Wal-Mart: How It Mistreats Its Employees

Two recent books describe the rise and expansion of Wal-Mart and detail the methods it has used.

The Retail Revolution: How Wal-Mart Created a Brave New World of Business by Nelson Lichtenstein

The Wal-Mart Effect: How the World’s Most Powerful Company Really Works—and How It’s Transforming the American Economy by Charles Fishman

Wal-Mart began with a need for a steady supply of poor people anxious to have one of their low-paying jobs. They also needed a supply of poor people who would appreciate and need the low prices they provided. Unfortunately, while the company and the Waltons have become fabulously rich and powerful, the basic business model has not changed. They continue to need a ready supply of poor people today, and their business practices have helped to ensure a supply that will never disappear.


Wal-Mart is the biggest player in the retail field. It can set the standard that all others must follow if they are to remain competitive. The standard they have set would best be described as a race to the bottom: the creation of ever more jobs with ever lower wages and benefits. When people speak of the wage stagnation that began for the middle class in the late 70s and early 80s, they usually attribute it to competition from growing globalization and increased reliance on automation. This growth in income inequality also coincides with the explosion in growth of Wal-Mart and its imitators. These companies were not driven to lower wages by global competition or automation, it was a conscious choice made on the basis of greed. While the Waltons were becoming billionaires, the real wages of their employees fell about 30% in concert with the loss in purchasing power of the minimum wage over the last three decades.


So a Wal-Mart is being built in your town and you are looking for work. What might you have to look forward to.


First of all, what type of people is Wal-Mart looking for?

“Wal-Mart itself admitted, or rather boasted, that only 7 percent of the company’s hourly associates try to support a family with children on a single Wal-Mart income....To staff its stores, the company purposely seeks school-age youth, retirees, people who want a second job, and those willing or forced to work part-time..”

Does that sound like you? Is that the kind of workforce that will become the cornerstone of your local economy? Do you see yourself raising a family as a Wal-Mart associate? You do? Then let’s proceed.


Full-time employment at Wal-Mart is considered to 34 hours per week. That is so they can work you extra hours and legally not pay you overtime. What it means immediately is that your effective wage is actually 15 percent lower than the quoted hourly figure. And there is no guarantee of your hours. If your hours are low enough they do not have to provide you with any benefits. Wal-Mart’s policy is that if business slows down, the loss in income comes first from its employees in terms of shorter hours and less pay. That is the Wal-Mart way. If you end up working more than 40 hours in a week and expect to earn some overtime—well, watch what you wish for. Any number of law suits have proven that Wal-Mart encourages its managers to cheat the employees by modifying time cards or by instructing them to punch out and then continue working. This is referred to as working “off-the-clock.” If one is foolish enough to complain she can easily be rewarded with shortened hours or enough variable shifts to force her to quit.


From Lichtenstein:

“Indeed, Wal-Mart is an outlaw. ‘We’re going to quit breaking the law,’ Regional Vice-President Larry Williams told a Tulsa meeting of store managers in 1994. The OSHA laws we have, the wage and hour laws that we have, the federal firearms law, we’re going to quit breaking the law.’ But without a radical shift in the corporate work culture, such top-down admonitions were but futile wishes, ignored by Wal-Mart’s army of hard-pressed managers. Although both K-Mart and Target proscribe overtime pay and squeeze their managers and workers to keep labor costs in line, neither has been the subject of a class-action ‘off-the-clock’ suit. Wal-Mart, on the other hand, was defending itself against seventy-five such suits as of December 2008 when the company announced a settlement, perhaps costing as much as $640 million, in sixty-three of those wage and hour lawsuits covering hundreds of thousands of workers in some forty-two states.”

So you don’t mind all that and you think you see the potential for a long-term career at Wal-Mart. I hope you are not a woman.

“Walton admitted that for years management jobs in his stores were considered ‘the exclusive province of men.’ And not just men but family men. ‘There was no such thing as a single store manager,’ remembered Larry English of his experience in the 1960s and 1970s. Indeed, when the courts forced the company to release once-confidential employment data in the famous Dukes v. Wal-Mart gender discrimination class-action lawsuit, it became clear, even in recent years, that store managers, assistant managers, and management trainees were far more likely to be male at Wal-Mart than at any of its competitors. Although women made up two-thirds of those in the hourly paid ranks, they received just one-third of all promotions to store management positions.”

A very small fraction of workers make it into a management track. For the others, it is to Wal-Mart’s advantage for them to go away as soon as possible. There is no advantage to experience in Wal-Mart jobs. They are constructed in such a way that any healthy individual can perform the tasks. The reason they focus on the types of people described above is because they want them to work for a while and then leave. There will always be someone else they can hire at entry level wages with no benefits.


Wal-Mart’s benefits, or the lack thereof, are the stuff of legend.

“In a confidential 2005 ‘benefits strategy internal memo leaked to the ‘New York Times,’ Executive Vice President Susan Chambers of Wal-Mart’s People Division admitted, ‘Our coverage is expensive for low-income families....On average Associates spend 8 percent of their income on healthcare (premiums plus deductibles plus out-of-pocket expenses) for themselves and for their families, nearly twice the national average.’ For a family with kids, the cost shoots up even higher: most would have to pay health-care costs equal to 30 percent of their income before receiving most benefits.”

Wal-Mart is proud of its approach to healthcare. They believe making the employee shoulder as much as possible of the costs is in the country’s best interests.

“’The greatest incentive for health and wellness is high deductibles,’ Wal-Mart vice president Tom Emerick told a friendly Dallas business audience in the spring of 2007.”

Do you wonder what might happen if you were injured on the job?

“Like many large companies, Wal-Mart has ‘self-insured,’ promising to pay workers’ comp claims out of its own reserves rather than through an insurance company or a state workers’ compensation fund. This saved overhead expenses, but it also gave the company a clear incentive to delay, reject, and litigate the claims that Wal-Mart’s ever growing workforce forwarded on to the home office each year.”

“In many states, Wal-Mart requires a ‘voluntary resignation’ from the injured employee in order to settle an injured employee’s claim. Wal-Mart sees these injured employees as ‘troublemakers’....In Maine....the Workers’ Compensation Board reported that in 2004 Wal-Mart challenged the validity of more than 90 percent of all the compensation claims filed by workers in its Maine stores and warehouse facilities....By way of contrast, Maine’s largest employer, the Hannaford Brothers grocery chain, contested only 17 percent of its workers claims.”

In other words if you are injured and you file a claim your job at Wal-Mart is over, either immediately or shortly thereafter, and you will receive no benefits on a time scale where they could be of any value to you.


There is yet another scam Wal-Mart executes in order to cheat their employees out of unemployment compensation insurance. The policy is never to terminate an employee. All employees who leave must appear to leave voluntarily. In practice this is very easy. If a manager wants to get rid of an employee, all he has to do is cut their hours until they leave in disgust. Since most stores have three shifts and 24 hours of activity the manager can also assign the worker a different shift every day. Not many would last long in that mode.


Wal-Mart tries to cloak itself in a mantle of righteousness, but it has spent its life careening along that fine line between mean-spiritedness and criminality. It deserves the same rapid termination that it provides its employees. Let’s try to avoid supporting this company in any way.