How Walmart’s Business Model Encourages Gender Discrimination

In many ways, Betty Dukes was the kind of worker Walmart—the world’s largest private employer—had always sought to attract: someone looking for an entry-level job and willing to work hard for low pay. She was 44 years old with twenty years of experience in retail, but she had had a difficult life, and she came to Walmart because it was one of the few jobs open to her.

She was born in Tallulah, Louisiana, in 1950, one of twelve children. Dukes had dropped out of high school and cycled through jobs, drinking hard during the bad times. She had minor brushes with the law and reached a point where she didn’t think there was much left for her. She told a local newspaper, “Life had lost all its flavor, all its purpose and meaning.”

Then she found God. And when she did, she became an ordained Baptist minister, volunteered as an assistant minister at her church, and became a community leader. She started school again and even made the honor role. Walmart was hiring at a relatively new store not far from where she lived, and what Dukes most needed was employment. So, she accepted a job there, starting as a part-time cashier earning $5.50 an hour (a little more than California’s minimum wage of $4.25). She was certain if she kept focused and worked hard, she could work her way up what she thought of as the Walmart “ladder.”

Dukes liked what she saw at Walmart. She felt that the company reflected her Christian values. The store’s founder, Sam Walton, known to his employees as Mr. Sam, had died two years before Dukes’s first day on the job in 1994, but his Bible-based corporate messages were still drilled into Walmart workers: this was a company that was pro-family and built on Christian principles of community, looking out for others, and taking care of customers.

These were Dukes’s principles, too. And in her early years on the job, Dukes quickly moved up through the Walmart ranks. By her fifth month, she had been promoted to a full-time cashier. By her ninth month, she had received a merit raise because of her excellent customer service. By 1997, she had become a customer-services manager, which despite its name was an hourly non-management position that still didn’t offer her access to benefits.

Dukes, who kept her customers happy and was well liked by her co-workers, pressed her supervisors to consider her for the training necessary for hourly workers to move into management roles. She heard nothing, but then saw the men working next to her getting higher pay and being chosen for the management training she had been pushing for, while she was overlooked.

When she complained to her supervisors, Dukes was told, “People like you don’t get promoted.” Since Dukes was Black and her supervisor proudly described himself as “a redneck,” she assumed his comment was racially motivated. She complained again. But while she waited for a response, she was reprimanded for asking a colleague to ring up a one-cent transaction on the register to make change (a common practice). After that, she was informed she was being demoted to the position of cashier. Her efforts to speak up on her own behalf had backfired.

Initially, Dukes hesitated to challenge Walmart. As she later explained, “I was from a poor family, my education was limited, and I knew I had to support myself. I felt that I should just be grateful for the job I had and not rock the boat.” It was the demotion that persuaded Dukes to fight back. She saw herself and her family as more deeply rooted in Pittsburg, a city where Walmart had only recently opened the store where Dukes worked, than Walmart, and given her role as a community leader, she felt that the demotion was an insult “not only to her but also to the town.” Dukes’s initial legal claim, which she filed without a lawyer, alleged racial discrimination. To the extent she thought she had suffered from discrimination, Dukes assumed it was because of a racially biased culture at the store.

At the same time, a legal team made up of prominent discrimination lawyers was putting together a much larger lawsuit accusing Walmart of sex discrimination. Lawyers on the team included Stephen Tinkler, who had already successfully brought sex abuse claims against the Catholic Church, as well as sexual harassment cases against Walmart; Joe Sellers, a veteran civil rights attorney in Washington, D.C.; Brad Seligman, a founder of the public interest Impact Fund who later became a California judge; and Guy Saperstein, Seligman’s law partner. It was a high-powered group prepared to marshal the resources necessary to confront one of the biggest companies in America.

Dukes learned about the lawyers’ efforts and met with them. Up to this point, she had little idea that there was such a thing as sex discrimination. Indeed, she initially assumed that “sex discrimination” had something to do with sex, “like Bill Clinton or Anita Hill,” as she later explained. She soon discovered that not only does federal law prohibit treating women differently from men but also that her experience at Walmart wasn’t at all unique. The numbers and the stories from Walmart women had already persuaded the lawyers that the company was engaging in systematic sex discrimination: they showed a remarkably consistent national pattern of favoring men over women. Even at the dawn of the twenty-first century, Walmart management had not seen the need to change its practices.

Thus, Dukes may well have experienced sex discrimination in the direct way most people would think; but what really prevented her from getting ahead was a set of unwritten rules, deliberately hidden from her view.

