The Business Ethics Blog

As promised, here’s my reveiw of “Wal-Mart – The High Cost of Low Price.”

(Bias advisory: I don’t like Wal-Mart. I do shop there occasionally, but I have a semi-irrational dislike of the place.)

OK, what you need to know about the movie:

• It is not an unbiased documentary. It is a one-sided attack piece, and never claims to be anything else.
• It’s also a good movie. It’s worth watching.
• You need to have your critical-thinking hat on for this one.

The movie has a beautiful narrative arch.
The first 15 minutes are about the effect a new Wal-Mart store had on small mom-and-pop busiensses in Middlefield, OH. The story is told by 3 generations of the Hunter family, owners of H&H Hardware. The Hunters are sincere, simple folks who speak eloquently about small-town life, and what the store has meant to their family. I think a lot of people will, like me, find this segment kind of sad, but will feel that nostalgia for the small-town life of yesteryear isn’t enough to condemn a store that manages to provide rock-bottom prices to low-income shoppers mostly through the excellence of its supply-chain. In some ways, this is a set up. The more serious moral condemnation comes in the next section.

(Apparently, this first section of the film is also quite misleading. According to a story in the Cleveland Plain Dealer, the hardware store actually shut down before the new Wal-Mart opened, and the family’s patriarch denies that the big-box store was to blame.)

The second section of the movie, the big middle section, is about much more clearly blameworthy behaviour on the part of Wal-Mart. Here the movie details a range of management practices with negative effects on employees — everything from giving employees too few hours to live on (or to warrant benefits) through to coercing employees to work unpaid overtime. This section also includes stories about Wal-Mart’s lackluster environmental track-record and claims that security in their parking-lots is inadequate.

The final segment of the movie is about towns fighting back. It shows grassroots movements in Chandler, AZ and Inglewood, CA working hard to prevent Wal-Mart stores from opening in their communities. Inspirational music soars as the film portrays the activists’ success at keeping America’s biggest employer at bay.

So, what kind of beast is Wal-Mart? Should we believe this movie, or the company’s own commercials? Big topic, but here are some thinking points:

• The key, here, I think, is not to get bogged down in complicated economic arguments. For most of us, those are not relevant…yet the lion’s share of debate over Wal-Mart on the ‘net is focused on issues like the net effect of a 2% drop in nominal wages combined with a 3% drop in consumer costs. The net economic effect of a company like Wal-Mart is (or should be) a concern for governments, and net local impact should clearly be a big concern for town councils. But I generally think the big-picture economic question is a red herring, and ought to be dropped for most purposes.
• Some of the practices detailed in the movie (discriminating against women and blacks in decisions about promotion, falsifying time-cards, etc.) are clearly ethically indefensible. You don’t need an ethics professor to tell you that.
• Other “sins” pointed out by the movie are much less convincing. For example, the movie points out that a lot of Wal-Mart employees are on various forms of government assistance. It even provides numbers. But just how unusual is it for retail workers to be on one or more forms of government assistance? Personally, I have no idea. But without that sort of baseline information, a statistic about Wal-Mart’s employees is pretty close to useless.
• I’m extremely skeptical about blaming Wal-Mart for what goes on in its parking lot. The movie basically tries to suggest that the company is actually directly responsible for a number of crimes (including at least one rape and one murder) that happened in its parking lots. The specific claim is that Wal-Mart should have had security guards either patrolling or watching on closed-circuit camers. Again, this claim suffers from lack of suitable comparisons. Do other large retailers have security patrols in parking lots? Is there an industry standard in this regard? How does the crime rate in Wal-Mart parking lots compare to the crime rate in parking lots more generally?

[Thanks to Andrew Potter for a useful e-mail discussion on this topic.]

List of other movie reviews on this blog.