WASHINGTON—Wal-Mart Stores, Inc. alone accounted for almost 10 percent of U.S. imports from the People's Republic of China and caused around 200,000 U.S. job losses between 2001 and 2006, according to recent research.
The Benton, Ark.-based global discount retailer Wal-Mart—with revenues of $312 billion in 2006—is the second largest corporation in the world, behind oil giant ExxonMobil.
A report titled "The Wal-Mart Effect: Its Chinese Imports Have Displaced Nearly 200,000 U.S. Jobs" was recently published by the Economic Policy Institute (EPI), a Washington, D.C.-based, independent, not-for-profit, nonpartisan think tank. The report details the effect Wal-Mart has on the U.S. economy and job market.
The numbers are rather conservative due to the type of goods Wal-Mart imports from China to the United States. The imported products accounted for are "durable and non-durable consumer goods such as furniture, apparel and textiles, toys, and sporting goods. These are particularly labor-intensive manufacturing industries and support more jobs per $1 billion of imports than more capital-intensive goods such as machine tools, automobile and aircraft parts imported by other U.S. firms," suggests EPI.
Between 2001 and 2005, Wal-Mart accounted for only $100 million of U.S.-made export goods—out of a total of $33.7 billion—in U.S. exports to China. At the same time, it imported $17.1 billion of goods from China, accounting for almost 10 percent of the U.S. trade imbalance with China.
"Wal-Mart's increased dependence on cheap imports from China is reflected in the nation's increasing trade imbalance with that country," claimed EPI in a press release.
Robert E. Scott, EPI Director of International Programs, suggests that the influx of cheap goods from China has caused closure of companies that would have supported between 1.2 million to 2.7 million jobs in the past five years.
Labor Union Chimes In
Sam Walton, the founder of Wal-Mart announced in a recent publication that he would be able to "restore [U.S.] manufacturing capacity, improve our national economy, and renew our pride in American craftsmanship," according to Change to Win, a labor union based in Washington, D.C., that fights against outsourcing of low-level American jobs .
The Wal-Mart of today has changed course. According to Change to Win, Wal-Mart spokesperson David Tovar announced: "We're a global company, and it is necessary to source globally to ensure that we meet the needs and wants of our customers."
Professor Gary Gereffi of Duke University told PBC Frontline during a 2004 interview that according to Change to Win, Americans should not blame the countries that sell their products to the United States, but the U.S. companies that export American jobs overseas. Gereffi sees Wal-Mart as the U.S. firm that is responsible for the most U.S. job losses. "Wal-Mart is one of the major companies that's been promoting a global race to the bottom. It's like we're on a bus with an accelerator pedal with no brakes," said Gereffi.
According to Change to Win, Americans produced 94 percent of Wal-Mart's products until 1995. By 2007, 70 percent of all products sold by Wal-Mart in the United States were made in China.
It appears that the United States is the top loser in Wal-Mart's trading practices. At Wal-Mart stores in China, only 1 percent of all goods sold were manufactured outside of China. In Canada, only 20 percent of products sold at Wal-Mart stores were imported, and in its Mexican stores, only 7 percent are imported. U.K.'s Wal-Mart/ASDA management announced that it would stock its stores with textiles made in the U.K.
Unskilled Labor Harmed the Most
The U.S. manufacturing sector has been hit hardest by cheap imports from China. Americans affected by the China trade are those with little or no education, as the production of most goods for Wal-Mart does not require higher education and some not even a high school diploma.
U.S. workers often have to struggle to find a comparable job because many low-level jobs have been exported to China or India over the past several years. And where do these workers shop? They shop at Wal-Mart because they often cannot afford to shop anywhere else.
The EPI report claims that companies such as Wal-Mart allow China to brazenly continue its disregard for fair play and international trade practices. Wal-Mart—in not holding its trading partner to internationally accepted labor laws—is "providing a vast and growing conduit for the distribution of artificially cheap and subsidized Chinese exports to the United States," said EPI.
A Race for the Bottom Line
The descendants and widow of Walton own 40 percent of Wal-Mart shares and each have around $15.5 billion in assets, according to a 2007 AlterNet report. The Walton family members account for five of the eleven wealthiest people in the United States.
Lee H. Scott, Jr., Wal-Mart CEO, earned $1.3 million in 2005, not including $16.2 million in benefits such as stock options, incentive pay, and personal use of corporate assets.
On the flipside, Wal-Mart's employees live in or close to poverty. The hourly wage of an average Wal-Mart worker is $8.23. The typical work week at Wal-Mart is about 36 hours and many employees are limited to a 24-hour work week. Annual income for such workers ranges between $10,000 and $16,700. U.S. federal government statistics in 2007 indicate that anyone earning less than $10,210 is considered to be below the poverty line.
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