http://www.contracostatimes.com/mld/miamiherald/business/special_packages/busin...
http://walmartwatch.com/home/pages/issues
I recently watched Greenwald’s critical documentary about Wal-Mart, and it was fairly well made. Of course we know the company’s reputation, rarely shop there because most of our communities realized the negative effects, and city officials felt that the backlash wasn’t worth the financial perks. I only occasionally shopped there during my college years, plagued by a pretty tight budget, but for sure I’m done with the big box stores (I’ll make an exception with Target for obvious reasons). Like the sweatshop scandals by Gap, Nike, and Kathy Lee in the ‘90s, we know that Wal-Mart is not the sole perpetrator of unethical commercial activities. Other retailers play the game just as ruthlessly (and in some cases, illegally), but Wal-Mart’s utter domination of the market and slew of fines/lawsuits in the press are potential indications that they may be the most egregious violators of the lot. Actually, I had a hard time finding articles about other big box companies’ legal issues, such as Kmart, Target, Ikea, and Home Depot.
http://news.bbc.co.uk/1/hi/business/3600976.stm (Home Depot $5.5M sex discrimination settlement, but Wal-Mart may be in for a much worse penalty, see below)
http://news.bbc.co.uk/1/hi/business/4179132.stm (Kmart executives misconduct during the company’s bankruptcy filings)
http://news.bbc.co.uk/1/hi/england/london/4179930.stm (Ikea has fought some battles for the rights to expand into new locations, but seems very employee-friendly, even accommodating Muslim workers with Ikea-labeled headscarves!)
Wal-Mart is the largest company in the world in terms of employment and sales revenue (ExxonMobil is slightly larger if you use market capital as the metric), so it’s an obvious target of criticism. Some proponents think that Wal-Mart criticism is mostly jealousy backlash. They mastered the system and won the game better than other retailers. This is fairly clear, and Wal-Mart stock gains paid a lot of my college tuition. But what did such “success” cost the world, just so certain Wal-Mart heirs, managers, and shareholders could gain so much? And yes, millions of consumers saved money on daily goods along the way – but did they pay in other ways?
I think the film emphasized isolated events and anecdotes too often, instead of offering systemic analyses of detrimental Wal-Mart business practices (but it’s a pop-documentary, not an article in The Economist). But like his previous film “Outfoxed”, the director used former employees very effectively to set the table and paint Wal-Mart as a very callous, duplicitous, negligent, and insanely greedy organization. He focuses on many “Red State” communities, and interviews mostly Middle America, apple pie Republicans/conservatives harshly impacted by Wal-Mart. This gives the criticisms more grassroots credibility and less of an anti-corporation, conspiracy theory feel, as was the case with Fox. I have the movie on DVD if you’d like to borrow, and it’s only 97 min.
Of course everyone loves a deal, and Wal-Mart capitalizes on the avarice and financial pressure that most Americans and foreigners are under for much of their lives. Very few people condone poor labor practices and corporate irresponsibility, but if it doesn’t affect them directly, they can turn a blind eye and sleep soundly at night, basking in the glory of how much cash they saved from their last spree. But people save 100% of their hard-earned cash if they control themselves and refrain from buying shit they don’t need. Unfortunately, these Wal-Mart savings don’t materialize out of thin air, and taxpayers, the environment, competing businesses, and employees/laborers have suffered dearly (and in some cases, unjustly) to provide them.
Overhead and the bottom line are crushing sometimes, yet Wal-Mart does more sales than any other company, retail or otherwise. The tacit strategy is ingenious (if we live in a moral vacuum): import dirt-cheap goods from the Third World (abused, destitute foreign labor in unsafe facilities), manipulate political leaders to offer commercial and construction incentives, build an eyesore big box just outside the city limits for zoning and tax perks, out-compete local businesses with merciless ferocity, pay desperate employees shit and offer few tangible benefits, intimidate “troublemakers” and crush any trace of labor unions, yet maintain the good old Americana image that Sam Walton engendered (but I’m sure he’s rolling in his grave now and loathes his greedy, squabbling progeny). Then build an identical Wal-Mart nearby, watch the store staffs compete with each other to the death, close down the less-profitable location, kick the superfluous employees to the curb, leave a gutted empty shell for other business that are too small to fill it, and move on to the next community – like a bunch of LOCUSTS.
