VOTE FOR WORKER-BACKED PROPOSALS AT WALMART

In the 2024 proxy season, Majority Action recommended investors SUPPORT the following shareholder proposals: No. 5 - Racial Equity Audit, No. 6 - Human Rights Impact Assessment, No. 7 - Set Compensation that Optimizes Portfolio Value for Company Shareholders, and No. 9 -Workplace Safety & Violence Review. Walmart is both the largest private sector employer in the U.S. and the largest private employer of Black people within the U.S., with people of color comprising half of its hourly workforce. As a low-wage employer with huge economic power, the company has an outsized influence in perpetuating racial disparities in labor markets and local economic development. 

In April, Walmart was named by the National Council for Occupational Safety and Health, a nationwide network of non-profit worker safety advocates, as a Dirty Dozen employer for 2024. The title of a “Dirty Dozen employer” has severe implications for the company’s frontline associates and should be a signal to Walmart’s investors that more needs to be done immediately to ensure the safety and health of its workers. 

  • Racial Equity Audit Proposal (No. 5): Walmart is the U.S.’s largest private employer of Black workers, and over 50 percent of its hourly workforce identify as persons of color. Research shows that Walmart exercises monopsony power in local labor markets, resulting in negative consequences for workers, including depressed earnings. As the nation’s largest retailer, grocer, and importer of consumer goods, Walmart’s corporate practices and policies set the standard and have far-reaching impacts on not just the low-wage labor market, but also the retail, grocery, and logistics industries. A racial equity audit would help identify racial disparities in Walmart’s human capital management, business strategy, and corporate practices that present legal, reputational, financial, and operational risks to the company and stymie value creation. A racial equity audit also presents an opportunity for Walmart to improve its business performance in neighborhoods of color. One study found that, “Poor customer service is unevenly distributed across Walmart stores in ways that reproduce racial and socioeconomic disadvantage.” This dynamic has led to Walmart closing a number of underperforming stores in Black and Latine neighborhoods in recent years. A comprehensive racial equity audit could enable Walmart to understand how it can better serve the needs of BIPOC consumers and boost the performance and profitability of its stores in communities of color. Finally, an independent audit would assist Walmart in assessing the effectiveness of its current DEI initiatives and programs. 

  • Living Wage Proposal (No. 7):  Living wages improve firm productivity and lower turnover costs by fostering better worker morale, performance, recruitment, and retention. As the nation’s largest private employer, Walmart has an outsized impact on the labor market for hourly wages. In early 2023, Walmart increased the minimum hourly wage for its store associates to $14. However, it decreased hourly pay by $1 for a subset of new associates a few months later, citing a cooling labor market. Walmart’s wages fall far short of the $25.02/hour living wage needed to sustain a family of four with two working adults. People of color, who comprise the majority of Walmart’s non-managerial workers, make up a disproportionate share of employees who do not earn a living wage.

  • Workplace and Gun Violence Safety Proposal (No. 9): Occupational health and safety failures lead to increased operational costs, as well as legal, regulatory, human capital, and reputational risks. Research shows that BIPOC workers experience higher rates of work-related diseases, injuries, and psychological distress than white workers. Walmart hourly associates, almost half of whom are people of color, have raised concerns about workplace safety issues including unsafely stacked products, organized theft, and threats of physical assault and/or gun violence from customers and co-workers. There have been several incidents of gun violence by white supremacists at Walmart stores in recent years, including a 2019 mass shooting that killed 23 people and a November 2023 shooting that injured four people.

  • Human Rights Impact Assessment Proposal (No. 6): Human rights impact assessments are a valuable tool for helping companies uncover human rights risks in their supply chains and operations. In particular, the use of forced labor in supply chains can create financial, legal, reputational, and operational risk to downstream companies. Recent government probes and investigative reporting has drawn attention to the use of forced labor in Walmart’s U.S. supply chain. These jobs, which are highly coercive, unsafe, and low-paying, are disproportionately performed by workers of color who are minors, undocumented, and/or incarcerated.  An investigation by The New York Times found that many Walmart suppliers rely on child labor. Last year, a federal investigation found evidence of forced migrant labor in violation of the temporary agricultural workers visa program on farms that supply watermelons to Walmart. Walmart also purchases food products from suppliers that source from prison labor programs. 

