To paraphrase Yogi Berra, if Sam Walton were alive today, he’d be spinning in his grave. He tried to instill a small-town retailing ethic in his company. Snake eyes on that roll, Sam.
It has been termed a “Retailer of Shame” by NOW due to its ugly sexist policies, and it’s loathed by organizations like United Food and Commercial Workers, whose Bill McDonough refers to Wal-Mart as “this devouring beast of a corporation.”
Wal-Mart is now the largest corporation on Earth, having passed GM and ExxonMobil for the top slot. It took in nearly $250 billion in revenue in 2003—more than the entire GDP of Ireland and Israel combined (in one day late in 2002, it had $1.4 billion in revenue—more than the GDP of 36 nations). It has some 4,400 stores worldwide, including 3,600 in the U.S.
It has surpassed GM as the world’s largest employer—about one out of every 120 workers in our country (more employees than the U.S. Army has soldiers).
It also has become the biggest seller of groceries, surpassing Kroger after having launched its supermarket operation only ten years ago. It’s the biggest seller of jewelry, photo processing, dog food, vitamins—and now it’s moving into banking, gasoline, used cars, travel, flower delivery, Internet access:
I can hear you asking: So what? Sounds like an awful lot of jobs, and the store’s slogan is, after all, “Always Low Prices.” How do they achieve this? Do they take in less profits? Of course not. They rake in nearly $7 billion a year in profit, more than any other retailer on the planet (and twice as much as the next fifteen retailers combined). Do they keep a tight rein on the pay packages of top executives? Get serious. The CEO alone hauled in $11.5 million in personal pay last year.
Do the top owners (Sam Walton’s widow and children) hold down their take in keeping with his small-town ethic? Nope. Of the ten richest people in the world, five are Waltons, with a total of $100 billion in personal wealth. More than Bill Gates.
So:who pays for these “Always Low Prices”? Meet the Associates.
The average Wal-Mart employee makes $15,000 a year for full-time work. Most are denied even this poverty-level income because they’re part-time workers. The company likes to brag that 70 percent of its workers are full-time, but to produce this statistic, it defines “full-time” as 28 hours a week:meaning that those employees gross under $11,000 a year. You receive health-care benefits only if you’ve worked there for two years, and even then the premiums and deductibles keep most employees from joining. Only 38 percent are covered.
They are anti-union. Bill Moyer did a great documentary on the store, wherein a former Wal-Mart manager noted that a confidential document titled “Manager’s Tool Box To Remaining Union Free” is given to every store manager. It includes a toll-free hotline to corporate headquarters, where “labor relations” teams are standing by, ready to board a jet and rush to the store at the first sign of a union. According to the manager Moyer interviewed, this is what the “labor relations” teams do when they arrive: “They interview all the managers, they interview the associates. They start talking antiunion, ‘We don’t need a union.’ They start showing videos. They start going through personnel files looking for dirt on any associate that is a union supporter, so they can get ‘em out legitimately.”
This includes, in the case of the Jacksonville Wal-Mart meat cutters who formed the first-ever Wal-Mart union, closing meat-cutting departments in all stores and announcing all meat would henceforth be purchased from companies using nothing but non-union labor. Turnover in Wal-Mart stores as a whole is over 50 percent a year:some stores register as high as 300 percent annual turnover. The store doesn’t care, because that just means fewer workers reach the two-year marker for health insurance.
Speaking of turnover:and getting union supporters out ‘legitimately’:the guy who spearheaded that Jacksonville union was fired for eating half a banana before paying for it. I kid you not.
Wal-Mart is the most sued corporation in the country, facing more than 5,000 actions per year (that’s almost 14 per day). The company is an unrepentant, recidivist criminal, routinely violating practically all employee rights and all of America’s labor laws. For example: The EEOC has had to file more suits against Wal-Mart for cases of disability discrimination than against any other corporation. A top EEOC lawyer told Business Week, “I have never seen this kind of blatant disregard for the law.” In Arizona, the company was caught in such shameful discrimination against the disabled that a judge not only assessed a $750,000 fine, but also required Wal-Mart to run commercials admitting it was guilty of disability bias. The National Labor Relations Board has issued more than 40 formal complaints in 25 states in the past five years against Wal-Mart for using illegal tactics to deny its workers the right to have a union. The largest class-action suit in the country is under way on behalf of nearly 1 million women who’ve worked at Wal-Mart, charging massive sex discrimination in pay levels and promotions. The few women who have become store managers are paid an average of $16,400 less annually than the men. Cases abound of women who have had to train the men promoted above them. In 25 states, there are cases pending against the store regarding a loathsome policy called “off the clock,” wherein employees are forced to work—you guessed it—off the clock. It has already paid over $50 million to settle two of these cases.