Of course no one “forces” anyone to work, shop, or buy stock from Wal-Mart, and it’s “their own fault” if other businesses can’t stay out of the red. I guess it’s the same as poor people in the South were at fault after Katrina. We supposedly elected the government officials who condone or encourage illegal or unethical Wal-Mart practices. No one is calling for mom-and-pop business subsidies, like how the West helps its farmers to out-compete the agriculture of developing nations. Boycotts, protests, and strikes can work, but they’re hard to organize and execute, especially when multi-million-dollar legal hit men are set upon the wee consumers. And many customers are infants sucking on Wal-Mart’s teat, almost financially reliant (or addicted) on the cheap products provided. That’s why we can’t let market forces rule our daily lives, because the system is too vicious and manipulative so even conscientious, law-abiding individuals may not stand a chance to resist. Wal-Mart is an obvious example of the system taken to the extreme. Now for a few specifics to corroborate issues addressed in the film.
COMPANY IMAGE
http://news.bbc.co.uk/1/hi/business/4490434.stm
http://www.usatoday.com/money/industries/retail/2005-08-25-wal-mart_x.htm
In the past few years, Wal-Mart’s media blitz focused on “American values” and supposedly illustrated how the corporate giant helps people, communities, and the country as a whole. Wal-Mart promotes a great family life, provides many avenues for promotion (you have better chances if you’re a white male), and gives back to locals. Basically, they’re god’s gift to the world and the savior of the American family. But since their widespread negative press has basically tanked the “good guy” image beyond repair (Zogby poll shows 59% think they’re bad for the USA), now they’re going for star power endorsements (Beyoncé, etc.) to attract people back.
Ferocious companies do what is most financially profitable. If lawsuit settlements over the long term are less costly than improving environmental impact, employee benefits, and fair labor practices for thousands of stores, then so be it. If positive advertising and the guise of an “ethically conscious” corporation will benefit sales according to research projections, then the company will adopt that strategy. But if a company is hated but still very profitable, they have no incentive to deviate from the status quo, like Halliburton, Enron, or McDonald’s in some nations. But if poor image or bad behavior become too costly, of course the shareholders will be the first ones to make a fuss and demand reforms, any maybe not because they’re such concerned citizens: http://news.bbc.co.uk/1/hi/business/4605733.stm. Wal-Mart is a good Christian company with good Christian values and employees. But where would Jesus shop (if he shops at all)? http://www.fortwayne.com/mld/journalgazette/business/13388477.htm
As a side note, it’s ironic that Wal-Mart’s hometown of Bentonville, Arkansas is a living museum dedicated to the post-WWII Americana that we’ve all read about and seen on TV sitcoms. Ironically, their current business practices are endangering (and in many cases eradicating) such a historical treasure from US society. http://news.bbc.co.uk/1/hi/world/americas/2787951.stm
WAGES
http://news.bbc.co.uk/1/hi/business/4377344.stm
CEO Lee Scott has a lot of nice things to say about his company (http://news.bbc.co.uk/1/hi/business/3620956.stm), does accurately state that Wal-Mart pays its employees well above the minimum wage, and is actually lobbying Congress to raise the national minimum (even though the anti-labor Senate rejected a hike to $6.25, which isn’t even close to a living wage in many Metropolitan areas). I suppose he wants to do the right thing for the wrong reasons. Of course he won’t offer raises to his grunts (that would compromise their $10B/year profits), but wants lower-income Americans to have more spending money to bring to Wal-Mart. The average pay of $9/hour is well above the pathetic $5.15 minimum, but actually they force “full time” workers into 30-hour or less workweeks, which won’t pay the bills even at $9/hour. In addition, employees are encouraged to spend their fresh paychecks on Wal-Mart goods (at meager employee discounts), thereby reinvesting the money in the company (or making sure it never leaves). A hike in minimum wage is probably meant to attack Wal-Mart’s competition, who may provide proper full-time hours for their staff but can’t afford any pay raises (and don’t have the political clout that Wal-Mart has for tax breaks).
