Report criticizes Walmart for undermining good jobs in its supply chain

A new report released by the National Employment Law Project describes how Walmart’s race-to-the-bottom corporate culture is driving down wages and working conditions for workers in the retail giant’s supply chain.

These mostly Latino workers, many of whom are immigrants, work in warehouses loading and unloading merchandise destined for the shelves at Walmart stores. They are by and large precarious workers employed by temporary staffing agencies, which in turn are subcontractors for the Walmart contractors that operate the warehouses.

The contractors are under constant pressure from Walmart, whose management oversees the warehouses, to reduce costs. According to the report, Chain of Greed, Walmart’s cost cutting pressure leads these contractors and subcontractors to cut corners on safety and violate wage and hour laws.

“In service of low prices and large profits, Walmart has become infamous for squeezing its suppliers and contractors, so that contracted workers at the bottom of the food chain are forced to accept poverty wages and harsh working conditions,” said Christine Owens, NELP executive director.

Owens also said that Walmart is only one among many companies that rely on a contingent and precarious workforce. “Subcontracting is on the rise across the US economy, and without fair ground rules that are respected by all players and rigorously enforced, the quality of many more jobs in America will spiral downward.”

One of Walmart’s practices that drive down wages and working conditions is its “Plus One” bargaining strategy, which requires contractors always to reduce their costs from the previous year.

The report describes how this bargaining strategy affects workers at a Walmart distribution center in Mira Loma, California, owned and operated by Schneider Logistics, a leading transportation and logistics corporation based in Wisconsin.

Schneider contracts with two temporary employment agencies, Rogers Premier and Impact Logistics, to staff the warehouse. In order to meet Walmart’s demands to lower costs, Schneider and its subcontractors in 2010 implemented a piece rate pay system. Instead of making an hourly wage, worker pay is now based on the number of shipping containers they load or unload.

The result, according to the report, was “rampant minimum wage and overtime violations.” Workers also accused their employers of falsifying time records and creating an overly complicated piece rate system that makes it difficult to know if they are being paid for all the work they performed.

The California Labor Commissioner investigated the workers’ complaints and fined the two subcontractors more than $1 million for wage and hour violations.

Workers also said that the piece rate system led to a speed up on the job creating more safety hazards in the warehouse, which like all warehouses can be a dangerous place to work even without speed up.

Walmart tried to absolve itself of responsibility for its subcontractors’ violations, but the report says that the company exercises continuous oversight of the warehouse. Its security guards are employed by Walmart; furthermore, Walmart management is on site and frequently instructs subcontractors on staffing levels, productivity, and worker misconduct.

Conditions at the Mira Loma facility are not unique. Other reports show that similar conditions exist at Walmart warehouses in Illinois and New Jersey.

Warehouse operators are just one of a growing number of businesses that rely heavily on easily exploited precarious workers. Chain of Greed  estimates that 30 percent of the US workforce is engaged in some kind of contingent or non-standard relationship and that as many as 50 percent of today’s new jobs fit this category.

These jobs generally pay low wages, have few if any benefits, and by their very nature make it difficult if not impossible for workers to have a collective voice on the job.

Latino workers are over represented in the precarious workforce. The report estimates that 21 percent of precarious workers in the US are Latino.

According to Owens, precarious work has turned what were once decent jobs like those in warehouses into low-wage, dead-end jobs, and the only way to stop this decline is to hold corporations like Walmart accountable for the misdeeds of their contractors.

“When these kinds of deplorable wage violations and harsh working conditions are forced from up top, it shouldn’t just be the contractor and subcontractor left holding the bag,” Owens said. “We need to hold major corporations accountable for the workplace abuses that stem from their outsourcing policies.”

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