Can We Take a Moment to Complain About Walmart?

By Elizabeth Brotherton-Bunch
May 29 2019 |
“Always low prices. Always.” That onetime Walmart slogan wouldn’t fit the company in 2019, when it laid out plans to pass along any tariff-induced price increases to consumers. | Getty Images

The retailer’s woe-is-us response to trade action is … rich.

Longtime readers of this blog know that here at the Alliance for American Manufacturing, we have some deep-seated issues with Walmart.

There’s the fact that the company is No. 1 on the Fortune 500 list and made $129 billion in profit in 2018, but pays its average worker $14.26 an hour. That amounts to about $25,200 for a year for 34-hour weeks, which is full-time at Walmart — and under the national poverty line for a family of four.

Then there’s all the Made in America hypocrisy! Oh, there’s so much hypocrisy.

For one, the company has made a big deal the past few years about how it is “Investing in American Jobs” and encouraging American manufacturing, yet it imports more products than any other retailer by far.

The numbers are staggering, actually. Walmart imported 874,800 twenty-foot equivalent units (TEUs — i.e., a standard shipping container) in 2017. Rival retailer Target came in second, with 590,300 TEUs. That’s a whole lot of stuff heading to Walmart shelves that isn’t Made in America.

And even when Walmart does decide to sell something manufactured locally, it can be deceiving.

Remember Element Electronics? Walmart made a big deal about how Element’s televisions were Made in America. But in actuality, the sets almost entirely were made in China, with minor assembly work happening in the U.S. — the TVs arrived at Element’s South Carolina facility already packaged, and workers there merely inserted a memory board.

But all of this is old news. What has us fired up now?

Well, Walmart is very concerned about the Trump administration’s efforts to renegotiate the American trade relationship with China. Not surprisingly, the No. 1 importer is worried about how tariffs will impact its bottom line.

Walmart’s strategy? It’s going to pass any cost increases onto consumers!

“Our goal is to be the low-price leader,” CFO Brett Biggs said. “We want to manage margins… We have mitigation strategies that have been in place for months. But increased tariffs will increase prices for customers.”

This all is just so rich.

Let’s start with the tariffs. While there’s strong bipartisan support for taking on China’s litany of unfair trade practices, there also is legitimate debate happening about the Trump administration’s strategy to issue tariffs on China-made goods.

While we think much of the outcry has been overblown, it’s worth noting the Trump trade team purposely has tried to avoid issuing tariffs on popular consumer goods. Treasury Secretary Steve Mnuchin talked about that strategy last week, noting “there may in some cases be an impact” although he doesn’t “expect that there will be significant costs for American families.”

But Walmart’s positioning in all this is incredibly frustrating.

The company that is No. 1 on the Fortune 500 is making itself out to be a victim in a trade war between the United States and China, when it is one of the reasons why we find ourselves in this position in the first place!

Don’t kid yourself. There is a huge cost to Walmart becoming the low-cost leader.

The United States lost 3.4 million jobs between 2001 and 2017 as a result of China’s 2001 entry into the World Trade Organization, many of them in industries like electronics, furniture and textiles. You know, the sort of things that line Walmart’s store shelves.

Walmart strategically and very purposely pushed companies to offshore to maximize its profits. Bicycle maker Huffy, for example, once made its popular products in Ohio, Missouri and Oklahoma; it manufactured its last bike in the United States in 1999, driven to offshore because of its relationship with Walmart.

Now, you might be thinking that while offshoring is tough for those workers, it is overall good for companies like Huffy. But the race to the bottom actually isn’t a good business strategy at all!

Take the Lovable Company. It was once the sixth-largest maker of intimate apparel in the U.S., employing 700 people in the states. Walmart eventually became the company’s biggest customer, only to renege on a contract in 1995. Lovable went out of business soon after. “Their actions to pulverize people are unnecessary. Walmart chewed us up and spit us out,” recalled Frank Garson II, the company’s last president.

Despite its low prices, Walmart isn’t at all good for the communities where it operates, either.

Consider what has been dubbed as the Walmart effect — what happens to communities after the retailer opens up shop. From small towns to places like Chicago’s West side,  Walmart kills small businesses. One study found that between 35% to 60% of small businesses located closely to a Walmart close; 24% of small businesses shut down about four miles out.

Walmart is also bad for jobs. Another study estimated that for every two jobs that Walmart creates — you know, those jobs we talked about earlier that pay poverty wages — three local jobs are destroyed.

The retailer isn’t even good for tax revenue! Within the two ZIP codes closest to or encompassing a Walmart, overall sales tax revenue declined.

And don’t forget that all those offshored products are still largely being made by people, who often work long hours for terrible wages in dangerous, potentially deadly conditions.

And now Walmart is employing scare tactics. Whatever your thoughts on the Trump administration and its decision to employ tariffs in trade negotiations with China, do not buy into this argument from Walmart.

The company doesn’t actually care about its customers or the communities where it operates its stores. Walmart’s goal is the same as it always has been — maximize Walmart’s profits, no matter what that does to people.

Walmart sells its stuff insanely cheap. But it has come at a cost.