Like with any organization of Walmart’s scale, a definitive discussion of labor would be a long topic. This article covers labor as it relates to food pricing, but before I get to that, I want to briefly mention two public aspects of the Walmart experience regarding employees: litigation and the union perspective.

As a large company, Walmart spends a lot on litigation related to managing labor. In their 2011 Financial Report, Walmart reported 63 wage and hour class action lawsuits that were settled in 2009, which resulted in a pre-tax charge of $382 million. This expense is indicative of the scope of Walmart’s labor management legal expense. There are also highly visible lawsuits, such as the Braun/Hummel v. Wal-Mart Stores, Inc. class action lawsuit in which the plaintiffs allege that Walmart failed to pay class members for all hours worked and prevented class members from taking their full meal and rest breaks; and the Dukes v. Wal-Mart Stores, Inc., class-action lawsuit in which the complaint alleges that Walmart has engaged in a pattern and practice of discriminating against women in promotions, pay, training and job assignments. These cases have been adequately covered in other media outlets.

Likewise, I don’t cover the United Food and Commercial Workers campaign called “Making Change at Walmart.” Readers can find additional information about this labor movement initiative here.

Walmart has 1.4 million employees in the United States. We could review Walmart’s talking points on being a responsible employer, and compare them to the talking points of the United Food and Commercial Workers, but let’s cut to the chase. All of this boils down to the fact that people want to work at Walmart and they must be finding adequate reason to do so. In order to retain enough employees for a large scale operation, Walmart, by its nature, has to be more equitable than most employers in terms of pay and benefits. Finally, if there were a compelling reason for Walmart employees to join a union, more stores would be unionized. Read about a 2005 union organizing attempt in Jonquière, Quebec here and find out why local residents were unhappy with both Walmart and UFCW after a union organizing attempt.

What does this mean to food prices? With a consistent and adequate supply of labor, and emphasis on hiring people who have additional sources of support, such as retirees and college students, employee costs are stable. This supports the EDLP philosophy and enables the company to focus on improvements in productivity. In my view, once a stable workforce has been established, productivity is what makes the real difference in Walmart’s ability to deliver low prices.

To understand Walmart productivity, it is instructive to read the chapter in Thomas Friedman’s 2005 book The World is Flat: A Brief History of the Twenty-First Century called “Supply Chaining.” Friedman points to Walmart as the best example of a company that uses technology to streamline item sales, distribution and shipping. What that means is using technology to replace employees.

In high school, I worked at what we would today call a “box store.” On Thursday evening, we prepared for the promotional sales flyer that went out weekly in the local newspaper. That meant about 3-4 hours of bringing sale items from the stockroom and preparing aisle end displays with them. We joked that Thursday was “Kotex Day” because sanitary napkins were almost always on sale, and we would pile the large boxes six or seven feet high so they need not be restocked. We often returned excess product to the stockroom on Mondays.

This work is replaced at a 2011 Walmart by end of aisle displays that have been pre-stacked by the supplier on a pallet that can be easily wheeled out. A “sales promotion” at Walmart is a rarity, in fact it runs counter to their pricing philosophy. Through electronic data collection and analysis, Walmart enables vendors to monitor their inventory at store level, and better project demand, thus avoiding the Monday morning cleanup of excess product. Take this small example times multiples of a thousand, and it is easy to see that a key to Walmart’s ability to maintain low food prices is partly through the use of technology to reduce the number of employees needed to operate its stores.

It is hard for a small, locally owned grocery store to compete with Walmart on price. When we consider John’s Grocery and that it had the highest price on six of ten items in our survey, it seems unlikely they can reduce labor costs since many employees are family members. For John's Grocery to survive as a small family owned business, it requires a combination of location, satisfied customers and a college town that shops frequently in their specialty beer and wine section without regard for price. They hang on despite Walmart's lower prices.