Endgame Profile of Wal-Mart
compiled by George Draffan ofEndgame Research
FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of political and economic issues. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C.Section 107, the material on this site is made available without profit to those who have an interest in receiving the information for research and educational purposes.
Board of Directors(as of June 2004)
James W. Breyer
Accel Partners, RealNetworks
M. Michele Burns
Delta Air Lines, Arthur Andersen, Orbitz, Worldspan LP
Thomas M. Coughlin
Stanley C. Gault
Goodyear Tire & Rubber, Rubbermaid, Avon Products, Timken Company
David D. Glass
Roland A. Hernandez
Telemundo Group, MGM Mirage, Ryland Group, Vail Resorts
Dawn G. Lepore
Charles Schwab, eBay
John D. Opie
General Electric, Delphi, Stanley Works, Board of Trustees of Michigan Tech University
J. Paul Reason
U.S. Navy, Metro Machine Corp, Syntek Technologies, Amgen, Norfolk Southern
H. Lee Scott, Jr
Jack C. Shewmaker
Jose H. Villarreal
Akin, Gump, Strauss, Hauer & Feld
John T. Walton
S. Robson Walton
Wal-Mart director resigns after internal investigation. USAToday, March 27, 2005. "A high-profile Wal-Mart (WMT) board member resigned Friday after an internal probe turned up evidence of financial improprieties of up to $500,000 dollars. Three Wal-Mart employees, including a company officer, also lost their jobs..."
Religious leaders join in successful community fight against Wal-Mart. Catholic Onlne, May 5, 2004.
Sequim [Wash]: Judge again refuses citizens group on Wal-Mart. By Jan Rodak. Peninsula Daily News, May 7, 2004.
Citizens group Sequim First was dealt another blow by Thurston County Superior Court Judge Thomas McPhee in its attempt to stall construction of a Wal-Mart ``supercenter'' in Sequim. McPhee on Wednesday in Olympia refused to reconsider his March 19 ruling which denied an appeal filed by Sequim First challenging the City Council's initial permitting for a 195,000-square-foot Wal-Mart at West Washington Street and Priest Road. The appeal sought an independent environmental-impact statement prior to any permitting for the project. Sequim First has until June 4 to decide whether it will appeal McPhee's decision before the state Court of Appeals...
Chicago City Council puts hold on Wal-Mart. By Alex Daniels. Arkansas Democrat-Gazette, May 23, 2004.
Wal-Mart is getting its first dose of life in the city. The Bentonville-based retail giant's plans to open two discount stores in Chicago have been put on hold by the City Council. Original plans for a May 5 vote on the two new stores, which are planned for lower-income neighborhoods, were postponed until Wednesday. Four city aldermen requested the delay. Religious leaders, including the Rev. Jesse Jackson Sr., founder of the Rainbow/PUSH coalition, argued that the jobs created by the new stores would not provide adequate health care and wages. They have called on Wal-Mart to offer concessions on wages and health-care benefits. Some local leaders want the retailer to guarantee it would hire ex-convicts...
Group sees Wal-Mart threat to Vermont. CNNMoney, May 24, 2004.
Historic trust group says new stores would smash state's rural life. "In its annual list of most endangered historic places, the National Trust for Historic Preservation included the state of Vermont because of an "onslaught of big-box" stores by Wal-Mart , the Arkansas-based retailer. Trust President Richard Moe said Wal-Mart planned to "saturate" Vermont -- known for its quaint villages, winding back roads and strong sense of community -- with seven new "Super Stores." These stores, said Moe, would spur more development, sprawl and lead to disinvestment in historic downtown areas and a loss of locally owned business..." Report by National Trust for Historic Preservation.
Medford council nixes proposed Wal-Mart Supercenter, cites traffic concerns. Portland Daily Journal of Commerce, May 24, 2004. "The Medford City Council reversed an advisory commission's recommendation last week and nixed a proposal to build a Wal-Mart Supercenter..."
Mexican sues to stop Wal-Mart at ruin: Activist sues to stop store construction near pyramids after alter unearthed in parking lot. Reuters/CNNMoney.com, Oct 19, 2004.
Steven Greenhouse, Illegally In U.S., And Never a Day Off At Wal-Mart, New York Times, Nov 5, 2003.
The Wal-Mart Effect. Los Angeles Times, November 2003 -- Part III: Unions Battle to Stop Invasion (11/25/03)
Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion. By Emek Basker, University of Missouri, 2004.
Wal-Mart announces new employee plan. USAToday.com, June 4, 2004.
Wal-Mart will cut the bonuses for top executives if the company does not promote women and minorities in proportion to the number that apply for management positions, its top executive announced Friday. Chief executive Lee Scott said bonuses, including his own, would be cut up to 7.5% this year and 15% next year if the company does not meet its diversity goals. (Related story:Celebrity appearances at Wal-Mart's annual meeting) "If 50% of the people applying for the job of store manager are women, we will work to make sure that 50% of the people receiving those jobs are women," Scott said...
Court OKs Class-Action Against Wal-Mart. By Jesus Sanchez, Los Angeles Times, June 22, 2004.
A lawsuit claiming that retail giant Wal-Mart Stores discriminated against its female employees today became the largest civil rights case ever filed after a U.S. judge in San Francisco granted the legal complaint class-action status. The ruling by U.S. District Court judge Martin Jenkins means that as many as 1.6 million current and former female Wal-Mart employees can now be represented under the 2001 lawsuit filed on behalf of six workers. The world's largest retailer is charged with discriminating against women in promotions, pay and job assignments in a far-reaching lawsuit...
Judge Approves Wal-Mart Class-Action Case, By David Kravets, Associated Press, Chicago Tribune, June 22, 2004.
A federal judge on Tuesday approved class-action status for a sex-discrimination lawsuit against Wal-Mart Stores Inc. that has become the largest private civil rights case in U.S. history. It could represent as many as 1.6 million current and former female employees of the retailing giant. The suit alleges Wal-Mart created a system that frequently pays its female workers less than their male counterparts for comparable jobs and bypasses women for key promotions... U.S. District Judge Martin Jenkins took nine months to decide whether to expand the lawsuit to include virtually all women who work or have worked at Wal-Mart's 3,500 stories nationwide since 1998. His ruling makes the lawsuit the nation's largest class action... The trial is expected to start with the women trying to demonstrate that Wal-Mart has a pattern of paying women lower wages and passing them over for promotions. Wal-Mart would then get a chance to dismantle that theory. If a judge or jury found Wal-Mart did have a pattern of discrimination, a second phase of the trial would let the plaintiffs seek damages. The Wal-Mart spokeswoman said the company is evaluating its employment practices. "Earlier this month Wal-Mart announced a new job classification and pay structure for hourly associates," Williams said. "This new pay plan was developed with the assistance of third-party consultants and is designed to ensure internal equity and external competitiveness.
Wal-Mart Must Face Huge Sex-Bias Suit, By Lisa Girion and Abigail Goldman, Los Angeles Times, June 23, 2004
Women Recount Pervasive Inequality at Wal-Mart, By Nancy Cleeland, Los Angeles Times, June 23, 2004
Judge Is Known as Diligent and Fair, By Anna Gorman, Los Angeles Times, June 23, 2004
Wal-Mart And Sex Discrimination By The Numbers, By Dan Ackman, Forbes, June 23, 2004.
... For the case to get this far is already a victory for the plaintiffs. Indeed, most sex discrimination allegations don't make it to a courthouse at all; according to data compiled by the U.S. Equal Employment Opportunity Commission, there were 27,146 sex discrimination claims resolved administratively by its office last year, and the level of enforcement has been stable for a decade. More than 15,000 EEOC claims, or 57%, were found to have "no reasonable cause," and were likely dropped. Just 28.77, or 10.6%, resulted in settlements, which totaled $94.2 million. The average settlement was just $34,200. The EEOC filed just 393 lawsuits on sex discrimination grounds. To be sure, there are cases outside the EEOC system, but not many. There were 20,507 employment-based civil rights actions--of all kinds, not just sex discrimination--filed in all federal courts last year, according to the Administrative Office of U.S. Courts. There are no statistics for how the federal cases were resolved. But the numbers hardly seem alarming for an economy with 146 million workers. In 2000, the U.S. government agreed to settle for $508 million a sex discrimination case filed 20 years earlier on behalf of more than 1,000 women who alleged they were refused employment by the now defunct U.S. Information Agency. The Wal-Mart case may be headed in that direction, though there are miles to go before that happens. For now, and generally, the multi-million verdicts that make the papers are rare indeed.
