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Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Wal-Mart (WMT) is huge store chain with over a million employees. That’s more than anyone except the U.S. Government. So when Wal-Mart's got a problem, a lot of people stand to get hurt! Could the company's legal problems with immigrant labor become a problem for all of America? Bill, we’ll go to you first. Talk about this labor problem that they’ve got.
Bill Baldwin, editor: You mean the fact that Wal-Mart got caught with these illegal aliens working at it’s stores? They said ‘we didn’t know anything about it.’ Maybe, maybe not. I think there’s a bigger issue here. We’ve had a glorious decade of deflation. And it’s been made possible by the willingness of many foreigners to work for very low, un-American wages. The Chinese: Wal-Mart brings in a lot of Chinese apparel, and now the Mexicans who come across the border to take jobs polishing floors. I think there’s going to be a backlash in that kind of deflation, and I think you’re seeing it in the immigrant raids against Wal-Mart, and you’re seeing it in the protectionist stance that you hear from politicians.
David Asman: But, bottom line is you think this is not only going to hurt Wal-Mart, but the economy in general?
Bill Baldwin: This is a harbinger of a backlash against cheap labor.
David Asman: Victoria, is this really tough on Wal-Mart, and the whole economy? Everybody?
Victoria Murphy, senior reporter: I think we might be overreacting a little bit, here. Cleaning is a percentage of overall costs at a place like Wal-Mart or casinos or hotels.
David Asman: Let’s be specific. It’s the cleaning staff that employed a lot of illegal aliens. Some of whom were subcontracted, by Wal-Mart, but go ahead.
Victoria Murphy: Right. I think in the long run, it’s not a huge deal. Now, if we go around raiding farms in California, that’s a big deal, because a large percentage of that labor is done by illegal immigrants. But, for Wal-Mart, I don’t see this as a huge issue, and I don’t think it’s going to affect the stock price.
David Asman: Steve, a lot of average businesses employ illegal immigrants. I’ve worked in kitchens across the country that employ illegal aliens.
Steve Forbes, editor-in-chief: Yeah, this whole thing underscores the need for real immigration reform. If we have need for people from overseas, do a work program, so we know who’s coming in. They’re here for a specific period of time, then you can send them home, and then they can come back again.
David Asman: Temporary workers. Don’t give them citizenship or green cards, but temporary workers.
Steve Forbes: Absolutely. Bring it above ground, instead of this crazy illegal alien thing, where you get corruption, you get exploitation. Bring it out in the open so we can police it. Especially in this age of terrorism.
David Asman: Quentin, isn’t that a better way?
Quentin Hardy, Silicon Valley bureau chief: Well, Steve’s got a little solution there, but we’d better focus back on the problem. Is this a problem for Wal-Mart? Hey, it’s a problem for Wal-Mart because they outsourced their responsibilities, and those companies evaded the law. They did not respect workman’s compensation, they did not respect overtime, they didn’t respect minimum wage. You know, they’re outsourcing their responsibilities. That gave Wal-Mart a price advantage over their competitors. I say it’s a big problem for Wal-Mart because they put guys out of business by disrespecting the law – the current law. You want to change it? Great. But it should be a problem for Wal-Mart. They disrespected the law.
Steve Forbes: It was not illegal immigration that enabled Wal-Mart to do what it did in terms of pricing. It was smartness and sophisticated technology. And what Wal-Mart is undergoing is the fact that it’s successful, it’s a target, and people want publicity, and they’re going after them.
David Asman: Will they survive?
Steve Forbes: Yes.
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