Wal-Mart's Mean Streak

This article is part of our Rising Stars Portfolios series.

Earlier this month, Costco (Nasdaq: COST) became the latest purchase for my Rising Stars real-money portfolio. I outlined many reasons why I consider Costco to be a perfect company for a portfolio focused on socially responsible investing (SRI).

Intriguingly, one could arguethat  Wal-Mart (NYSE: WMT) has plenty of socially responsible angles of its own. The Bentonville Behemoth's been trying green initiatives for years now, moving from a push to energy-saving light bulbs toward a sustainability scorecard for its suppliers, among other efforts.

You can even make the case that Wal-Mart's focus on low prices for consumers is socially responsible. Times are tough for lots of folks, and cheap merchandise means more pocket money for extras that people so desperately need. Plus, Wal-Mart's super-sized expansion does provide much-needed jobs.

Still, Wal-Mart simply isn't "good" enough for this portfolio. There may be more to like about the company these days, but it's still hard to love Wal-Mart. Disturbingly, the company's known for paying its employees such low wages that they may only be able to afford to shop at their own own price-cutting employer, or at similar deep-discount dollar stores.

This pay issue is also causing growth problems for Wal-Mart. It needs to compete with rivals like Target (NYSE: TGT) and Costco by entering more urban markets. Unfortunately for the company, unions often try to block Wal-Mart's entry into important cities; the company's currently embroiled in negotiations with union leaders in Chicago.

The average hourly wage for a Wal-Mart worker is about $11.75 an hour -- less than the retail industry's average wage of $11.84. Costco's average worker, on the other hand, makes well over the industry average, at $19.76 per hour. Wal-Mart planned to pay its hourly Chicago workers $8.75 to start; Costco starts its employees between $11.00 and $11.50 per hour.

Granted, many companies get a bad rap for their resistance to unionization; even Whole Foods (Nasdaq: WFMI) and Starbucks (Nasdaq: SBUX) occasionally catch flak. However, both companies are known for voluntary pro-employee policies, having long provided health insurance coverage and other benefits to full-time workers.

Many of Wal-Mart's new policies are positive, and the company's big enough to institute some real change in areas like environmental sustainability. However, it still hasn't changed the way it treats the lifeblood of its business: the employees who deal with its customers every single day.

Better pay policies for employees could really help a lot of people to "live better," and it might clear the way for folks to feel even better about investing in the company. Until then, Wal-Mart feels pretty tarnished in the socially responsible sense.

What do you think? Sound off in the comments box below.