Quebec Wal-Mart workers get go-ahead to unionize, By Robert Melnbardis, Reuters, USAToday, Aug 3, 2004.
Workers at a Wal-Mart Stores (WMT) outlet in Canada have been granted permission to form a union, which would be the first in North America for the world's largest retailer. In a decision dated Aug. 2, the Quebec Labour Relations Board said it accredited Local 503 of the United Food and Commercial Workers Union to represent roughly 170 workers at the Wal-Mart store in Jonquiere, Quebec, 137 miles north of Quebec City. The company can appeal the decision and the workers still have to establish a bargaining unit before proceeding to negotiations on a first contract... Pelletier said Wal-Mart has no plans to close the store because of the union certification. "We would only close the store for economic reasons," he said. The Quebec Federation of Labour, the province's biggest union group, said it hopes the labor board will approve accreditation for a second Wal-Mart store in the Montreal suburb of Brossard. The United Food and Commercial Workers Union, which is affiliated with the federation, filed its request with the board July 22 for the Brossard store's accreditation. The federation said the campaign to unionize Wal-Mart stores in Quebec and the rest of Canada would continue. Four other accreditation requests have been filed with provincial authorities - two in Saskatchewan, and one each in Manitoba and British Columbia. The United Food and Commercial Workers Union is also leading a drive to establish unions at Wal-Mart outlets in the United States.
Wal-Mart in talks with Justice Department; Report: Illegal immigrants issue may include $10 million fine. MSNBC, Aug 4, 2004.
Workers at Wal-Mart in Colorado Reject Union. Reuters / New York Times, Feb 25, 2005.
Wal-Mart Mops Up Immigrant Flap. CBSNews.com, March 18, 2005.
Union Seeks Wal-Mart Files About Payments, By Steven Greenhouse, New York Times, April 9, 2005.
Can't Wal-Mart, a Retail Behemoth, Pay More? By Steven Greenhouse, New York Times, May 4, 2005.
Wal-Mart Memo Suggests Ways to Cut Employee Benefit Costs. By Steven Greenhouse and Michael Barbaro, New York Times, Oct 26, 2005.
Labor Dept. Is Rebuked Over Pact With Wal-Mart. By Steven Greenhouse. New York Times, Nov 1, 2005
100 Arrested at Wal-Mart Construction Site, By Michael Rubinkam, AP / Abcnews.com, Nov 18, 2005.
No Free Lunch For Wal-Mart. AP / CBS, Dec 23, 2005
An Alameda County jury on Thursday awarded $172 million to thousands of California employees at Wal-Mart Stores Inc. who claimed they were illegally denied lunch breaks.
The world's largest retailer was ordered to pay $57 million in general damages and $115 million in punitive damages to about 116,000 current and former California employees for violating a 2001 state law that requires employers to give 30-minute, unpaid lunch breaks to employees who work at least six hours.
The jury's $172 million judgment works out to about $1,000 a worker, reports CBS News correspondent John Blackstone. In a written statement, Wal-Mart said it will appeal and said the company acknowledged it had compliance issues when California's meal break law was first enacted. But the company said it now has systems to ensure all associates receive their meal breaks. The workers' attorneys, however, said Wal-Mart continued refusing to pay for missed meals even as the case wound its way through the courts.
The class-action lawsuit in Alameda County Superior Court is one of about 40 nationwide alleging workplace violations by Wal-Mart, and the first to go to trial. The Bentonville, Ark.-based retailer, which earned $10 billion last year, settled a similar lawsuit in Colorado for $50 million.
In the lunch-break suit, Wal-Mart claimed that workers did not demand penalty wages on a timely basis. Under the law, the company must pay workers a full hour's wages for every missed lunch.
The company also said it paid some employees their penalty pay and, in 2003, most workers agreed to waive their meal periods as the law allows.
The lawsuit covers former and current employees in California from 2001 to 2005. The workers claimed they were owed more than $66 million plus interest, and sought damages to punish the company for alleged wrongdoing.
Attorney Fred Furth, who brought the case on behalf of the workers, said outside court the jury "held Wal-Mart to account."
The jury's verdict was reached after nearly three days of deliberations and four months of testimony.
The company contended that the lunch law does not allow for punitive damages because "the meal-period premiums in question are penalties, rather than wages," it said in the statement. "In short, California law prohibits penalties on top of penalties."
A spokesman did not return a call by The Associated Press for further comment.
Wal-Mart attorney Neal Manne also claimed the state law in question could only be enforced by California regulators, not by workers in a courtroom.
"We absolutely disagree with their findings," Manne said of the jury's verdict. He conceded that Wal-Mart made mistakes in not always allowing for lunch breaks when the 2001 law took affect, but said the company is "100 percent" in compliance now.
The lawsuit was initially filed by a handful of former Wal-Mart employees in the San Francisco Bay area in 2001, but it took four years of legal wrangling to get to trial.
Blackstone reports that attorneys say Wal-Mart faces similar employee lawsuits in 30 states, including a huge class action suit. More than 1.5 million women are suing Wal-Mart for paying them less than men.
Critics have also launched campaigns trying to stop its expansion efforts and have targeted it for giving short shrift to workers.
Paul Blank, campaign director for WakeUpWalMart.com, an union-affiliated advocacy group that believes Wal-Mart's policies over wages, health benefits and other issues harm families and communities, said he's delighted with the verdict.
"It is a sad day when Wal-Mart provides these so-called low prices by exploiting their workers and even the law," Blank said.
The company added lower-cost health insurance this year after an internal memo surfaced that showed 46 percent of Wal-Mart employees' children were on Medicaid or uninsured.
A trial also is underway in Marin County Superior Court in which a group of boys were injured while riding bicycles. They claim Wal-Mart and San Rafael-based Dynacraft BSC Inc. conspired to hide defects in a key bicycle part.
The case decided Thursday is Savaglio v. Wal-Mart, C-835687.
Law Aimed at Wal-Mart May Be Hard to Replicate. By Reed Abelson and Michael Barbaro. New York Times, Jan 16, 2006.
When the Maryland legislature passed a law last week requiring that its largest employers, including Wal-Mart Stores, spend at least 8 percent of their payrolls on health care, supporters of the measure claimed they had delivered a clear message to corporate America: companies cannot shirk their duty to employees.
"Let's light the torch. Let us lead the way," said Senator Gloria G. Lawlah, a Democrat who sponsored the bill.
Elated union leaders claim that they have lined up legislators in 30 states to introduce similar bills this year - and that the Maryland vote is likely to give their campaign added impetus.
For all the unions' success in Maryland, though, it is doubtful that the campaign will steamroll across the country, policy analysts say. Because the other states' bills are written much more broadly, they are likely to draw more opposition from companies that watched the Maryland debate from the sidelines.
Still, the new Maryland law has already begun to raise the decibel level of the debate over how to handle the nation's growing number of people with no health insurance, which is now at 46 million. Union activists and others say the law focuses more attention on the role of employers in providing the insurance.
"There is now more public consciousness about how large employers do not provide health care," said Anthony Wright, the executive director of Health Access California, a consumer coalition that supported a similar law in California that was narrowly defeated by voters a little more than a year ago.
Only a handful of states, among them Rhode Island, Washington, Colorado and New Hampshire, are likely to seriously consider requiring employers to provide a certain level of coverage, according to health care advocates and union activists.
