Wal-Mart and China

Wal-Mart buys much of its merchandise from China

Wal-Mart reports that it purchased $18 billion of goods from China in 2004.

Wal-Mart was responsible for about 1/10th of the U.S. trade deficit with China in 2005. [“U.S. Stock Investors Wary of Analyst `Yuan Plays': Taking Stock, Bloomberg, 7/1/05]

If Wal-Mart were an individual economy, it would rank as China’s eighth-biggest trading partner, ahead of Russia, Australia and Canada. [China Business Weekly, 12/02/2004]

Many of Wal-Mart's “American Suppliers” actually manufacture most or all of their products in China

An example of an “American Supplier” is Hasbro, headquartered in Rhode Island. Today, Wal-Mart is the largest purchaser of Hasbro products—accounting for 21 percent of all Hasbro goods or more than $600 million in sales. But Hasbro reports, “We source production of substantially all of our toy products and certain of our game products through unrelated manufacturers in various Far East countries, principally China.” Hasbro specifies that “the substantial majority of our toy products are manufactured in China.” [2004 Hasbro 10-K filed with the SEC]

Wal-Mart's Chinese factory workers are treated poorly

Workers making clothing for Wal-Mart in Shenzhen, China filed a class action lawsuit against Wal-Mart in September 2005 claiming that they were not paid the legal minimum wage, not permitted to take holidays off and were forced to work overtime. They said their employer had withheld the first three months of all workers' pay, almost making them indentured servants because the company refused to pay the money if they quit. [New York Times, September 14, 2005]

Workers making toys for Wal-Mart in China’s Guangdong Province reported that they would have to meet a quota of painting 8,900 toy pieces in an eight hour shift in order to earn the stated wage of $3.45 a day. If they failed to meet that quota, the factory would only pay them $1.23 for a day’s work. [China Labor Watch, December 21, 2005]

Elsewhere workers producing goods for Wal-Mart also face appalling conditions, despite Wal-Mart’s factory inspection program

Workers from Bangladesh, China, Indonesia, Nicaragua and Swaziland brought a class action lawsuit against Wal-Mart in September 2005 asserting that the company’s codes of conduct were violated in dozens of ways. They said they were often paid less than the legal minimum wage and did not receive mandated time-and-a-half for overtime, and some said they were beaten by managers and were locked in their factories. [New York Times, September 14, 2005]

A female apparel worker in Dhaka, Bangladesh, said she was locked into the factory and did not have a day off in her first six months. She said she was told if she refused to work the required overtime, she would be fired. Another worker said her supervisor attacked her “by slapping her face so hard that her nose began bleeding simply because she was unable to meet” her “high quota.” [New York Times, September 14, 2005]

In 2004, only 8 percent of Wal-Mart inspectors’ visits to factories were unannounced, giving supervisors the chance to coach workers what to say and hide violations. Wal-Mart claimed it planned to double unannounced visits by its inspectors but that would still leave 80 percent of inspections announced. [CFO Magazine, August 2005]

A former Wal-Mart executive James Lynn has sued the company claiming he was fired because he warned the company that an inspection manager was intimidating underlings into passing Central American suppliers. Lynn documented forced pregnancy tests, 24-hour work shifts, extreme heat, pat-down searches, locked exits, and other violations of the labor laws of these Central American countries. [New York Times, July 1, 2005 and James Lynn to Odair Violim, April 28, 2002, www.nclnet.org]

A Substantial Number of Wal-Mart Associates earn far below the poverty line
· In 2001, sales associates, the most common job in Wal-Mart, earned on average $8.23 an hour for annual wages of $13,861. The 2001 poverty line for a family of three was $14,630. [“Is Wal-Mart Too Powerful?”, Business Week, 10/6/03, US Dept of Health and Human Services 2001 Poverty Guidelines, 2001]

· A 2003 wage analysis reported that cashiers, the second most common job, earn approximately $7.92 per hour and work 29 hours a week. This brings in annual wages of only $11,948. [“Statistical Analysis of Gender Patterns in Wal-Mart’s Workforce”, Dr. Richard Drogin 2003]

Wal-Mart Associates don't earn enough to support a family
· The average two-person family (one parent and one child) needed $27,948 to meet basic needs in 2005, well above what Wal-Mart reports that its average full-time associate earns. Wal-Mart claimed that its average associate earned $9.68 an hour in 2005. That would make the average associate's annual wages $17,114. [“Basic Family Budget Calculator” online at www.epinet.org]
Wage increases would cost Wal-Mart relatively little

· Wal-Mart can cover the cost of a dollar an hour wage increase by raising prices a half penny per dollar. For instance, a $2.00 pair of socks would then cost $2.01. This minimal increase would annually add up to $1,800 for each employee. [Analysis of Wal-Mart Annual Report 2005]

Wal-Mart forces employees to work off-the-clock
· Wal-Mart’s 2006 Annual Report reported that the company faced 57 wage and hour lawsuits. Major lawsuits have either been won or are working their way through the legal process in states such as California, Indiana, Minnesota, Oregon, Pennsylvania, and Washington. [Wal-Mart Annual Report 2006]

· In December 2005, a California court ordered Wal-Mart to pay $172 million in damages for failing to provide meal breaks to nearly 116,000 hourly workers as required under state law. Wal-Mart appealed the case. [The New York Times, December 23, 2005]

· A Pennsylvania court, also in December 2005, approved a class-action lawsuit against Wal-Mart Stores Inc. by employees in Pennsylvania who say the company pressured them to work off the clock. The class could grow to include nearly 150,000 current or former employees. [Arkansas Democrat-Gazette, January 12, 2006 ]

· In Pennsylvania, the lead plaintiff alleges she worked through breaks and after quitting time — eight to 12 unpaid hours a month, on average — to meet Wal-Mart’s work demands. “One of Wal-Mart’s undisclosed secrets for its profitability is its creation and implementation of a system that encourages off-the-clock work for its hourly employees,” Dolores Hummel, who worked at a Sam’s Club in Reading from 1992-2002, charged in her suit. [Arkansas Democrat-Gazette, January 12, 2006 ]

Your tax dollars pay for Wal-Mart's greed
· The estimated total amount of federal assistance for which Wal-Mart employees were eligible in 2004 was $2.5 billion. [The Hidden Price We All Pay For Wal-Mart, A Report By The Democratic Staff Of The Committee On Education And The Workforce, 2/16/04]

· One 200-employee Wal-Mart store may cost federal taxpayers $420,750 per year. This cost comes from the following, on average:
o $36,000 a year for free and reduced lunches for just 50 qualifying Wal-Mart families.
o $42,000 a year for low-income housing assistance.
o $125,000 a year for federal tax credits and deductions for low-income families.
o $100,000 a year for the additional expenses for programs for students.
o $108,000 a year for the additional federal health care costs of moving into state children's health insurance programs (S-CHIP)
o $9,750 a year for the additional costs for low income energy assistance.
[The Hidden Price We All Pay For Wal-Mart, A Report By The Democratic Staff Of The Committee On Education And The Workforce, 2/16/04]