Tag Archives: Walmart

Walmart-Logo_color_0Walmart made headlines recently by announcing it is raising its base wage rate to $9 per hour (going to $10 per hour in 2016). In response, Gary Silverman of The Financial Times suggests that “Walmart stirs hopes of a Fordist revival,” referring to Henry Ford’s famous implementation of a $5 day in 1914 – double the going rate at the time. Similarly, Paul Krugman, Princeton economist and New York Times columnist, argues that Walmart’s “wage hike seems to reflect the same forces that led to” rising real wages and declining inequality for nearly three decades after the Second World War.

While the comparison between Walmart and Ford is apt in some respects, unfortunately, the broader institutional context of today’s postindustrial, globalized, financialized economy is far different from that of the post-WWII years. As a result, the move by Wal-Mart is unlikely to signal a broad reversal of the current trajectory of the American labor market, which is characterized by stagnating wages and rising inequality.

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On the morning of April 24, 2013, Rana Plaza, an eight-story building in Bangladesh that housed five garment factories, collapsed. When the search and recovery operation concluded on May 13, the final death toll stood at 1,129 workers, making it one of the worst industrial workplace disasters in history.

Media coverage of this event added fuel to a longstanding campaign by local and international unions and NGOs to address what was, well before this latest tragedy, a crisis in building and fire safety in Bangladesh.

As a result of this publicity and activist pressure, over 70 companies, mostly European apparel brands and retailers, have signed a factory safety agreement called the Accord on Building and Fire Safety in Bangladesh (pdf). These include H&M (largest global buyer from Bangladesh), Carrefour and Tesco (the second and third-largest retailers in the world), and Inditex (world’s largest fashion retailer and owner of the Zara brand). The Accord also has the support of two global union federations, several leading labor rights groups, and the International Labour Organization.

Notably absent from these signatories, however, are the American buyers sourcing apparel from Bangladesh. Although a few U.S. companies signed on —specifically, Philips Van Heusen, American Eagle, Abercrombie & Fitch, and Sean John Apparel—most of the country’s leading retailers have not. Instead, earlier this month they announced an alternative program, the Bangladesh Worker Safety Initiative (pdf).

Why did America’s largest retailers, including Wal-Mart, Gap, J.C. Penney, and Macy’s, decline to join a program that enjoys broad support and buy-in from multiple stakeholders, opting instead to propose their own alternative initiative?  I argue that the answer becomes clear if we look more closely at the content of each plan.

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Following the recent collapse of a garment factory in Bangladesh that killed 1,129 workers and injured 2,500 more, over 70 companies, mostly Europeans, signed the Accord on Fire and Building Safety in Bangladesh. This Accord was rejected by most US companies, who instead announced the Bangladesh Worker Safety Initiative agreement, led by Wal-Mart and the Gap and signed by 17 companies.

The Wal-Mart/Gap agreement recreates the primary weaknesses of private monitoring, the centerpiece of corporate social responsibility (CSR) in the global apparel industry for over a decade.

The consensus among researchers is that CSR monitoring has done little to improve the industry.  Although there is evidence that standard payment of wages and health and safety conditions have improved in some factories, overall we have seen a decline in real wages, a rise in the use of temporary and contract labor, the continuation of millions of dollars in wage theft, and the deaths of workers by violence, fires and building collapse.

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