Walmart’s Cutthroat Business Model Fuels Labor Violations throughout Its Food Supply Chain

by Katie Tracy

June 23, 2015

Every day, millions of consumers endure Walmart’s crowded parking lots and cramped aisles for the chance to buy retail goods and groceries at low prices.  Perhaps some visitors find value in the prospect of starring in the next caught-on-camera video like last week’s hit filmed at a store in Beech Grove, Indiana.  But the lower prices Walmart offers come at a high cost elsewhere. 

According to a new report by the Food Chain Workers Alliance, Walmart’s low cost strategy induces poor labor and environmental practices throughout its food supply chain, and these hidden costs are passed back to workers, suppliers, the environment, and communities.  “Walmart’s business model  . . . . creates the conditions to force suppliers to cut costs, which often means cutting wages for workers, lowering prices to farmers, and externalizing costs on to the environment and the communities surrounding the suppliers’ business,” the report states.

Moreover, the authors found that despite Walmart’s so-called “responsible sourcing” code of ethics that its suppliers are supposed to abide by, the company continues to do business with suppliers that fall below the code’s standards.  For all 11 of the food-related industries examined in the report, researchers found that companies supplying food to Walmart exploited workers.  Violations and bad practices cited in the report ranged from racial and gender discrimination to unsafe working conditions to forced labor.

The report also discusses how Walmart perpetuates the growing trend toward using contingent workers by contracting out its warehouse and food distribution operations to third parties that rely heavily on temp workers hired by staffing agencies, which are notorious for ignoring health and safety standards, paying low wages, and declining to offer health care.  As CPR scholars and staff explain in, At the Company’s Mercy: Protecting Workers from Unsafe Working Conditions, the increasing use of contingent workers is reshaping the entire labor market and it is critical that our laws and standards are modernized to ensure this growing workforce has the protections they deserve.

The Food Chain Workers Alliance offers a laundry list of recommendations that Walmart could adopt to increase transparency in its supply chain, demand fair wages and safe workplaces for workers in its food supply chain, empower workers to report violations, and support workers’ rights in its own operations.  Additionally, the report recommends the President and Congress establish a Blue Ribbon Commission to investigate and develop policies that would stop supermarket chains from abusing their buyer power in the way that Walmart has.

In addition to lawmakers and corporate executives, workers and consumers can stand up to Walmart and demand it stop its exploitative practices.  Toward that end, the Food Chain Workers Alliance has created a petition to Walmart CEO Doug McMillion urging the company to protect workers’ rights in its own operations and throughout its supply chain.

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Also from Katie Tracy

Katie Tracy, J.D., joined CPR as a workers’ rights policy analyst in May 2015. Her previous experience includes working for more than two years as a regulatory policy analyst at the Center for Effective Government, where she advocated for strong regulations to protect health, safety, and the environment.

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