Walmart's Tireless Cost-Cutting Drives Down Workers' Wages, Report Says
Walmart is often credited with lowering the prices of consumer goods. Now the big-box retailer is being credited -- or more precisely, blamed -- for driving down some workers' wages and benefits.
According to a new report by a pro-labor group, the National Employment Law Project, workers employed by "outsourced Walmart logistics operations" in warehouses around the country are alleging a host of labor violations, from unpaid wages to health and safety issues.
Walmart Stores Inc.'s aggressive strategy of "enforcing ever-lower prices has serious implications" for workers throughout the company's supply chain, the NELP report alleges, because the policy puts pressure on suppliers to cut corners on safety and violate wage-and-hour laws. And it does it in a way that insulates Walmart from responsibility, the group says.
For its report, NELP focused on one of three Walmart warehouse complexes run by third parties in Mira Loma, Calif., part of the Southern California region known as the Inland Empire.
The group says that the practice of contracting-out such labor has spread to other companies and industries, including logistics firms that work for Walmart's competitors -- retailers that are also under pressure to reduce costs. The push has resulted in lower wages for employees of the retail stores' subcontractors, compared to those of the stores' in-house workers who perform the same tasks.
Walmart spokesman Dan Fogelman told the Los Angeles Times that the Bentonville, Ark.-based company expects all its contractors and subcontractors to comply with laws governing worker pay, safety and other areas. He added that most of Walmart's distribution centers are owned and operated by the company and not by third parties.
NELP's report follows recent claims of worker abuse at the same massive Inland Empire warehouse complex. According to a lawsuit filed in October, workers there were underpaid and forced to work long hours in unsafe conditions, including high heat. The three companies accused of the abuses have denied the allegations.
The Times notes that two of the three contractors recently were ordered by state labor officials to pay more than $1 million in fines for failing to properly maintain payroll records for workers at the center, who are chiefly Latino immigrants.
The lawsuit is merely the latest in a slew of labor woes that Walmart has dealt with the last decade, including allegations that the company violated laws related to illegal immigrant workers, overtime, gender bias, and preservation of evidence in pursuit of larger profits.
"Walmart's had a long history of legal conflict because they have a way of doing business that pushes the edges of what the law allows," James Post, a professor at Boston University School of Management, told Bloomberg News. "Sometimes it goes over the line."
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David Schepp has spent more than a dozen years covering business news for the electronic and print media, including Dow Jones Newswires, BBC News, Gannett Co., and most recently at AOL's DailyFinance. Nearly 10 years ago, he started writing a weekly People@Work column, looking in depth at issues facing workers in today's workplace. The syndicated column appeared in newspapers and websites nationwide before it made its debut on DailyFinance in 2010. Schepp now continues that tradition at Aol Jobs, covering the jobs beat and providing readers insight and analysis into the nation's challenging employment scene.
Schepp holds a Bachelor of Arts degree in journalism from Metropolitan State College of Denver.
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