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For Sam Walton, Walmart’s larger-than-life founder, women workers had always been part of his business strategy. A former JCPenney employee, Walton opened his first store in the forties and his first official Wal-Mart (as it was then called) store in Rogers, Arkansas, in 1962. From the outset, Walton’s business model was based on keeping his prices—and expenses—low, thereby undercutting his competitors and increasing his sales volume.

In order to pull this off, Walton needed workers who were prepared to work for very low wages. In the forties and fifties, the farms of rural Arkansas were mechanizing, freeing women who had helped out on the farm to leave the home in search of income. The women of the Ozarks needed jobs, and they were happy to work for Sam Walton.

There’s no doubt that in many ways, Walton bettered the lives of his rural female employees. He gave them jobs they needed when few other opportunities were available—and the women enjoyed the work of serving their friends and neighbors at the store. They also identified with the distinctive company culture Walton had created, a culture reinforced by daily meetings, promotional videos, and a concept Walton called “servant leadership,” which echoed Christian notions of service.

At the time Walton started out in business, minimum wage rules, which had first passed in the New Deal era, did not apply to retail clerks, and sex discrimination laws did not exist. Walton saw his women employees as doing what women had always done: welcoming their neighbors, making the stores attractive places to visit, emphasizing the stores’ community ties. Walton thought of management, on the other hand, as “the exclusive province of men”; he explained that the retailers of the era did not believe that women were suitable for anything but “clerk jobs.”

The managers had the tough jobs, critical to a low-cost operation. They had to do whatever needed to be done. That meant filling in when other employees were unavailable, making the hours long and unpredictable. And it could mean doing everything from unloading trucks to mopping floors. Walton didn’t think women could do either the literal or the metaphorical heavy lifting. At the time Wal-Mart began, managers were overwhelmingly male in most stores. Indeed, the want ads of the era separated “help wanted male” from “help wanted female,” and managerial positions overall were much more likely to be listed in the male column.

As Walmart expanded its stores across the country, low-rung female workers remained essential to Walton’s low-cost business model. Although Walmart also cut costs, creating more efficient supply chains, at the bedrock of Walton’s success was always his ability to design workplaces that kept labor costs to a minimum. He liked to brag, “We’re going to be successful, but the basis is a very low-wage, low-benefit model of employment.”

Walton sought to grow his Ozarks-based operation in an era during which the federal government had expanded labor protections and, seemingly even worse from Walmart’s perspective, expanded them to women. Congress passed the Equal Pay Act in 1963, the same year that John F. Kennedy’s administration delivered on a campaign promise to women to finally push through legislation that extended the minimum wage to retail employees at large companies, effectively doubling the wage for (majority female) clerks.

Walton evaded the new law by dividing his stores into different companies, keeping each under the $1 million in sales that would subject the company to the wage and hour requirements. The Labor Department ultimately prevailed in an action against Walton in the seventies, obtaining a ruling that subjected the entire operation to federal labor regulations. After that, he resorted to subterfuge: to find a way to pay his employees less than the law required and keep out the regulators and the unions that would make the practices visible.

By the time Dukes went to work for Walmart in the nineties, the retail empire had perfected the methods necessary to keep wages low and, moreover, export a pre-New Deal system of labor relations to the rest of the country. Its store managers and assistant managers—who held the positions to which Dukes aspired—were the “shock troops” in this system, according to labor historian Nelson Lichtenstein. Walmart had engineered low-price products through top-down supply chain management micromanaged from the corporate headquarters in Bentonville, Arkansas.

It had pioneered the use of bar codes as part of its data-driven supply system. It also carefully planned its store expansions to minimize the costs of delivery from its supply centers, and it so relentlessly monitored the relationship between its warehouses and its stores that it dictated uniform national temperatures in company refrigerators. In contrast, it produced a national low-wage system by giving its managers unbridled discretion with respect to personnel decisions—and only personnel decisions.

Walmart decentralized personnel matters—and still produced uniformly low labor costs—by building the right incentives into its compensation system. Around the time of the Dukes litigation, the base pay for a Walmart manager was about $60,000 a year, but according to another lawsuit, managers could triple that amount in bonuses if they “hit their numbers.” The managers “are relentlessly and mercilessly graded on their capacity to hold labor costs below a fixed ratio of the sales generated by their store in any given week,” Nelson Lichtenstein explained.

Supervisors who succeeded in keeping down such costs received higher compensation, no questions asked. Should their labor costs rise beyond the limits set by the Walmart’s home office computers in Bentonville, Arkansas, “the hours worked by associates are slashed, wages are then frozen, and the regional vice president tells the store manager to relinquish his keys and find another job.” Even in periods in which Walmart did well, 10 to 15 percent of store managers were demoted each year.