Maryland's bill, drafted to apply to companies with 10,000 or more employees, actually affects only one company in the state: Wal-Mart Stores, which has come to symbolize corporations that do not provide adequate health benefits to their employees. The laws being contemplated elsewhere, aimed at companies with a thousand or two thousand employees in that particular state, could affect dozens of other corporations, like McDonald's and the CVS Corporation, the drugstore chain.
"The broader the scope of the attack, the broader the counterattack that will be mounted," said Prof. Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University, who does not expect the Maryland law to lead to the passage of similar bills in many other states.
Retailing and restaurant chains, which are most vulnerable to any state law mandating coverage because they employ so many low-income workers, are already preparing an aggressive campaign to prevent lawmakers from passing the legislation outside Maryland. Three trade groups - the National Retail Federation, the National Restaurant Association and the International Franchise Association - have created a coalition to oppose legislation.
"If retailers are hit with this extra cost, this is going to put them in a position to raise prices for consumers or lay off workers," said J. Craig Shearman, vice president of government relations at the retailers' federation.
The Maryland law is likely to face legal challenges to determine whether federal law allows states the authority to mandate health benefits, said J. D. Piro, the chairman of the health law group at Hewitt Associates, a consulting firm.
The Maryland Chamber of Commerce, a business lobbying group, argued that the Maryland bill was pre-empted by the federal Employee Retirement Income Security Act, or Erisa, even though the Maryland attorney general found that the bill did not violate federal law because it imposed no requirements on how companies spend their money. "It's likely this will go to court," Mr. Piro said.
Struggling to balance their own budgets in the face of rising health care costs, some state officials are likely to look favorably on action that would force companies to shoulder more of the bill. "I think they will be looking," said Helen Darling, the president of the National Business Group on Health, an employer coalition based in Washington. "It seems to be a cheap fix."
States are searching for ways to pay for programs like Medicaid, Mr. Piro agreed. "It's a question of who has the money," he said.
Amy G. Rice, a Democrat in the Rhode Island House of Representatives, said the bill that she planned to introduce next week had "a high chance of passing" in the Democratic-controlled state legislature.
"Legislators in both parties are very concerned about the health care crisis in Rhode Island," said Ms. Rice, who cited a poll that found that a majority of the state's residents supported the idea of requiring large corporations to increase spending on health care.
Her bill would require companies with more than 1,000 employees to devote 8 percent of their payroll to health insurance. Ms. Rice estimates that of 38 employers with more than 1,000 employees, only 6 do not meet the 8 percent requirement.
Proponents of similar bills in other states say most companies would not be affected. As a result, they say, companies that do provide coverage may be reluctant to support the efforts of those that do not.
"They won't be the leaders of the opposition," said Mr. Wright, the California advocate who said the majority of the resistance in his state came from fast-food and retailing companies. In fact, some companies may even support the measures. In Maryland, for example, Giant Food, a regional supermarket chain that competes with Wal-Mart, came out in favor of the legislation.
Because it is so narrowly written and may not result in coverage for significant numbers of uninsured people, policy analysts say the Maryland bill cannot be viewed as a model for any states looking seriously at gaps in health care coverage. "The Maryland law is aimed at Wal-Mart, not the issue of the uninsured," said Paul B. Ginsburg, the president of the Center for Studying Health System Change, a nonprofit research group in Washington.
Wal-Mart insures fewer than half of its 1.3 million employees in the United States. According to an internal memo, 5 percent, or roughly 65,000, of its workers rely on state Medicaid plans, compared with 4 percent for other national companies.
Even if other laws apply to significantly more employers, some policy analysts say these measures do not represent long-term solutions to the problem of paying for health care. "I'd rather see the state work with all employers to see if they can come up with incentives to spread the risk among a broader pool," said Laura D. Tyson, dean of the London Business School and former chief economic adviser to President Bill Clinton. "This is a Band-Aid, arbitrary, firm-specific solution to one of the most important policy problems of the United States."
The focus on the issue of low-income workers who cannot afford coverage even when it is offered is important, said Peter V. Lee, the chief executive of the Pacific Business Group on Health. But, he said, the question of who pays for the care for these individuals - the state or the employer - does not address the fundamental problem of rising health care costs in this country, he said.
"All we're doing is playing squeezing the balloon," he said.
Wal-Mart Says It Will Boost Health Benefits. By Abigail Goldman, Los Angeles Times, Feb 24, 2006.
Wal-Mart Stores Inc., under pressure to shoulder more of its workers' healthcare costs, outlined plans Thursday to improve its benefit offerings, including opening more clinics in stores and shortening the period that part-time employees have to wait before they can buy coverage.
The world's largest retailer also said it would expand its cheapest health insurance option, an $11-a-month plan that has been offered in selected areas. The "value plan," which costs about $20 for families and allows three doctor visits and three prescriptions before a $1,000 deductible kicks in, will be offered to half of the company's employees, Wal-Mart said.
The proposals are in a speech that Wal-Mart's chief executive is scheduled to deliver Sunday. They follow promises the company made last year to bring healthcare within reach of all its nearly 1.4 million U.S. employees.
Over the last several months, Wal-Mart has come under increasing criticism for what opponents call stingy health benefits. The company released highlights of the CEO's speech the same day a union-backed group issued a report claiming that U.S. taxpayers spent $1.5 billion last year providing medical care for uninsured Wal-Mart workers.
Wal-Mart said the five-page report was a publicity stunt based on poor methodology.
The company said the number of employees covered by its health plans increased slightly last year to 46% — below the national average of 60%. It said almost one-third of its workers get health insurance elsewhere, which critics say is evidence that the retailer relies on state programs and other companies to cover its workers.
At a time when expansion is crucial to the company's future growth, especially along the East and West coasts, the attacks against Wal-Mart are taking a toll, at least in terms of public opinion.
In Fortune magazine's 2006 list of America's most admired companies, released this week, Wal-Mart fell eight spots to No. 12. The Bentonville, Ark., retailer, which has more than 3,850 U.S. stores and nearly 2,300 international locations, held the top spot on the list in 2003 and 2004.
The speech by CEO H. Lee Scott Jr. at a National Governors Assn. meeting in Washington is aimed at an audience playing a key role in the company's latest healthcare battle: state-by-state efforts to force Wal-Mart to pay more of its workers' medical costs.
In California, state Sen. Carole Migden (D-San Francisco) introduced a bill Wednesday that would require companies that employ 10,000 or more state residents to spend at least 8% of their total payroll on health benefits or make payments into a state fund for the uninsured.
"Wal-Mart's commitment is not enough and is hardly affordable to their hardworking employees," Migden said in a statement Thursday. She said Wal-Mart's 70,000 California employees average about $15,000 in annual pay, and even under the company's coverage proposals, workers would be charged monthly premiums and large deductibles.
Migden's bill is based on legislation passed last year in Maryland — which survived a veto by that state's governor — and introduced in several other states.
In his speech Sunday, Scott is expected to denounce those efforts and call on government to work with business on healthcare issues, the company said.
He also will announce that for the first time, part-time employees will be able to buy health insurance for their children, the company said. Part-time Wal-Mart workers now wait two years before being eligible for individual health coverage. The company said it had not yet decided what the shortened waiting period would be.
The company said Scott also would outline plans to expand a pilot program of nine in-store health clinics to 50 sites. Those clinics, the company said, offer nonemergency care to employees and members of the community, many of whom might otherwise go to a hospital emergency room for routine ailments.
In October, Scott had said he wanted to make affordable healthcare coverage available to all U.S. employees of the company, which this week reported annual profit of $11.2 billion on $312 billion in sales.
A company memo leaked just after Scott's pledge outlined stark recommendations for reining in healthcare costs, such as making jobs more physically rigorous to discourage unhealthy workers and using more part-time workers.
The memo also recommended boosting the company's image by touting initiatives such as the ones Scott plans to highlight Sunday.
Wal-Mart has said that the memo was a preliminary document and not a final list of proposals.
But critics said Scott's planned speech this weekend appeared to take its cue from the memo, which suggested "reframing" the issue of uninsured workers as a societal problem as well as engaging in a "sustained communication campaign" about the company's healthcare offerings.
