Cheap. Like most college students, that one-word description fits me perfectly. When I need to buy stuff and I'm searching my wallet for pennies, I visit Wal-Mart. The low prices at the store make me feel like I have at least some role to play in the demand-side economy. The hot deals also take my mind off unpleasant realities like the Bush inauguration, my tanking GPA, unpaid credit card bills and impending quarterly taxes.
That said, I have always been suspicious about how Wal-Mart prices are lower than the combined IQ of the entire Bush Cabinet. There have always been reports about low pay, negligible benefits and the proverbial race-to-the-bottom to weed out smaller competitors.
With all this as a backdrop, Wal-Mart's ad blitz last week extolling its jobs, benefit packages and diversity made me somewhat curious. The ads in USA Today and The Wall Street Journal contend the company plans to create 100,000 U.S. jobs in 2005 and 74 percent of its hourly employees work full time.
It also claims that the average wage for its full-time hourly employees is nearly twice the federal minimum wage. The key word in the last line is "average," which means that a small fraction of the employees could be paid as much as three to four times the minimum wage while a vast majority could be paid just $5.15.
That way Wal-Mart could still claim to top the minimum wage while unsuspecting -- and in some cases uninformed -- Americans wouldn't know any better.
For the mathematically challenged, here is a simpler example: If you had two employees and paid them $21 per hour and $1 per hour respectively, you are as good a paymaster as Wal-Mart since both your employees earn $11 on average. Fuzzy math, huh?
Jay Allen, senior vice president of corporate affairs at Wal-Mart said, "It has just become evident to us that it is time for us to be more aggressive in defining ourselves rather than letting others do that."
Wal-Mart owns about 3,600 stores in the United States and its annual sales revenue is on par with some Eastern European countries. It is amazing that Wal-Mart has to spend advertising dollars to improve its image. Even its television ads have little to do with its products or customer service.
There are several reasons for Wal-Mart's tanking approval ratings. If you depend on the patronage of locals in a small town, it helps not to force yourself down their collective throats. In April 2004, the City Council in Inglewood, Calif., opposed Wal-Mart's proposal to build a store the size of 17 football fields.
Rather than negotiate with the community, the company gathered 6,500 signatures, calling for a ballot initiative that would have bypassed the government and allowed the construction without the traffic reviews, environmental studies or public hearings required of other developments.
The company also spent $500,000 to help defeat a California ballot measure requiring larger employers to pay for health care coverage for workers. Greg Denier, spokesman for the United Food and Commercial Workers, told The New York Times that Wal-Mart's health insurance is too expensive considering what its employees are paid and provides inadequate coverage for noncatastrophic illness. One study of health care in Las Vegas revealed that a plurality of that city's employed Medicaid recipients worked at Wal-Mart.
Wal-Mart also has a sketchy record in gender equality. In 2001, six female employees sued Wal-Mart alleging that they were passed up for promotions repeatedly and their complaints resulted in harassment by their superiors.
I checked the company Web site for any press release, but there was none expressing apologies or opposition for the record. News reports dating back to the lawsuit contain rebuttals from Wal-Mart executives, although not to the specific charge about women employees being told that "women do not make good managers," and "a trained monkey" could do their jobs.
Wal-Mart is one of the very few major companies in the United States that openly despises unions. I was more than surprised that this dislike for unions is restricted to the company's American operations. In November 2004, Wal-Mart China released a statement to the effect of: "Should associates request formation of a union, Wal-Mart China would respect their wishes."
It seems Wal-Mart is receptive to unions only in China, where real democratic union leaders are jailed for dissent and unions end up serving the companies' interests. Freedom is on the march, indeed.
Wal-Mart should change its slogan from "Always low prices" to "The lowest scruples."
Nishant Bhajaria is a computer science graduate student. Reach him at nishant.bhajaria@asu.edu.