Successful managers, in turn, were routinely moved to new stores, often on short notice and hundreds of miles away. As Walmart expanded nationally, it required its management candidates to agree in writing to accept moves as a condition of admittance to the training program; but Walton conceded in his 1992 autobiography that the practice discouraged women from applying and he confessed that he had “seen the light on the opportunities we missed out on with women.”

Still, the Supreme Court’s opinion in Dukes, written in 2011 by Justice Antonin Scalia, described the willingness to move as a condition of admission to the company’s management training program. While the company eventually dropped it as a company-wide requirement, some managers continued to ask management trainees for such agreements, formally or informally. By moving successful managers to new stores, Walmart created a system for controlling labor practices in all the stores, without the need to dictate the practices from Bentonville.

The store managers’ and assistant managers’ roles were also critical to Walmart’s operation because they kept labor costs low by minimizing personnel. Dukes thought of Walmart as offering a career ladder, but in fact Walmart had fewer managerial positions than did other stores, and the managers oversaw a huge hourly worker force. This meant there were relatively few opportunities for advancement.

Instead, Walmart used its salaried supervisors, who did not have to be paid overtime, to compensate for the company’s chronic understaffing. Assistant managers reportedly worked “a minimum of forty-eight hours a week, but more likely fifty-five and sixty, eating on the fly and never quite sure when they’ll leave for the evening.” And that doesn’t include the Christmas season, when the pressures ratcheted up even more.

Within this system, hourly workers like Betty Dukes not only didn’t get the promotions they deserved; they often didn’t receive the compensation to which they were entitled under federal law for the work they had performed. Some managers, trying to reconcile chronic understaffing with Walmart’s policy against ever paying overtime, pressured workers to clock out and then go back to work or to continue working through their breaks or lunch hour.

As the New York Times reported, the company’s “intense focus on cost cutting had created an unofficial policy that encouraged managers to request or require off-the-clock work and avoid paying overtime.” Less scrupulous managers simply “adjusted” the time cards of workers who reported more than forty hours in a week, unilaterally adding rest breaks or increasing meal periods. This is also why most workers, like Dukes, start part-time; part-time workers enjoy fewer legally mandated protections. Walmart, in turn, accepted notoriously high turnover rates—about double that of competitor Costco—as the norm. Walmart just replaced the employees who left with new workers it could pay less.

Workers who stepped out of line in any way, including by complaining about their pay or working conditions, often had their hours cut or, like Dukes, were accused of wrongdoing and demoted, if not fired. While these abuses were not targeted at women, they contributed to the concentration of women in the lowest-paid Walmart positions, partly because women had fewer alternatives in the job market than did men, and partly because they were more willing than men to take the part-time jobs Walmart offered, given their customary family responsibilities. Meanwhile, Walmart’s loyal female employees often made so little that they had to rely on food stamps to get by. Out of the goodness of their hearts, Walmart stores have even held canned food drives—for their own employees.

A lightbulb went on for us when we realized that the managerial system Dukes challenged as discriminatory worked, from start to finish, to facilitate circumvention of the labor laws and shortchange Walmart workers without anyone in Bentonville being held accountable. In 2018, a report titled “Grand Theft Paycheck,” showed that Walmart was in fact the number one company in the country for the fines and settlements it had paid out for wage theft (wage and hour violations). Walmart wasn’t only looking for managers who were the best of its hourly employees; it was also apparently looking for managers who would do anything to lower their sales costs, regardless of the law or the impact on the employees under them.

This certainly would explain why Walmart didn’t post its managerial openings for Dukes to see and why Walmart never considered Betty Dukes to be management material. When Dukes was told, “People like you don’t become managers,” this was an entirely accurate statement. Betty Dukes would never have been chosen as a manager, even if Walmart did not intentionally discriminate against women, because she had the wrong qualities.

Her most admirable qualities—her devotion to her customers, concern for others, and identification with her community—were traits that would have suggested to the higher-ups that she cared about something more than her paycheck or the bottom line of cutting costs; that she might not be willing to do whatever it took to produce the results Walmart valued. These we believe were among the unwritten rules, the invisible qualifications that Dukes never knew about or understood: that she just might not be ruthless enough to compete in a high-stakes bonus system.

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Excerpted from Fair Shake: Women and the Fight to Build a Just Economy by Naomi Cahn, June Carbone, and Nancy Levit. Copyright 2024 © by Naomi Cahn, June Carbone, and Nancy Levit. Reprinted by permission of Simon & Schuster, an imprint of Simon & Schuster, LLC