In its report Thursday, Wake Up Wal-Mart, the union-backed group critical of the company, projected that American taxpayers would pay $9.1 billion in healthcare costs for Wal-Mart employees by 2010.
The group based the figure on the number of Wal-Mart employees now using Medicaid and projections for the company's growth.
Wal-Mart disputed the report. "The fact is, Wal-Mart jobs move people from public health programs onto private insurance," said company spokeswoman Sarah Clark.
"Seven percent of associates join Wal-Mart already on Medicaid. Within two years, that number drops to 3%."
Companies face RICO lawsuits on illegals. By Edward Iwata, USA TODAY, April 25, 2006
In legal cases with potential repercussions for businesses and employees, current and former workers are accusing U.S. companies of violating immigration law and driving down wages.
The federal lawsuits — against carpet maker Mohawk Industries, Tyson Foods, retailer Wal-Mart, and others — are winding their way through appeals courts. The Mohawk case will be argued today before the U.S. Supreme Court.
The class-action lawsuits were filed by plaintiffs under the RICO (Racketeer Influenced and Corrupt Organizations Act) statute, typically used against organized crime.
Under RICO, if a business engages in an enterprise of racketeering activity, it could be found liable for triple damages and attorneys' fees and face criminal prosecution.
If the Supreme Court allows lawsuits similar to Mohawk to be filed against companies, some industry groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, fear that businesses will face billions of dollars in potential liabilities.
"This would open the floodgates to RICO being used in all garden-variety lawsuits against corporate defendants," says Robin Conrad, an attorney at the National Chamber Litigation Center, the legal arm of the U.S. Chamber of Commerce.
In the Mohawk case, the former workers allege that the carpet manufacturer conspired with employment agencies to hire undocumented immigrants from Mexico. Mohawk used forged Social Security cards and recruited workers from the border at Brownsville, Texas, the suit alleges.
Johnson & Bell attorney Howard Foster, who represents workers in the Mohawk case and similar lawsuits, says, "The key issue is, can a corporation be sued for engaging in illegal conduct with its recruiters? If we win this case, there probably will be quite a few more cases filed against corporations."
Juan Morillo, an attorney at Sidley Austin for Mohawk, denies the allegations. He argues that businesses will be hurt badly if federal courts hold corporations and their associated business parties fit the legal definition of an "enterprise" under the RICO statute.
"This could turn every ordinary business dispute involving a third-party — a business partner, a vendor, a subcontractor — into a potential RICO case," Morillo says.
Federal appeals courts have issued conflicting rulings on whether the RICO statute applies to such immigration cases. Under immigration law, it's a crime to hire and harbor illegal immigrants. None of the cases have gone to trial yet.
Zirkle Fruit, an apple-packing company in Selah, Wash., recently settled a RICO lawsuit for $1.3 million in back wages to an undetermined number of workers it employed between 1999 and 2004.
Stephen Yale-Loehr, a Cornell Law School professor, says immigration laws already exist to crack down on "employers who knowingly hire undocumented workers." A Supreme Court ruling allowing the RICO lawsuits would provide more legal ammunition, he says.
Wal-Mart ordered to pay $78 millio. Seattle Times, Oct 14, 2006
Wal-Mart Stores must pay at least $78 million for violating Pennsylvania state labor laws by forcing employees to work through rest breaks and off the clock, a jury decided Friday.
Michael Donovan, a lawyer for the plaintiffs, had asked the jury for at least that amount in compensatory damages for what he said were missed or shortened breaks, or time employees worked off the clock.
He will seek an additional $62 million in damages because the jury found that Wal-Mart acted in bad faith.
The class action involves 187,000 current and former employees who worked at Wal-Mart and Sam's Clubs in Pennsylvania from March 1998 through May this year.
Wal-Mart attorney Neil Manne said the company plans to appeal the class certification and the jury's findings.
Wal-Mart considers challenge to sex discrimination ruling. The Guardian [UK], Feb 7, 2007
Wal-Mart was today preparing to challenge a court's green light for a sex discrimination case involving over a million women employees.
In a major setback for the world's biggest retailer, an appeal court yesterday upheld a 2004 decision to let America's largest class action employment discrimination lawsuit go to trial.
The plaintiffs estimate they could win billions of dollars in lost pay and damages and that as many as 2 million women who have worked for Wal-Mart in its US stores since 1998 could join the class action, a kind of lawsuit that allows a small number of plaintiffs to sue on behalf of a much larger group.
The two-to-one ruling by the three-judge panel in San Francisco yesterday took no position on the merits of the case, stressing that its decision only reaffirmed a lower court ruling certifying the case as a class action against Wal-Mart.
Betty Dukes, the lead plaintiff who claims she has suffered discrimination in terms of pay and promotion while working at a Wal-Mart in San Francisco said she sued because of neglect she and fellow female employees felt when openings for positions were advertised within her store.
After working as a cashier for three years, Ms Dukes said she advanced to become a customer service representative, a position some male employees attained even before their initial probationary periods of employment had expired.
"I had seen males go into the position with less than 90 days experience," Ms Dukes said.
Wal-Mart argued it did not discriminate and that class action status should be dismissed, because the company grants its 3,400 US stores a great deal of independence in their management. The company said it would appeal against the ruling to a larger appeal court and to the US supreme court if necessary.
"This was one step in what is going to be a long process, and we are still at a very early stage in this case," said Ted Boutrous, lead counsel for Wal-Mart's appeal. "We are very optimistic about our chances for obtaining relief from this ruling as the case progresses."
In a dissent, Judge Andrew Kleinfeld said the case should not be a certified as a class action, since it could enrich lawyers and undeserving plaintiffs, while diluting the rewards to any who were actually injured by sex bias.
"Plaintiffs' only evidence of sex discrimination is that around two-thirds of Wal-Mart employees are female, but only about one-third of its managers are female," he wrote. "Not everybody wants to be a Wal-Mart manager. Those women who want to be managers may find better opportunities elsewhere."
The judge in the original case ruled that the attorneys for the six named women presented sufficient evidence for a class action suit.
He said "largely uncontested descriptive statistics" showed that women working in Wal-Mart stores were paid less than men in every region, that pay disparities existed in most job categories and that the salary gap widened even for men and women hired for the same job at the same time.
Brad Seligman, a lawyer for The Impact Fund, a non-profit group in Berkeley, California representing the female plaintiffs, told reporters: "It is time for Wal-Mart to face the music. Two courts now have ruled that Wal-Mart is going to have to face a jury ... We fully expect Wal-Mart to keep appealing but we're very confident now that two courts have upheld this [class] certification."
Most large discrimination cases are settled out of court. In 1996, the oil firm Texaco paid a $176.1m (£89m) settlement after black employees sued for racial discrimination. The DIY firm Home Depot settled a sex discrimination class action suit in 1997 for $104m.
Wal-Mart Subsidy Watch from Good Jobs First
Study: Wal-Mart's U.S. Expansion Has Benefited From More Than $1 Billion In Economic Development Subsidies. Good Jobs First, May 24, 2004. "Wal-Mart Stores Inc., the world's largest retailer, has benefited from more than $1 billion in economic development subsidies from state and local governments across the United States, according to a new study by Good Jobs First, a Washington, DC-based research group (the study, Shopping For Subsidies, is available online at www.goodjobsfirst.org). "Wal-Mart presents itself as an entrepreneurial success story, yet it has made extensive use of tax breaks, free land, cash grants and other forms of public assistance," said Philip Mattera, research director of Good Jobs First and principal author of the study... The publicly evident value of subsidy deals for individual distribution centers ranged as high as $48 million (with an average of $7.4 million), while for retail outlets the largest was $12 million (with an average of $2.8 million). Wal-Mart subsidy deals were found in 35 states, with the largest number in California, Illinois, Missouri, Texas and Mississippi. In total dollar terms, Louisiana, Florida and New York also ranked high. Although comparative data are not available, the study says it is likely that Wal-Mart, given the extent of its operations, receives state and local subsidies from more jurisdictions than any other corporation in the United States... The types of subsidies given to Wal-Mart projects included the following: Free or reduced-price land; Infrastructure assistance, including access roads and water/sewer lines; Tax increment financing, a diversion of property (and/or sales) tax generated by a new development; Property tax abatements; State corporate income tax credits; Sales tax rebates or exemptions; Enterprise zone status, which typically provides for a menu of subsidies such as property tax abatements, state tax credits, sales tax exemptions and reduced utility rates; Job training and worker recruitment funds; Tax-exempt bond financing; and General grants, including outright cash payments to the company. "
Wal-Mart increases work for police forces. By Alexandria Sage. Arkansas Democrat-Gazette, May 23, 2004. Harrisville, Utah. "For the tiny police force in this bedroom community, the south end of town never caused much bother. Horses grazed in the green pastures, and for years two solitary bars provided the only late-night distractions for those who needed something to do. That was before early 2001, when Wal-Mart opened a 24-hour supercenter that swallows all 212,000 square feet of rural fields. Since then, police in Harrisville, population 4,000, have been forced to confront big-city realities..."