But if they pay workers so fairly, why can’t employees make ends meet by shopping at the company where low prices are guaranteed, “always”? http://www.alternet.org/story/16111/. I’ll discuss the specifics in the last section about community friction, but Wal-Mart also encourages workers to seek government aid on the side: welfare, Medicaid, etc. Ridiculous, isn’t it – why do employees need welfare if Wal-Mart pays fair wages? Why do employees of a “worker-friendly” company need to seek outside assistance? This was another important factor in the unemployment statistics battles during the 2004 presidential campaign. It is true that the USA has very low unemployment compared to other nations, but those figures of 4-5% don’t take into account chronically unemployed people, incarcerated individuals, as well as the droves of underemployed citizens (such as Wal-Mart associates who can’t pay the bills with one job). Now we see why our parents pushed us so hard to get a good education and avoid these headaches. Wal-Mart’s employee health plan is apparently really shitty, and often they must work overtime with no bonus pay. So the drain on social services by Wal-Mart employees is actually costing the government and taxpayers a lot (estimated in the billions nationwide). This makes the $5 DVDs and T-shirts a lot less desirable.
God save us, Wal-Mart wants to get into banking too:
http://news.yahoo.com/s/nm/20051216/pl_nm/congress_walmart_dc_2
GLOBALIZATION
http://news.bbc.co.uk/1/hi/business/4530522.stm
Wal-Mart has expanded to dozens of countries and even tapped the vast Chinese market. But as A was telling me, they’re less successful over there because much cheaper goods are also available in the form of Chinese street markets and contraband (can you imagine Wal-Mart as a moderately-classy retailer?). They also buy up struggling retail/food chains in foreign nations like Japan, Brazil, and the UK. I think they are trying to buy out Safeway too. Many people are complaining about the Wal-Mart “monopoly”, and sadly we are entering some troubling territory.
http://news.bbc.co.uk/1/hi/business/4243676.stm
And of course Wal-Mart capitalizes on cheap foreign manufacturing labor. As was the case with Nike and Gap in the ‘90s, Wal-Mart was investigated and sued (pending) for unethical practices in their overseas factories. Wal-Mart auditors know what’s going on, but they pretend all is well when they make their inspection visits. The local factory managers threaten the workers and order them to lie and tell the Yankees what they want to hear, or they lose their jobs. See no evil; hear no evil, so the auditors report back to Bentonville that all is well from Asia and Latin America.
Maybe you remember the case of Mexico’s protest to a proposed Wal-Mart expansion near the ruins of the Teotihuacan Aztec archaeological site. They won and the people lost. http://news.bbc.co.uk/1/hi/business/3747580.stm. But there is still hope; many US communities have successfully persuaded their local government to block Wal-Mart intrusion into their hometowns (Inglewood was a recent major victory, and my county also narrowly voted down big box intrusion).
UNION ISSUES
http://news.bbc.co.uk/1/hi/business/4175914.stm
http://news.bbc.co.uk/1/hi/world/americas/2496357.stm
Since the USA is one of the least labor-friendly of the developed nations, Wal-Mart permits its workers in overseas stores to unionize, but fiercely discourages Americans from doing so. Supposedly they permit unions but don’t recognize them (I’m not sure what this means), and claim that their workers have not chosen to unionize. Others would allege that Wal-Mart management “browbeats” them into that decision. Their environment of “open communication” with management and fair employee relations preclude the need for collective bargaining, according to them. Quebec has some of the strongest labor laws in Canada, and a Wal-Mart store there became the first in North America with union labor, though the company has fought it fiercely in court of course (http://news.bbc.co.uk/1/hi/business/3532580.stm). The courts upheld the people’s right to unionize, but moot point I guess, because Wal-Mart decided to close the store instead of succumbing to employee empowerment (http://money.cnn.com/2005/02/09/news/international/walmart_canada/). Wal-Mart treats unions like the plague, and it is one of their highest priorities to stamp out any potential “contaminations” before it affects their giant million-plus-employee, mass consumption empire.
