Effect of Walmart on American labor

Abstract

The labor industry in America has been affected by aspects such as global trends towards outsourcing to low-cost countries. Wal-Mart, in pursuit of its cost-leadership strategy, has been at the center of such labor-industry transformation in the US. This paper evaluates the effects of Wal-Mart on American labor highlighting its impacts on wage levels, employment, workers’ rights and employment practices. In pursuit of a low-cost strategy, Wal-Mart’s effects on wage levels have largely been negative and Wal-Mart has contributed to job losses especially in the manufacturing sector with its increased imports from low-cost countries. Its strong stance against unionization and claims of discrimination in its workplaces also buttress the role that Wal-Mart has played in curtailing development of workforce to become a source of competitive advantage for entities in the U.S.

Introduction

The labor industry in most countries has experienced great transformation driven by factors such as globalization and technology. In respect to globalization, the enhanced ability of entities to outsource various processes in low wage countries has generated pressure on wage levels in most developed countries. Technology, on its part, has contributed to the entities’ ability to outsource in geographically distant locations and helped in replacement of workforce following automation of processes. Additionally, by importing products from low-cost countries such as China, entities in the U.S. have increasingly facilitated loss of jobs in industries that compete with the cheaper imports. Such factors have helped entities such as Wal-Mart Stores Inc. (henceforth Wal-Mart) to employ a cost leadership position in achieving profitable growth over its decades in existence. Wal-Mart has however faced criticism concerning its employment and wage practices and disregard of workers’ rights (Jacobs, Graham-Squire & Luce, 2011; Neumark, Zhang & Ciccarella, 2008).

The importance of Wal-Mart in the American labor industry arises from the its role as a major employer in the industry. Wal-Mart is the largest corporation in the world. For instance, in the Fortune 500 ranking for 2011, Wal-Mart was ranked in the first position with revenues exceeding $421 billion; such revenues were in excess of $67 billion of the revenues of the second placed entity, Exxon Mobil (“Fortune 500”, 2011). In terms of employment, according to the entity’s factsheet for 2011, Wal-Mart had 2.1 million employees (referred to as associates) globally and almost 1.4 million in the United States (Wal-Mart, 2011a). Its operations in the U.S are spread across all cities with its retail facilities (stores and Sam’s clubs) numbering 4400 by the end of the 2011 financial year (Wal-Mart, 2011a). Highlighting the significance of Wal-Mart in the U.S. labor industry, Neumark, Zhang and Ciccarella (2008), for instance noted that Wal-Mart’s workforce exceeded the country’s high or middle school teachers being slightly below the number of elementary school teachers. The entity’s workforce is also estimated to comprise about 10% of total employment in the retail sector in the U.S. (Neumark, Zhang & Ciccarella, 2008, p. 405). Such statistics indicate that Wal-Mart is a significant employer in the industry whose labor practices could affect communities in which it resides significantly.

The purpose of the current essay is to assess the effect of Wal-Mart on American labor with regard to management of labor. The paper will tackle aspects such as Wal-Mart’s effects on wage levels, employment levels, workers’ rights such as rights to join unions and employment policies such as offering equal employment opportunities. The paper is organized into three sections as follows: an introduction that provides a background to the study and the entity with a statement of purpose, a main body discussing effects of Wal-Mart on various aspects of American labor industry, and a conclusion highlighting the core issues discussed throughout the paper. The findings concerning wage levels indicate a negative impact of Wal-Mart in the communities it resides with employment levels also having a negative outlook in the long term following Wal-Mart’s operations. Regarding respect for employee rights, the findings indicate the Wal-Mart anti-union stance to have a negative effect on success of labor unions in unionizing other entities.

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