Hidden Costs of Wal-Mart Jobs by Arindrajit Dube and Ken Jacobs (University of California-Berkeley Labor Center, Aug 2, 2004) and Authors' Response to Wal-Mart's Statements.
A New Weapon for Wal-Mart: A War Room. By MICHAEL BARBARO, New York Times, Nov 1, 2005.
BENTONVILLE, Ark., Oct. 26 - Inside a stuffy, windowless room here, veterans of the 2004 Bush and Kerry presidential campaigns sit, stand and pace around six plastic folding tables. Open containers of pistachio nuts and tropical trail mix compete for space with laptops and BlackBerries. CNN flickers on a television in the corner.
The phone rings, and a 20-something woman answers. "Turn on Fox," she yells, running up to the TV with a notepad. "This could be important."
A scene from a campaign war room? Well, sort of. It is a war room inside the headquarters of Wal-Mart, the giant discount retailer that hopes to sell a new, improved image to reluctant consumers.
Wal-Mart is taking a page from the modern political playbook. Under fire from well-organized opponents who have hammered the retailer with criticisms of its wages, health insurance and treatment of workers, Wal-Mart has quietly recruited former presidential advisers, including Michael K. Deaver, who was Ronald Reagan's image-meister, and Leslie Dach, one of Bill Clinton's media consultants, to set up a rapid-response public relations team in Arkansas.
When small-business owners or union officials - also employing political operatives from past campaigns - criticize the company, the war room swings into action with press releases, phone calls to reporters and instant Web postings.
One target of the effort are "swing voters," or consumers who have not soured on Wal-Mart. The new approach appears to reflect a fear that Wal-Mart's critics are alienating the very consumers it needs to keep growing, especially middle-income Americans motivated not just by price, but by image.
The first big challenge of the strategy will come Nov. 1 with the premiere of an unflattering documentary. "Wal-Mart: The High Cost of Low Price" was made on a shoestring budget of $1.8 million and will be released in about two dozen theaters. But its director, Robert Greenwald, hopes to show the movie in thousands of homes and churches in the next month. The possibility that it might become a cult hit like Michael Moore's 1989 unsympathetic portrait of General Motors, "Roger & Me," has Wal-Mart worried.
So, Wal-Mart has embarked on a counteroffensive that would have been unthinkable even a year ago. Relying on a preview posted online, Wal-Mart investigated the events described in the film and produced a short video contending the film has factual errors. (Mr. Greenwald denies there are errors and says that Wal-Mart has not seen the final cut.)
Wal-Mart has also begun to promote a second film, "Why Wal-Mart Works & Why That Makes Some People Crazy," which casts the company in a rosier light. Wal-Mart declined to make its executives available for the Greenwald film, but it participated with the second film's director, Ron Galloway. The war room team helped distribute a letter, written by Mr. Galloway, that challenges Mr. Greenwald to show the two movies side-by-side.
To keep up with its critics, Wal-Mart "has to run a campaign," said Robert McAdam, a former political strategist at the Tobacco Institute who now oversees Wal-Mart's corporate communications. "It's simply nonsense for us to let some of these attacks go without a response."
Wal-Mart's aggressive new posture is a departure from its tradition of relying on an internal staff to manage the company's image. The war room, which is part of a larger Wal-Mart effort to portray itself as more worker-friendly and environmentally conscious, runs counter to the philosophy of the chain's founder, Sam Walton. Believing that public relations was a waste of time and money, the penny-pinching Mr. Walton would not likely have hired a public relations firm like Edelman, Wal-Mart's choice to operate its war room.
So what has changed? For one thing, Wal-Mart's critics have become more sophisticated.
For years, unions hurled little more than insults at the chain. But over the last year, two small groups - Wal-Mart Watch and Wake Up Wal-Mart - set up shop in Washington with the goal of waging the public relations equivalent of guerilla warfare against the company. Wal-Mart Watch received start-up cash from the Service Employees International Union; Wake Up Wal-Mart is a project of the United Food and Commercial Workers International Union. Unions have tried, unsuccessfully, to organize Wal-Mart's employees.
At the suggestion of Wake Up Wal-Mart, members of the nation's largest teachers' unions staged a boycott of Wal-Mart for back-to-school supplies this fall. Wal-Mart Watch, meanwhile, set up an automated phone system that called 10,000 people in Arkansas in June seeking potential whistle-blowers willing to share secrets about the retailer.
Wal-Mart did not rebut such attacks, even when Wal-Mart Watch released a 24-page report blasting the company's wages and benefits. Wal-Mart Watch said the report had been downloaded from its Web site 55,000 times.
Once a darling of Wall Street, Wal-Mart's stock price has fallen 27 percent since 2000, when H. Lee Scott Jr. became chief executive, a drop that executives have said reflects, in part, investors' anxieties about the company's image. Sales growth at stores open for more than a year has slowed to an average of 3.5 percent a month this year, compared with 6.3 percent at Target. And Wal-Mart is facing growing resistance to new urban stores, with high- profile defeats in Los Angeles, Chicago and New York.
There is some evidence that criticism is influencing consumers. A confidential 2004 report prepared by McKinsey & Company for Wal-Mart, and made public by Wal-Mart Watch, found that 2 percent to 8 percent of Wal-Mart consumers surveyed have ceased shopping at the chain because of "negative press they have heard."
The Greenwald movie threatens to make matters worse. It features whistle-blowers who describe Wal-Mart managers cheating workers out of overtime pay and encouraging them to seek state-sponsored health care when they cannot afford the company's insurance. And it travels across small-town America to assess the effects on independent businesses and downtowns after a Wal-Mart opens.
The film is a particular concern now that Wal-Mart is trying to move upscale, a strategy it hopes will appeal to higher-income consumers. In the last year, Wal-Mart has introduced a line of urban fashions called Metro 7, hired hundreds of fashion specialists to monitor how clothing is displayed in stores, and produced more polished advertising.
But for the fashion strategy to pay off, Wal-Mart must win over a group of shoppers who are sensitive to criticism of the chain's record - consumers, in the words of Wal-Mart's chief executive, "who are not worried about their next paycheck."
Hence the war room in Bentonville. Wal-Mart executives realized they were unprepared to react to what Mr. Scott began to call the most expensive campaign ever waged against a corporation. So the company quietly mailed a letter to the country's biggest public relations firms several months ago seeking their help in developing a response.
The contract went to Edelman, which assigned its top two Washington operatives to the account. Wal-Mart would not say what it is paying Edelman, nor would it allow interviews with the war room staff. Mr. Dach, who is active in environmental and Democratic causes, was an outside adviser to President Clinton during the impeachment battle. Mr. Deaver was President Reagan's communications director and the creative force behind Mr. Reagan's so-called Teflon image.
Edelman also dispatched at least six former political operatives to Bentonville, including Jonathan Adashek, director of national delegate strategy for John Kerry, and David White, who helped manage the 1998 re-election of Representative Nancy Johnson, a Connecticut Republican. Terry Nelson, who was the national political director of the 2004 Bush campaign, advises the group.
