Those low-cost goods at Wal-Mart ultimately come at a high price: lost jobs, lower wages and unsupportable U.S. trade deficits.

Wal-Mart is the single largest importer of foreign-produced goods in the United States, and the majority of its private-label clothing is manufactured in at least 48 countries around the world—and almost none in the United States.

Wal-Mart’s biggest trading partner is China. The world’s largest retailer admits it bought some $18 billion in merchandise in 2004, from China, nearly 10 percent of all Chinese goods sold in this country that year. Through August 2005, the United States was running a $126 billion trade deficit with China.

Lost Jobs Through Importing Foreign-Made Goods

Such a huge trade deficit undercuts domestic manufacturing and destroys good U.S. jobs because the nation is importing, on a large scale, products that had been produced domestically.

• The company says its inventory of products made in China was expected to hit $18 billion in 2004, the second consecutive year the inventory grew by more than 20 percent. More than 70 per cent of the products sold at Wal-Mart are made in China, according to the China Business Weekly.
• More than 80 percent of the 6,000 factories in Wal-Mart's worldwide database of suppliers are in China. If Wal-Mart were a separate nation, it would rank as China’s fifth-largest export market, ahead of Germany and Britain.

U.S. Jobs Shipped Overseas

Between 1989 and 2003, the ever-increasing U.S. trade deficit with China has led to about 1.5 million jobs that either moved overseas or never were created in this country as production shifted to China, according to a report released Jan. 11, 2005, by the U.S.–China Economic and Security Review Commission (USCC), a congressionally appointed panel. The pace of job losses has picked up since China joined the World Trade Organization in 2001, with about one-third of the total, or 500,000, occurring in the past three years.

Lower Wages for U.S. Workers

By supporting foreign-made goods on such a massive scale, the company that trumpets its All-American image is creating incentives for corporations to destroy good jobs in the United States.

• As the world’s largest company with sales of $288 billion in 2004, Wal-Mart exerts a strong downward pressure on wages, and not only for its own workers. Its sheer size and buying power gives it the ability to influence wage rates of its competitors and suppliers, including manufacturing and construction companies.
• Wal-Mart pressures its suppliers through a policy that says the price Wal-Mart will pay and will charge shoppers must drop each year for basic products that don't change. To survive in the face of the retail giant’s pricing demands, suppliers have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.

By purchasing such a large amount of goods produced in China, Wal-Mart indirectly supports continued workers’ rights abuses by Chinese authorities.

• A Washington Post report showed how Wal-Mart pits suppliers against one another and squeezes them for the lowest price. As a result, the report says factories respond with longer hours or lower pay. And the workers have no options because China forbids independent trade unions.

Get the Facts

• “The Wal-Mart You Don’t Know,” by Charles Fishman.
• “Wal-Mart’s Impact Far-Reaching,” by Jeffrey Rubin.
• “Is Wal-Mart Good for America?” by PBS “Frontline.”  
• Read the USCC report, U.S.–China Trade, 1989–2003: Impact on Jobs and Industries, Nationally and State-by-State.
• Read AFL-CIO Chief International Economist Thea Lee’s statement on U.S.–China ties before the U.S. House of Representatives Committee on International Relations.
• Read Lee’s statement before the Commission on U.S.–China Economic and Security Review: China’s industrial, investment and exchange rate policies: Impact on the United States.