The store has a lot of power with vendors. Wal-Mart sells from a tenth to a fourth of all products made by companies like Kraft, Kimberly-Clark, Heinz, Fruit Of The Loom, Clorox, Revlon, RJR, Gillette, Rubbermaid, Procter & Gamble, Hasbro, Dial, and Rayovac. Wal-Mart requires some suppliers to open their books so Wal-Mart executives can red-pencil what CEO Lee Scott terms “unnecessary expenses”:including, as you may have guessed, decently paid labor.
At least, you might be saying, they buy American. Their commercials say so. Right? No. Wal-Mart is the largest importer of Chinese-made products in the world. They purchase $10 billion worth of merchandise from Chinese factories each year, and in 2001, Wal-Mart even moved its worldwide purchasing headquarters to China.
Using its sheer size, market clout, and massive advertising budget, the company is squeezing out competitors and forcing its remaining rivals to adopt its price-is-everything approach. Even the big boys are daunted by the company’s brutish power, and are compelled to slash wages and benefits and search the globe for sweatshop suppliers in order to compete in the downward race to match Wal-Mart’s prices. “You have to mimic their operations,” one competitor’s CEO says, “and you get reduced to the lowest common denominator.”
Or even lower. Wal-Mart likes to practice what is known as “predatory pricing,” or setting prices below cost. With 4,400 stores, the company can afford to come to a town and jack prices so low that local competition is forced out. After local competitors are bled to death, the local Wal-Mart’s prices rise, and dollars spent there are used to subsidize another mugging down the road.
A case in point is Wal-Mart’s new gasoline operation, selling gas below cost in the parking lots of 700 stores and set to expand:assuming Wal-Mart’s lobbyists can get the laws changed, because predatory pricing is illegal in several states. Caught selling below cost in Florida, Wal-Mart launched a lobbying and petition drive to make it legal. Likewise in Oklahoma, the store was caught, and has run to federal court, claiming a constitutional right to kill competition.
When Wal-Mart decides to come to your town, that’s when things get really nasty. For whatever reason, Arizona communities have been a big testing ground for what it takes to remain Wal-Mart free—between 1998 and 2001, ten Arizona cities formed local coalitions to stop Wal-Mart from coming to town. It wasn’t easy. In Glendale, for instance, the city announced plans to build a “neighborhood shopping plaza” including a “visual oasis” of shops and restaurants. Once the deal was sealed, the developer finally got around to mentioning that part of this “oasis” would be a 220,000 square foot Wal-Mart SuperCenter. Some concerned citizens formed the Glendale Citizens for Responsible Development and got the word out. They exerted enough pressure that the city council withdrew its zoning approval for the project, citing the obvious fact that it had been lied to. And in swooped the corporate jets.
In a remarkable bit of irony, Wal-Mart started demanding something it had already denied to Glendale—democracy. It called for a citywide referendum on the project, hired a lobbyist to direct its campaign, and spent hundreds of thousands of dollars on ads, a five-minute video that was mailed to 20,000 Glendale homes. Glendale Citizens for Responsible Development had an $8,600 budget, but they allied themselves with the (surprise!) unions and went door-to-door. Even the Arizona Republic—a newspaper owned by Dan Quayle’s family—stood against Wal-Mart, noting that towns “pay a price in civic capital:a workforce of part-time employees hardly builds the wealth necessary to allow families to get ahead.”
Wal-Mart didn’t lose hope. It had the ballot question worded so that voters wanting to say “no” to the project had to vote “yes.” It ran ads and distributed flyers warning that “Big Labor” was trying to tell Glendale what to do. And then, as election day approached, Wal-Mart requested a postponement on the election it had set. The court said no dice, and the town voted 60-40 against the store. (For more information on this topic, regarding Wal-Mart and other major chains, visit www.sprawl-busters.com.)
The bottom line: by crushing local businesses, Wal-Mart eliminates three decent jobs for every two poorly paid, part-time, high-turnover jobettes it creates. It’s an extractor of community wealth, not a creator. It doesn’t buy locally. It doesn’t bank locally. It doesn’t advertise locally. It’s your money, and you should be careful about how you spend it.