In turn, Wakeup Wal-Mart is led by, among others, Paul Blank, former political director for the Howard Dean presidential campaign, and Chris Kofinis, who helped create the DraftWesleyClark.com campaign.
Wal-Mart Watch's media team includes Jim Jordan, former director of the Kerry campaign, and Tracy Sefl, a former Democratic National Committee aide responsible for distributing negative press reports about President Bush during the 2004 campaign.
The war room staff arrives at Wal-Mart's headquarters, a short drive from a nearby corporate apartment where they live, by 7 every morning. The group works out of an old conference room on the second floor, christened Action Alley, the same name Wal-Mart gives to the wide, circular aisle that runs around its stores.
Three display boards are covered with to-do lists. One says: "Promote Week of 10/24/05: MLK Memorial Donation. Urban/blighted community plan." Two large maps show the location of Wal-Mart and Sam's Club stores across the United States.
The team starts the day by scanning newspaper articles and television transcripts that mention Wal-Mart. Next come conference calls with Wal-Mart employees around the country to plan for events. Whenever possible, Mr. McAdam said, the war room will try to neutralize criticism before it is leveled.
That was the strategy behind what Action Alley considers its first coup. In late September, after several unions broke off from the A.F.L.-C.I.O., the splinter groups announced they would hold a convention in St. Louis on a Tuesday.
Action Alley members, assuming Wal-Mart would be a target of criticism during the union gathering, arranged for Wal-Mart to hold its own news conference the day before. It invited three local suppliers, a sympathetic local official and a cashier to say that Wal-Mart had a positive effect on the community.
"If you look at many of the stories that were written about that overall convention, they've got our messages in them," Mr. McAdam said. "In the past, when we've just responded to something somebody else is doing, it's sort of 'you know, by the way, Wal-Mart says ...' We got ahead of this one."
A campaign atmosphere pervades Action Alley. A small bus with the words "Clinton-Gore" on the side sits on the table. When discussing Wakeup Wal-Mart, Wal-Mart Watch and the Greenwald movie, Mr. McAdam slips into political-speak.
"The people who show up at Mr. Greenwald's film are probably not swing voters," he said. "They are probably the true believers of their point of view and I doubt there is a heck of a lot we can do to change their minds."
Mr. McAdam continued: "They've got their base. We've got ours. But there is a group in the middle that really we all need to be talking to."
Always High Costs
from the Wake Up Wal-Mart website November 1, 2005
The staff of the [U.S.] House [of Representatives] Committee on Education and Workforce estimates that because of the low wages of Wal-Mart, a Wal-Mart employee may result in a cost to federal taxpayers of around $2,103 in the form of federal public assistance programs. With approximately 1.3 million US employees and growing, this amounts to a total of $2.7 billion a year.
We have a health care crisis in America. Large corporations, like Wal-Mart, are contributing to this crisis by failing to live up to their responsibilities.
By paying sub-standard wages and benefits in order to increase profitability, large corporations are shifting costs onto taxpayers by forcing employees to rely on publicly funded health care programs and for other public assistance services.
In response to this crisis, please stand behind your fellow citizens in signing your name as a Citizen Co-Sponsor of the "Fair Share For Health Care" Act by clicking here.
Specifically, the Committee estimates that the low wages result in the following additional public costs being passed along to taxpayers for an average 200-employee store:"
To read the full report by the Staff of the House Committee on Education and Workforce, click here.
More Subsidies to Wal-Mart
"Tax Benefits and Sales Boost Wal-Mart Profit. Wal-Mart Stores Inc., the world's largest retailer, said Tuesday its fourth-quarter earnings rose 13.4 percent after aggressive holiday advertising helped boost sales by 8.6 percent. But Wal-Mart shares slipped as the retailer's fourth-quarter revenue fell short of Wall Street projections, and it also forecast a profit outlook that is below Wall Street projections. Wal-Mart's shares fell 12 cents to $45.98 in early trading on the New York Stock Exchange. Net income rose to $3.6 billion, or 86 cents per share, for the quarter ended January 31 from $3.2 billion, or 75 cents per share, a year ago. Earnings in the latest quarter included a $103 million net tax benefit that boosted net income by 2 cents per share... (New York Times, Feb 21, 2006).
Wal-Mart sees room for over 1,500 new stores. World’s largest retailer plans expansion in United States in coming years. AP / MSNBC, Feb 8, 2006.
Wal-Mart Stores Inc. plans to open more than 1,500 stores in the United States in the coming years, on top of nearly 3,200 it already operates, the world's largest retailer said Tuesday.
John Menzer, the company's vice chairman and head of its domestic Wal-Mart stores division, said Wal-Mart was on schedule to meet an announced target of between 335 and 370 new U.S. store openings this year after 341 last year.
That number includes Wal-Mart discount stores, Supercenters that also have a full grocery section, smaller Neighborhood Markets and Sam's Club membership warehouses. Supercenters are the largest single group with 1,980 locations in the U.S. and the focus of future growth plans.
Menzer did not specify a timeline for the new stores. He also did not refer to zoning and permit fights that have erupted in some places where Wal-Mart wants to expand, including big markets such as California where the company has fewer locations than in its traditional bases in the South and Midwest.
"We are really focused on opening new stores right now. We see so many opportunities to open new stores that that's where our capital is going first," Menzer said during a Web cast from a financial conference hosted by Citigroup in Miami.
Wal-Mart opened 69 new stores and Sam's Clubs in January, a company record for one month, it announced last week.
Menzer said 1,800 of its existing Supercenters would be remodeled over the next 18 months to make them more inviting, adding touches such as faux wood floors, wider aisles and digital television display walls.
The remodeling program, which Menzer said would not require a large capital outlay, is part of a broader strategy to interest consumers who are already in the store for basics to buy more fashions, electronics, home furnishings and fancier foods.
Wal-Mart began working on the remodeling program last year, and formally unveiled it in October at its annual meeting with analysts.
As part of its growth plans, Wal-Mart also is experimenting with new formats for Supercenters to fit the big box structures into tighter urban neighborhoods. New styles will include multilevel stores and underground or above-store parking rather than a huge lot out front.
Wal-Mart Works to Polish Image, but Detractors Gear Up Too: The retailer's executives have been forced to shift their focus to combating negative news. By Abigail Goldman. Los Angeles Times, April 19, 2006
ROGERS, ARK. In a hotel meeting room not far from Wal-Mart Stores Inc.'s headquarters, company executives told a gathering of 70 reporters Tuesday that Wal-Mart was working hard for working families.
Nearby, union organizers and other foes trotted out statistics, current and former Wal-Mart employees, and community leaders to try to prove that the company is a bane to those same families.
The dueling messages were aimed at the reporters attending Wal-Mart's second annual media conference.
For the executives, managing the steady drumbeat of negative news is consuming almost as much of their time as running the company, which has more than 6,500 stores in 16 countries and nearly $316 billion in annual sales. The past year in particular has been brutal.
"It's been an extremely trying year when the chief executive of the world's largest retailer has to devote himself full time to defending the company's business model," said Mark Husson, an analyst with HSBC Securities in New York. "By any measure it's an extraordinary amount of very senior management time being taken up in a noncommercial, unproductive manner."
Increasingly keen to change public perceptions, Wal-Mart again opened its doors to the media as it continues its global expansion. This year's conference, which concludes today, is a series of meetings featuring top Wal-Mart executives extolling the company's virtues.
"In the past, we've been forced to respond to criticism, but in the last year, we've taken a more proactive approach to sharing information and our critics have had to respond to us," said Wal-Mart spokeswoman Sarah Clark. "With success comes criticism, but we know if we didn't tell our story, no one else would and we didn't want to let our critics define our reputation."
Wal-Mart certainly has had its hands full, having to contend with:
• A leaked memo that outlined proposals to trim the company's healthcare costs by discouraging unhealthy workers.
• A scathing anti-Wal-Mart documentary that screened nationwide in churches, living rooms and schools.
