Effects of Wal-Mart on the U.S. Labor Industry – Effect on Worker’s Rights

Apart from the wages issue, Wal-Mart has faced increasing criticism with regard to respecting employees’ rights such as its opposition to unionization of its employees. Wal-Mart has historically been opposed to unionization of its workers at times closing stores as exemplified in closure of stores in Canada whose workers had joined labor unions. In the U.S. the resistance of Wal-Mart to unionization is evident with the failed attempts of the United Food and Commercial Workers union (UFCW) to sign Wal-Mart’s employees to join the union. A 2002 Business Week report for instance highlights a failed attempt by UFCW to unionize a Wal-Mart’s Sam’s club located in Las Vegas (Zellner, 2002). Another report in the Wall Street Journal indicates that UFCW attempts to sign Wal-Mart workers had achieved little success even by 2009 (Maher & Zimmerman, 2009). The inability to achieve substantial progress in unionizing Wal-Mart, though partly attributable to ineffective approaches by unions, is largely due to use of extreme measures by the entity to avert unionization.

In the Business Week article, the author for instance highlights some of the approaches that Wal-Mart and other corporations in the U.S have used to wade off union attempts. Although, some of the approaches such as conducting anti-union meetings and providing anti-union literature and videos to their employees are legal, others have largely fallen into illegal practices (Zellner, 2002). For instance, Zellner (2002) highlights cases where Wal-Mart discriminates against or harasses its employees who support union activities. For instance, one of the employees noted how she was surpassed repeatedly for better paying jobs owing to her pro-union stand in an attempt to make her quit the job she held at the store. The article in Wall Street Journal, indicates succinctly why Wal-Mart resists unionization of its employees. According to the article, the resistance arises from the perception among the entity’s management that unionization would result into high operating costs and reduced flexibility to manage employees (Maher & Zimmerman, 2009). Such a perspective buttresses Wal-Mart’s approach of creating a regime of low wages to support its cost-leadership approach.

The inability to unionize Wal-Mart’s employees effectively has created hurdles towards unionizing other retailers. UFCW officials quoted by Maher and Zimmerman (2009) for instance note that unionization of Wal-Mart would ensure easier unionization of other retailers thus preventing such retailers from having a competitive advantage over Wal-Mart based on an enhanced influence over employees. Wal-Mart has been a significant factor hindering unionization of members across the entire U.S retail sector, providing a strong support for opponents of labor laws that favor unions (Maher & Zimmerman, 2009).

In Canada, Wal-Mart’s approach to avert unionization have bordered on the extreme. The Canadian outfit of UFCW for instance started targeting Wal-Mart for unionization around 2002 and acquired significant support in areas such as Quebec by 2006 (Bianco, 2006). Failing to avert unionization in one of its stores, Jonquière, the entity resulted into a drastic measure shutting down the store in a pretense of poor financial performance (Bianco, 2006). This led to households and individuals abruptly losing their source of income thus creating fear among other Wal-Mart employees who would have joined labor unions to push for better remuneration.

Such an action by Wal-Mart indicates its high-handedness against unionization yet it constantly fails to improve workers remuneration and conditions at its stores. For instance, the entity continues to face litigation concerning non-payment of remuneration on some of the hours worked and failure to allow employees to take rest breaks and full meals (Wal-Mart, 2011c). In one of the cases highlighted in the annual report, Wal-Mart lost the initial case with the jury awarding payback of about $78 million for the hours not paid and the missed rest breaks, an amount that was subsequently raised to $188 million to include statutory penalties, interests and litigation fees (Wal-Mart, 2011c, p.47). Although Wal-Mart has subsequently appealed the ruling, the case highlights the risks that an entity faces for failing to observe employee rights, which could lead to the dismal performance in future periods.

By failing to allow workers’ rights while failing to improve the working conditions and remuneration, Wal-Mart creates a barrier to the extent to which it can leverage its workforce as a force for continued growth. Such differences are for instance evident in comparison of Wal-Mart’s customer service to those of other retailers such as Costco. In one study that made such a comparison, Cascio (2006) exemplifies how Wal-Mart is performing poorly in its customer service following its inability to establish a sound working environment. The study for instance notes that, resulting from the focus on price over other aspects that ensure employee satisfaction, Wal-Mart has increasingly experienced higher turnover whereas Costco moves towards achieving efficient inventory turnover. Since other large retailers could achieve cost-cutting measures brought about by aspects such as technology adoption, Wal-Mart could continue to be at a competitive disadvantage by its failure to develop its human resources. By developing its human resources, Wal-Mart would create a source of competitive advantage that competitors cannot imitate easily. The failure of Wal-Mart to develop its human resources is also evident from other employment practices as discussed in the subsequent section. Go to part five here.

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