The National Employment Law Project says Wal-Mart has applied its aggressive cost cutting to logistics.
By Marc Lifsher, Los Angeles Times
June 6, 2012, 12:05 a.m.
SACRAMENTO —Wal-MartStores Inc.has applied its aggressive cost cutting to logistics, helping to drive down wages and benefits for U.S. warehouse workers, according to a new study conducted by a labor-backed group.
The world’s largest retailer has significantly outsourced its supply chain, hiring third-party companies to operate its warehouses and transport its good to stores. Those firms in turn often rely on poorly paid temporary workers, said a report released Wednesday by the National Employment Law Project, which advocates for low-wage workers.
That complex hierarchy of contractors and subcontractors has lowered the quality of warehouse jobs across the country, including in Southern California, where the mostly Latino workforce has been disproportionately affected, the study’s authors concluded.
What’s more,Wal-Mart‘s practices are being imitated by competitors who are demanding the same low prices from logistics companies to compete.
“Outsourcing and other contingent work models like ‘perma-temping’ have become increasingly standard in the industry,” the report said.
Wal-Mart spokesman Dan Fogleman said the company had not seen the report and couldn’t comment on it. But he said that Walmart holds “contractors and subcontractors to the highest standards and expects them to comply with all applicable laws.”
The study is critical of Wal-Mart’s reliance on contractors and subcontractors that could be used to insulate the retailer from responsibility for pay and personnel practices on the warehouse floor.
The study “is not in any way suggesting that using subcontractors is a bad thing in and of itself,” said Catherine Ruckelshaus, one of the authors. But “when you’re acting like Wal-Mart and exercising control at the warehouse and insisting on low cost, low cost, it puts pressure on the contractors and others in the chain to do work for subpar wages and under unhealthy working conditions,” she said.
The logistics industry, including warehousing, trucking and the wholesale trade, is a major force in San Bernardino and Riverside counties, said John Husing, an economist and business consultant who specializes in the Inland Empire.
The industry accounts for about 114,000 jobs in a region where almost half the adults older than 25 have only a high school degree or less education, Husing said.
Wal-Mart owns a large warehouse and has partial ownership in another warehouse in Mira Loma, south of LA/Ontario International Airport. Allegations that labor contractors and subcontractors responsible for staffing the complex violated state wage and hour laws prompted an inspection by California labor regulators last fall. The state fined labor subcontractors Impact Logistics Inc. and Premier Warehousing Ventures more than $1 million for failing to maintain proper pay records and itemized pay statements for hundreds of temporary workers.
In October, workers supported by a union organizing group, Warehouse Workers United, sued Wal-Mart’s prime contractor, Schneider Logistics Inc., Impact and Premier in U.S. District Court in Riverside. The complaint alleged that employees were “forced to work long hours, under oppressive conditions for legally inadequate pay,” sometimes below the state minimum wage of $8 an hour.
Schneider denied any wrongdoing. Impact and Premier did not respond to requests for comment.
Conditions for some of the workers improved after Premier canceled its contract and Schneider agreed to directly hire the employees and pay them $12.75 an hour plus benefits.
The boost in status and pay “are a great victory for this group of workers,” said Lupe Palma, an organizer with Warehouse Workers United. But “it’s still Wal-Mart controlling things. It’s still Wal-Mart merchandise being moved by different groups of workers.”
Creating more steady, decent-paying jobs in warehouses is a priority, especially for immigrant and Latino workers, the National Employment Law Project said. But the jobs should come with strict government enforcement of labor laws, the group recommended.
Additionally, new laws should be passed that make all companies operating at a common warehouse jointly liable for labor law violations, the report said.