• Farmers, bankers and rural Americans who raged against the company's proposal to open a limited-purpose bank to save money on credit card transactions.
• State houses around the country which debated forcing the company to pay more for employees' healthcare or pay into state funds for that purpose.
The company has fared no better on Wall Street, where its stock has been relatively unchanged for the last 6 1/2 years. Shares of Wal-Mart rose 58 cents Tuesday to $46.40.
The trying times are taking their toll on Chief Executive Lee Scott, who has been traveling the globe fending off attackers. He recently said he would take a month off to go fishing.
Among those coming to Wal-Mart's defense Tuesday was Arkansas Gov. Mike Huckabee.
"Wal-Mart has really become the whipping boy of labor unions across the country who would love to demonize the Wal-Mart brand and the Wal-Mart culture," Huckabee told the gathering. "Wal-Mart would tell you they're not a perfect company. But one of the reasons they're successful is that they reinvent themselves every week."
Former U.N. Ambassador Andrew Young, chairman of the 16-member steering committee of Working Families for Wal-Mart, said at a small news conference that none of the problems affecting the poor were caused by the company.
"We all have an interest in Wal-Mart; we all want Wal-Mart to succeed," Young said, gesturing at his fellow committee members who came to Arkansas from around the country. "We don't think it ought to be trashed. We think it ought to be perfected."
Part of what Wal-Mart is battling is better-organized opponents. Two of its biggest detractors are Wal-Mart Watch, backed by the Service Employees International Union, the Sierra Club, the National Partnership for Women & Families and other activist groups, and WakeUpWalMart.com, funded by the United Food and Commercial Workers union.
Like Wal-Mart, those groups are fine-tuning their message for the coming year.
Andrew Stern, the founder of Wal-Mart Watch and the president of the Service Employees union who last year broke his and six other unions away from the AFL-CIO, said the next step was moving from a campaign-type organization to a permanent one.
"We spent a year trying to be heard, trying to make our case, trying to get legislators, businesspeople and reporters to pay attention to what we thought was a big problem in the American economy," Stern said. "Now we are looking at how we can provide very specific ways for helping Wal-Mart change its business model, instead of being perceived as just being critics."
To that end, Wal-Mart Watch is likely to ask the company to work more closely with local leaders to minimize the environmental and traffic problems associated with new stores. Also on the agenda: challenging Wal-Mart to set an example for the retail industry by providing affordable health insurance to all employees.
WakeUpWalMart.com continues to push similar demands, including paying a "living wage," offering affordable health coverage and increasing the amount of U.S.-made products it sells.
On Tuesday, the group set up camp steps away from Wal-Mart's meeting hall, flanked by workers describing their experiences with the company.
"I'm here because I can think of 100 people offhand — single mothers — who are forced to go on public assistance because Wal-Mart, which could afford to give people health insurance, chooses not to," said Greg Pierce, a 29-year-old from Ocala, Fla., who quit working at Wal-Mart a week ago.
Wal-Mart isn't the first American company to face withering attack by a groundswell of organized opposition and individual critics.
Standard Oil Co.'s dominance in a host of enterprises provoked widespread public outcry in the early years of the 20th century. Henry Ford, came under intense criticism in the late 1930s for heading the only nonunion American carmaker. In more recent years, Nike and Gap faced a barrage of criticism, particularly on college campuses, for what critics said were sweatshop conditions at its overseas factories.
Each company mostly or partly won over opponents after instituting change — either voluntarily or by force, said Nelson Lichtenstein, a professor of history at UC Santa Barbara and editor of "Wal-Mart: The Face of 21st Century Capitalism."
Standard Oil fell to the new antitrust laws demanded by the American public. Ford unionized, and Nike and Gap opened themselves and their factories up to inspection, review and oversight by independent observers.
If history is any guide, Wal-Mart probably will be forced to make changes as well, Lictenstein said.
"If they see that the political winds are moving against them, if the Democrats win big or something, then they'll start to deal," he said.
At Tuesday's media gathering, normally tight-lipped Wal-Mart executives took questions and described their efforts to remain relevant to the hundreds of millions of shoppers who pass through their doors each week.
Those plans include offering trendier and more-upscale merchandise; working with communities to design stores that better fit in with local architecture; employing local contractors and suppliers — particularly minority-owned businesses — to broaden the company's appeal in urban areas; and offering healthcare coverage for as little as $20 a month for families.
"One visit to Arkansas to be lectured on how America is better off with Wal-Mart isn't going to change anything, but if they're doing a whole raft of things, then Wal-Mart starts to look proactive and progressive rather than reactive and regressive," said analyst Husson. "If that's the strategy there is a tipping point where we get to where enough of that stuff will move public opinion and may even move press opinion."
Wal-Mart Flirts With Being Green. By Dan Mitchell. New York Times, April 22, 2006
THE sheer magnitude of Wal-Mart's plans to become more environmentally friendly has been enough to give pause to all but the most vehement of the company's critics.
The online environmental magazine Grist gave soft applause to Wal-Mart last week in its introduction to a Q. and A. session with H. Lee Scott Jr., the chief executive. When the company this month signed on to a call by a group of energy executives for caps on greenhouse-gas emissions, "the heart of this monolithic retail Grinch grew three sizes that day," writes Amanda Griscom Little, a Grist reporter, on grist.org.
To be sure, it is a little startling to hear Wal-Mart's chief executive bandying about phrases like "democratizing sustainability," but given that Wal-Mart plans to spend $500 million a year to, among other initiatives, reduce its greenhouse gases, build more energy-efficient stores and reduce packaging waste, even longtime naysayers have to take notice.
Ms. Little points out that Wal-Mart's size — the very thing that makes it so vulnerable to attack — is precisely what "could make it a powerful force for good for the planet."
"The company controls so much of the retail market, and has such sway over manufacturers, that any green initiatives on its part have huge ripple effects," she writes.
But even more, Mr. Scott says, Wal-Mart's size "enables us to help create markets for clean technologies that exist today, but don't yet have fully established markets."
"If Wal-Mart started using or selling those items all of a sudden, there would be enough scale that those would be viable alternatives," he added.
One commenter on Grist's blog wondered if Ms. Little's "glowing" article was "a cruel joke." The interview drew a lot of commentary in the blogosphere. Many bloggers seemed unsure how to react. Raven Brooks of buyblue.org, which "supports businesses that share our progressive values and ideals," wrote that he found the interview "shocking." He wondered about Wal-Mart's sincerity, but concluded that "this is progress." Wal-Mart has a change of heart? (buyblue.org)
Wal-Mart battle takes cue from politics. By Ron Fournier. Associated Press. April 24, 2006
There is no candidate. There are no ballots. There won't be an Election Day. And yet it may be the hottest, highest-stakes political contest in America today.
It's the campaign against Wal-Mart.
A year-old effort to force the nation's No. 1 private employer to change its business practices has evolved into a Washington-style brawl: tens of millions of dollars spent by Republican and Democratic political consultants using polling, micro-targeting, ads, e-mails, direct mail, grass-roots organizing and strategic "war rooms" to ply their trade in the corporate world.
Their fight involves some of society's most vexing trends, including the rising cost of health care, the painful realities of globalization and the waning relevance of organized labor.
"Our opponents have organized the likes of a political campaign against us," said Bob McAdam, vice president of corporate affairs at Wal-Mart. "It would be nonsense for us not to respond in a similar fashion."
Wal-Mart's main opponents are the Service Employees International Union, which started Wal-Mart Watch, and the United Food and Commercial Workers International Union (UFCW) , which funds a separate campaign called WakeUpWalMart.com
After failing to organize employees of Wal-Mart Stores with traditional tactics, the unions decided to use modern campaign and communications methods to drag the company into the public square and to try to shame them into change.
Both groups have hammered the world's largest retailer about its wages, employee health insurance, treatment of workers and proclivity for buying non-U.S. goods. Wal-Mart has responded with counterattacks and a multimillion-dollar campaign to polish its image.
