Walmart and Workers

Walmart is the world’s largest private employer. There are 2.3 million Walmart workers worldwide, including 1.5 million in the United States.

Walmart has received a lot of attention for supposedly raising wages, but the truth is that Walmart pays its new, entry-level U.S. workers $9/hour. At that rate, a new Walmart employee would make less than $16,000/year working 34 hours per week, which is Walmart’s definition of full-time.

The company says that new workers who complete a training program will move up to $10/hour. That program, called Pathways, takes at least six months to complete and workers say that they’ve been told they would be fired if they don’t finish the program within 18 months, a claim Walmart doesn’t seem to deny.

Because of Walmart’s high turnover, the company expects 500,000 people to go through Pathways in 2016. Yet, as of September 2016, only 3,100 workers had completed the program, with another 2,500 in the final stages. That means that, with the year almost over, less than 1% of expected participants had successfully completed the program necessary to receive Walmart’s widely publicized raise to $10/hour.

Walmart has blamed the raises for its poor financial performance, but behind the scenes the retailer has actually been cutting corners on compensation. After Walmart announced that it would raise pay for many associates in early 2015, executives told store managers to reduce expenses by cutting worker hours in certain cases, a choice seemingly in conflict with the company’s claims of boosting wages and improving customer service. At the same time, Walmart also changed its system for giving annual raises. In the past, workers used to get yearly raises of 40 to 60 cents based on merit; now they reportedly get raises closer to 2% or 2.75%. For a worker making $10/hour, that means raises between 20 and 28 cents, which is nowhere near what the raises used to be.

Many Walmart workers are left to utilize state subsidized benefits. It is estimated that taxpayers spend more than $6.2 billion annually supplementing Walmart’s paltry wages and benefits for workers who must rely on public assistance. According to data compiled by Good Jobs First, in 21 of 23 states that have disclosed information, Walmart has the largest number of employees on the public rolls of any employer.

In recent years, Walmart has reduced eligibility for its health benefits and dramatically increased the costs. In 2012, Walmart stopped offering health benefits to new employees who work less than 24 hours per week. In 2015, the company raised the floor to 30 hours per week and dropped coverage for workers who had been grandfathered in previously. Premiums have risen dramatically in recent years. In the last five years, the cost of Walmart’s cheapest healthcare plan has more than doubled. The cost of many of the company’s family plans has more than quadrupled over that time period, according to an analysis of Walmart’s Open Enrollment guides.

Walmart has a long history of taking drastic steps to discourage its employees from exercising their right to organize and collectively bargain. The company deploys numerous anti-union tactics, including requiring workers to attend anti-union meetings and specially training supervisors in union avoidance, according to a 2006 article in Business Week by Anthony Bianco (“No Union Please, We’re Walmart”). In recent years, Walmart has gone so far as to hire Lockheed Martin, contact the FBI, and rank stores by labor activity, as Walmart workers increasingly spoke out about their working conditions.

Between July 2005 and June 2011, Walmart settled an estimated 70 state and federal class action wage and hour lawsuits, and lost one jury trial of a wage and hour case that involved a total of well over a million current and former employees. It ended up costing the company over $1 billion. The lawsuits covered wage and hour violations that occurred between the late 1990s and 2010, including unpaid wages and lack of legally required breaks.

Walmart subcontracts warehouse work to third-party companies who then subcontract with temp agencies to supply workers. In 2014, Walmart and one of its contractors, Schneider Logistics, agreed to a $21 million settlement in a long-running wage theft case. The complaint detailed widespread wage-theft resulting from a piece-rate system for unloading containers, failure to pay employees for the time they actually worked, and other violations of state and federal wage and hour law. From 2001 to 2013, it was estimated that these workers were defrauded of tens of millions of dollars.

Walmart business strategy relies on a global supply chain to deliver cheaply made products to its store shelves. This system puts relentless pressure on suppliers to cut costs which often leads to workers in developing countries such as China and Bangladesh to toil for incredibly low wages, sometimes as low as $75 per month.