EXEMPT SOLICITATIONS

  • Majority Action’s exempt solicitation recommending VOTES FOR the racial equity audit proposal (proposal 5), along with VOTES FOR the Workplace Safety and the Prevention of Violence Assessment proposal (proposal 9), the Set Compensation that Optimizes Portfolio Value for Company Shareholders proposal (proposal 7) and the Human Rights Impact Assessment proposal (proposal 6) 

  • United for Respect’s exempt solicitation recommending VOTES FOR the racial equity audit proposal (proposal 5) 

  • Walmart Associate and shareholder Cynthia Murray’s exempt solicitation recommending VOTES FOR the Workplace Safety and the Prevention of Violence Assessment proposal (proposal 9) 

  • The Shareholder Commons’s exempt solicitation recommending VOTES FOR the Set Compensation that Optimizes Portfolio Value for Company Shareholders proposal (proposal 7) 

  • Oxfam America’s exempt solicitation recommending VOTES FOR the Human Rights Impact Assessment proposal (proposal 6) 

ADDITIONAL RESOURCES

  • Remarks from Congresswoman Joyce Beatty (D-Ohio) in support of a Racial Equity Audit at Walmart (May 2024)

  • Webinar Recording: May Day Workers, Advocates and Investors Roundtable: Racial Equity and Workplace Safety at Walmart on May 1, 2024 (Hosted by United for Respect, Majority Action and Americans for Financial Reform)

  • Oxfam America press briefing including remarks from Rev. Dr. William J.  Barber and Walmart associate TaNeka Hightower

  • Majority Action’s 2024 Proxy Voting Guide for Racial Equity

  • Majority Action report: Equity in the Boardroom 2023

  • Oxfam America report: At Work, and Under Watch: Surveillance and suffering at Amazon and Walmart warehouses

  • National COSH report: Dirty Dozen Employers 2024

    Discriminatory Hiring and Promotion Practices, and Pay Inequity

    Walmart has faced several recent lawsuits and controversies alleging discriminatory hiring and promotion practices, pay inequity, and lack of racial diversity in leadership positions. In 2022, the U.S. Equal Employment Opportunity Commission sued Walmart for gender and race discrimination for giving a Black female employee an unsanitary lactation space based on her race and failing to promote her based on gender stereotypes about mothers with small children. In the summer of 2020, Walmart’s CEO committed to prioritizing the recruitment and development of its Black workers – yet the company has received a failing grade from investors on racial and gender pay equity for three straight years. Further, an investigation by the House Select Subcommittee on the Coronavirus Crisis found that, “Walmart had some of the largest racial inequities of the surveyed companies when it came to employment outcomes,” with Black hourly workers fired twice as frequently as white hourly workers in 2020. At Walmart, Black employees make up 21 percent of the hourly workforce but only 12 percent of management and 9.5 percent of officers. In a recent survey of Walmart’s senior leadership, high-ranking Black managers described career advancement as difficult and said they would not recommend working at the company. 

    Walmart’s compensation model also disproportionately affects its Black workers in low-wage sales associate positions. Walmart’s average starting wage ($12/hour) is less than the average starting wage at competitor big-box retailers such as Amazon and Target ($15/hour). Firmwide, annual employee turnover is around seventy percent and likely concentrated among sales associates. Walmart’s wages are so low that its workers are the biggest recipients of Medicaid and SNAP benefits in most states.

    Systematic Underinvestment in Low-Income Black Communities

    Walmart also systematically underinvests in low-income Black communities. The company’s lower prices are often seen as a boon for households in disadvantaged neighborhoods. However, its low prices obscure the negative impact it has on local labor markets and economic development. Contrary to the belief that Walmart is a “job creator,” the entry of Walmart into communities is associated with increases in county-wide poverty rates and large declines in aggregate local employment, earnings, and labor force participation. Moreover, one study found, “Poor customer service is unevenly distributed across Walmart stores in ways that reproduce racial and socioeconomic disadvantage” – a practice the researcher calls “consumer redlining” to capture the company’s systematic neglect of stores in Black communities. This dynamic often results in Walmart closing “unprofitable” stores in communities of color, leaving a void not easily filled by smaller independent firms, many of which are driven out of business when the retail giant enters the neighborhood. For example, in April 2023, Walmart closed four stores in Chicago, three of which were located in predominantly Black and Brown neighborhoods that have experienced recent struggles with grocery and retail access. The closures came after Walmart highlighted its efforts in Chicago as a “critical part” of the $100 million racial equity pledge it made in the aftermath of George Floyd’s murder.

    Inadequate Response to a 2023 Shareholder Proposal Requesting a Racial Equity Audit

    In 2023, shareholders filed a proposal at Walmart asking the company to conduct a racial equity audit analyzing its adverse impacts on BIPOC communities. The lead proponent, United for Respect, suggested that the audit would help mitigate reputational, regulatory, legal, and human capital risks in addition to helping Walmart “obtain a complete picture of how it contributes to, and could help dismantle, social and economic inequality.” ISS and Glass Lewis both supported the proposal, while State Street was the only one of the Big Four asset managers to support it. The proposal received 18.2 percent support of shares voted by all shareholders and 42 percent support of shares voted by independent shareholders.