If Wal-Mart is so employee friendly and fair to everyone, why are they so afraid of unions? Unlike the official statement suggested, it was clear that a majority of workers wanted union representation at this store, as I believe is the case with most, if not all, American branches. The documentary expanded on this issue greatly, and they claim that anti-union policies are actually systemic and advocated from Headquarters. At the slightest omission of “union”, employees in question are monitored and intimidated. A “union-busting task force” is flown via private jet from Bentonville to manage the problem (they probably handle such “emergencies” a lot better than FEMA). Surveillance equipment is set up, and other workers are forced to alienate the “troublemakers” or risk losing their jobs as well. As we all know from the American political process, lethargy and apathy usually trump activism and the desire to risk one’s neck to do the right thing. And the larger the population, the harder it is to mobilize and inspire them. It is very challenging to overcome the inertia and assemble dozens, if not hundreds, of workers to seek legal counsel and unionize. So all Wal-Mart needs to do is make a few surgical attacks to sap the momentum of the movement, and terrorize meek workers on the fence into submission. They are then cajoled into signing some bogus statement supposedly documenting their lack of desire for labor unions. Managers are actually formally instructed on union busting from above, as the United Food and Commercial Workers (UFCW) website below claims.
http://www.ufcw.org/issues_and_actions/walmart_workers_campaign_info/relevant_l...
Now I know unions aren’t squeaky clean, free of corruption, and may not always have the best interests of the workers in mind, but someone has to keep corporate greed and exploitation in check. Ever since the destruction of the mob-infested teamsters and the gradual disappearance of the American manufacturing sector, labor rights have gotten the shaft. With conservative leadership in the 20th century (especially Reagan), the trend has shifted from the FDR model towards a more pro-corporate, laissez-faire, de-regulated climate. Unions are losing political clout and overall membership, and were blatantly threatened as recently as the GOP-sponsored California Special Election (fortunately all of the Governator’s measures fell short, by a scary, razor-thin margin in some cases). Like “liberal”, the term and connotations of “union” have become taboo in Mainstream America, mostly due to conservative politics. American wealth (especially for the richest 10%, and even more so for CEOs) has boomed since 1980, yet real wages have remained stagnant or declined. Benefits have also declined sharply (heath care especially, both in overall employee coverage and cost/quality of care, http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=32584), and none of us in my generation are counting on Social Security. It’s not a great time to work in America unless you’re a manager or skilled professional. Surely foreign workers are clawing and scratching to get a shitty service sector job here, as compared to the impoverished regions they came from. But American businesses used to treat their workers better (MUCH BETTER), and no executive can claim that “hard times” are prevented them from properly providing for their flock, while they give themselves huge bonuses. I don’t want to get into a huge economics discussion here (lack of interest and qualifications), but it’s clear that the upper crust has profited much more than the working class during said time period, and often at their expense.
http://www.nerinet.org/sc/unions.php
http://www.faireconomy.org/research/CEO_Pay_charts.html
Unions may be one of the few weapons remaining for less-educated and voiceless workers to defend themselves, their livelihoods, and their rights as human beings (a.k.a. “means of production” according to Marx). I know we hate ambulance-chasing lawyers and frivolous lawsuits, but as repugnant as they may be sometimes, they also serve to keep corporate negligence in check. Without the threat of lawsuits, I don’t think we can trust corporate ethics to double-check every product and service for safety, reliability, and accurate advertising if it endangers profits. Similarly, without the threat of strikes and collective bargaining, I don’t think we can trust companies to treat workers decently (eye of the beholder of course) and on par with American values. Health care and retirement are becoming even larger drains on company coffers. But some of us believe that such benefits are compulsory, out of loyalty to workers and respect for their years of diligent labor, and I think Sam Walton did too. The welfare states in Europe definitely agree, and even though their economic growth is not as robust as ours or China’s, I think it’s clear which nation treats workers more humanely, and which nations have smaller wealth gaps. So when push comes to shove and the shareholders are disgruntled with sagging profits, we know who will suffer. Unions are a tried-and-true way to fight back, so no wonder why Wal-Mart and other corporations are so paranoid and hostile towards any mention of them. Sometimes unions take things too far (farmers, truckers, and others striking in Europe incessantly), but their members have families and other priorities that need and deserve protection.
