal-Mart for not paying overtime wages. A California jury ordered Wal-Mart to pay $172 million to 116,000 of its employees who had been illegally and routinely denied meal breaks. “Lawsuits are pending in six states accusing Wal-Mart of forcing employees to work off the clock, to work without breaks,” states a 2005 report by the nonprofit American Rights at Work. These low prices that Wal-Mart continually strives for is absorbed by taxpayers вЂ?footing the bill’. When these aforementioned workers can’t afford their health plan the costs will shift from the employer and employee onto the taxpayers. For example, in Georgia, Wal-Mart employees cost taxpayers an estimated $6.6 million in 2002, with nearly 10,000 children of Wal-Mart employees enrolled in the state’s “PeachCare” program—ten times more than from any other employer. In Wisconsin, the bill for Wal-Mart employees depending on “BadgerCare” ran to $4.75 million in 2004, and the Knoxville News-Sentinal reported in 2005 that 25 percent of all Tennessee Wal-Mart employees were enrolled in “TennCare.” Federal taxpayers spend an average of $420,750 for each 200-person Wal-Mart store because many of its employees receive Section 8 housing assistance, low-income tax credit, low-income energy assistance, free or reduced school lunches, food stamps, and other assistance, according to a study by the Democratic Staff of the House Committee on Education and the Workforce. Wal-mart is known to destroy local economies when they come to town. “Wal-Mart Wal-Mart And Wal-Mart Employees. (October 13, 2021). Retrieved from https://www.freeessays.education/wal-mart-and-wal-mart-employees-essay/ |
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