http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=33441
http://www.usatoday.com/travel/news/2005-08-31-nwa-mechanics_x.htm?csp=34
http://news.minnesota.publicradio.org/features/2005/03/09_postt_crosbystrike/
http://www.cbc.ca/story/canada/national/2005/07/09/garbage-toronto050709.html
Aircraft mechanics, train workers, teachers, and garbage collectors in major cities (plus many others probably) have all threatened or gone on strike in 2005 (and the NYC transit workers staged a huge, controversial one recently, costing the local economy millions during this busy and frigid holiday season: http://www.philly.com/mld/inquirer/news/nation/13445485.htm). Times are tight and we can’t please everyone (yet profits soar for many companies, and military spending is rampant). But the knowledge and services unionized workers provide are often vital for the functioning of our economy and society in general. Sometimes they ask for too much, and sometimes they are just fighting to keep what they were promised. Of course the government intervenes on many occasions, often siding with the companies, and the lobby wars between union and corporate lawyers are ugly. Sometimes the needs of the workers take a backseat to the bottom line, and sometimes they get what they ask for. The ruling over United Airlines’ pensions was a scary precedent that many other companies will probably follow (http://www.forbes.com/markets/feeds/afx/2005/05/10/afx2016620.html, http://news.bbc.co.uk/1/hi/business/3895597.stm). But without unions, corporate responsibility, and a fair judicial process, we all risk treatment like Wal-Mart employees. The free market needs at least the specter of litigation, labor rights, and fair representation, or our predatory system will deteriorate into neo-feudalism among the haves and have-nots (“wage slavery” as coined by Chomsky). Maybe we’ve already arrived there, and imagine how hard it is for people with less education than we?
DISCRIMINATION
http://news.bbc.co.uk/1/hi/business/3830003.stm
http://news.bbc.co.uk/1/hi/business/4355910.stm
http://www.now.org/issues/wfw/wm-facts.html
http://www.usatoday.com/money/industries/retail/2004-06-24-walmart-usat_x.htm
You’ve probably heard, but Wal-Mart is facing the largest class-action lawsuit in history over gender discrimination (1.6 million female employees since 1998, case began in 2001). The plaintiffs claim that the company deliberately paid women less and promoted them less frequently, as compared to male employees of equal status and performance. The case began in a San Francisco court and is currently under appeal in the 9th District. The crux of the case is proving that management was aware of, and ignored (or condoned) the gender discrimination. Lawyers for the women’s group claim that they have documents demonstrating that the issue was raised with the Wal-Mart board members. In addition, many female employees and customers complained to executives and shareholders groups, but the company failed to take action. Other accounts of racial discrimination were also insinuated, as well as the famously leaked memo about encouraging unhealthy individuals from applying for jobs at Wal-Mart.
http://www.suite101.com/print_message.cfm/investing/82399/1138089
Another suggestive and ill-timed gaffe:
http://news.yahoo.com/news?tmpl=story&cid=509&ncid=509&e=40&u=/...
OTHER VIOLATIONS
http://news.bbc.co.uk/1/hi/business/4362489.stm
In 2003, a government investigation of 60 random stores revealed that illegal immigrants were hired as cleaners on the night shift. The company had to pay $11M in fines, but did not
http://news.bbc.co.uk/1/hi/business/4151061.stm
Wal-Mart had to pay $14.5M in a settlement over violations in gun sales in California in 2000-3. Basically, they sold guns to people or their proxies who were not eligible to own firearms by our state’s laws. Anything to make a buck, I guess. I wonder if any of those weapons were used in crimes. Currently the company is barred from gun sales in the state. And following the gun theme, New York’s attorney general is investigating Wal-Mart’s toy guns for lacking standardized safety markings that help kids from getting accidentally shot by trigger-happy NYPD officers (http://news.bbc.co.uk/1/hi/business/2938877.stm).
http://news.yahoo.com/s/ap/20051222/ap_on_bi_ge/wal_mart_lunch_breaks
And more recently, Wal-Mart was ordered to pay $172M by a California court for denying lunch breaks for thousands of employees. A similar suit in Colorado was settled for $50M. Of course the company is appealing. Other big box companies don’t even come close to the magnitude and frequency of such lawsuits and violations.
COMMUNITY/ECONOMIC FRICTION
http://news.bbc.co.uk/1/hi/business/3607509.stm
Inglewood residents effectively blocked a proposed Wal-Mart expansion that was approved by city officials. This should be a model of civil protest and activism.
http://www.bizjournals.com/baltimore/stories/2005/12/12/daily13.html?from_rss=1
Maryland’s governor (supported by the state’s Chamber of Commerce) vetoed a bill that would punish for-profit employers of over 10,000 workers that fail to spend 8% of their total payroll value for employee health care. Wal-Mart Watch is pushing to get that bill into law again. God forbid we try to keep our employees healthy, and probably many of their ailments are the result of job stress and exhaustion at Wal-Mart.
http://www.kansascity.com/mld/kansascity/business/13418146.htm
Krugman’s comments on Wal-Mart, arguing that the company is losing the PR war by trying to justify its wages and benefits practices as fair and proper, when they’re obviously not.
http://www.washingtonpost.com/wp-dyn/content/article/2005/05/13/AR2005051301423...
Wal-Mart shoots itself in the foot again, with an attack ad against Flagstaff advocates who are trying to change zoning laws to block a new store (they’ve also spent $100,000 to defeat the proposition). Their full-page spread insinuates, "Should we let government tell us what we can read? Of course not . . . So why should we allow local government to limit where we shop?" Of all the inappropriate censorship/government interference comparisons they could have raised, they chose to equate the Flagstaff initiative to NAZI BOOK BURNING in the 1930’s. A lackey of the consulting firm that designed the ad for Wal-Mart eventually apologized for their actions, offering cheap platitudes like, “People make mistakes; they move on.”
CONCLUSIONS
I’m pretty tired of writing, feeling upset, and researching at this point, but I think you get the drift by now. People around the world need and deserve cheap goods, and some people need and deserve sustainable service sector jobs. Some companies have the ability to provide such products and employment for large consumer markets and remain profitable. But can they accomplish this feat without mistreating workers, declaring war on unions/local economies, and committing a slew of ethical lapses and violations? Can we really have it both ways, cheap goods and reasonable employment that are provided in an ethical manner? Even if Wal-Mart halves its yearly profits to $5B (still a whopping gain), imagine what the other $5B could do to improve the lives of their huge workforce. Philanthropy and positive publicity will also generate consumer confidence, and potentially their sales can increase. Many people shop and/or work at Wal-Mart because they have no other reasonable choice, but other consumers are mad as hell and Wal-Mart is beginning to suffer from the backlash. Who knows how much their improprieties and negative PR have hurt them? They are still a giant (and will be for the foreseeable future), but if sales dip too greatly and lawsuits pile up to the heavens, maybe the greedy bastards in Arkansas have some changes and soul-searching to consider, if they still have souls.
As a last factoid, the documentary stated that Bill Gates has given 58% of his wealth to charities. We all know that Microsoft is not the friendliest business in the world in terms of relations with customers and competition, but Gates is doing what he can for the less fortunate, especially in Africa. The Walton heirs have a combined $100B in wealth split five ways, and have only given 1% of it to charities. It’s clear that the company leads by example.
http://en.wikipedia.org/wiki/Wal-mart
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