On both sides are some of the best political strategists money can buy.
WakeUpWalMart.com is run by Paul Blank, political director for Howard Dean's 2004 Democratic presidential campaign, and Chris Kofinis, who helped draft retired Army Gen. Wesley Clark into that race.
Their campaign has all the markings of the Dean and Clark insurgencies: a snappy Web site, volunteer action lists and an issues-based, grass-roots campaign.
Among those lined up against the company at Wal-Mart Watch are Jim Jordan, campaign manager for 2004 Democratic presidential nominee John Kerry; and Terry Holt, a spokesman for the 2004 Bush-Cheney campaign.
Odd bedfellows: a Republican working for unions against Wal-Mart.
"Wal-Mart is giving capitalism a bad name," Holt said. "It's lost touch with its small-town roots and has become a company that is depending on corporate welfare ... and an all-too-cozy relationship with China."
Under fire, Wal-Mart turned to Reagan adviser Michael Deaver, Bush-Cheney political director Terry Nelson and several Democrats, among them civil-rights leader Andrew Young and campaign strategist Leslie Dach.
More odd bedfellows: Democrats working for Wal-Mart against organized labor.
"We were being attacked. We wanted to hire people who knew how to respond," said Wal-Mart's McAdam, formerly a GOP aide on Capitol Hill and political strategist for the tobacco industry.
WakeUpWalMart.com claims 212,000 supporters who can be mobilized with a computer stroke to recruit members and be at media events to shine a bad light on the Bentonville, Ark., company.
A goal of the UFCW is to show Wal-Mart's 1.3 million U.S. employees — many of whom have a low opinion of unions or fear retribution if they organize — that unionized labor can change their workplace and lives for the better.
"For years, labor leaders were fighting Wal-Mart the old way, but times have changed," Kofinis said. "Instead of organizing workers, they're trying to organize the nation" against Wal-Mart.
In its own way, this campaign over Wal-Mart is as important as the congressional races this year.
Bringing Wal-Mart to heel with 21st-century tactics would signal a fresh approach for organized labor after a decades-long decline in membership.
At stake for Wal-Mart is the future course of a company with $312.4 billion in sales in the fiscal year that ended Jan. 31. Its stock has fallen 20 percent over the past two years, and the company has had trouble sustaining its historically high rates of profit growth.
Analysts say bad publicity from the union-backed campaigns may be hurting Wal-Mart, although unrelated business pressures are also a factor.
Wal-Mart denies the union-backed campaign has hurt its bottom line. But the company sees the effort as a threat.
After the Maryland Legislature passed a labor-backed bill requiring companies — Wal-Mart in particular — to spend more on workers' health insurance, the Arkansas company came out with improvements in its health-care coverage.
Amid criticism, Wal-Mart also has announced plans to:
- Help competing local companies stay in business.
- Expand its share of the Hispanic market.
- Sell more environmentally friendly products.
- Increase diversity in its work force.
A multimillion-dollar advertising campaign featuring testimonials of happy customers and employees cast Wal-Mart as a good corporate citizen.
Nelson was hired to wage a grass-roots campaign by recruiting Wal-Mart shoppers and local leaders sympathetic to the corporation's cause.
In the union camp, both groups send opposition research on Wal-Mart to reporters, e-mail supporters and stage events such as rallies and documentary-film screenings.
They have had an impact.
Maryland-style health-care bills have been introduced in more than 30 states. Democratic candidates in Ohio, Arizona and Pennsylvania have spoken out against Wal-Mart, as have elected officials in Wisconsin, Georgia, Connecticut and several other states.
Then there is Sen. Hillary Rodham Clinton.
The potential 2008 presidential candidate served on Wal-Mart's board for six years when her husband was governor of Arkansas. Just two years ago, the New York Democrat called her time on the board "a great experience in every respect."
But now she does not want anything to do with the company. Her re-election campaign returned a $5,000 contribution from Wal-Mart, citing "serious differences with current company practices."
Selling Wal-Mart: Can the company co-opt liberals? By Jeffrey Goldberg. The New Yorker, April 2, 2007
Wal-Mart has hired Democratic P.R. experts to help improve its reputation on such issues as low wages, miserly benefits, sex discrimination, and union busting.
Wal-Mart has hired Democratic P.R. experts to help improve its reputation on such issues as low wages, miserly benefits, sex discrimination, and union busting.
On the second floor of Wal-Mart’s headquarters, in Bentonville, Arkansas, is a windowless room called Action Alley. In the Wal-Mart idiom, the term "Action Alley" usually refers to the main aisle of the company’s two thousand Supercenters—the stores that have upended the retail business by selling enormous quantities of groceries and imported goods at prices that competitors find difficult or impossible to match. At the "home office," as Bentonville is known, Action Alley is the company’s war room, a communications center that was set up and is staffed by Washington-based operatives from Edelman, a public-relations firm that advises companies on issues of "reputation management." Wal-Mart corporate culture is parsimonious except in the matter of executive compensation, but, according to a source, the company has been paying Edelman roughly ten million dollars annually to renovate its reputation.
Twenty years ago, Wal-Mart was widely viewed as a scrappy regional retailer, and its founder, Sam Walton, an Ozarks eccentric with a vision of super-discounting, was praised for intuiting the needs of his customers, and for maintaining high morale among his workers. When Walton retired, in 1988 (he died in 1992), the company had revenues of sixteen billion dollars. Today, Wal-Mart is the second-largest company in the world in terms of revenue—only ExxonMobil is bigger. Its revenues last year came to more than three hundred and fifteen billion dollars, with profits of more than eleven billion, and it has developed a reputation as a worldwide colossus that provides poor pay and miserly benefits to its 1.8 million employees. The image of the company is not helped by the immoderation of Sam Walton’s widow and children, who together control forty per cent of Wal-Mart’s outstanding shares, and who are worth roughly eighty billion dollars; they are, by a striking margin, the richest family in America. (They are worth more than Warren Buffett and Bill Gates combined.)
Wal-Mart is traditionally a Republican-leaning company (during the past fifteen years, more than seventy-five per cent of its political donations have gone to Republicans) and has become a favorite target of Democratic politicians. Hillary Clinton, who once served on Wal-Mart’s board, recently returned a five-thousand-dollar donation because of what a campaign spokeswoman said were "serious differences with current company practices." Barack Obama and John Edwards have joined union-led campaigns to denounce the company for its wage-and-benefit policies. Wal-Mart is notably unfriendly to unions; in 2000, when meat-cutters at a single Wal-Mart in Texas organized into a collective-bargaining unit, Wal-Mart responded by shutting down its meat counters across Texas and in five neighboring states. It closed an entire store in Quebec, rather than see workers unionize.
The company has also been criticized for driving American jobs overseas, by demanding immense discounts from its suppliers. Senator Byron Dorgan, a North Dakota Democrat who is one of Wal-Mart’s main foes in Congress, says that the company, by forcing its suppliers to manufacture goods in China, shows that it "doesn’t stand for American values." Wal-Mart has been the subject of numerous unflattering documentaries and books. Even Ron Galloway, the maker of a recent pro-Wal-Mart documentary, "Why Wal-Mart Works and Why That Makes Some People Crazy," has turned against the company. Galloway told me that he now considers Wal-Mart to be a "heartless" employer. "They just instituted a wage cap for long-term employees—people making between thirteen and eighteen dollars an hour. It’s a form of accelerated attrition. They can’t expect me to defend that," Galloway said.
Two unions—the Service Employees International Union and the United Food and Commercial Workers—fund anti-Wal-Mart lobbying groups that catalogue what they see as the company’s diverse sins. Each month seems to bring a new, self-inflicted embarrassment. Most recently, Wal-Mart announced that it had fired a technician from its Threat Research and Analysis division (which combats industrial espionage) for eavesdropping on telephone calls made by the Times’ Wal-Mart beat reporter, Michael Barbaro. Wal-Mart claims that the technician acted alone; the U.S. Attorney in Arkansas is investigating.
In 2005, Barbaro and another Times reporter, Steven Greenhouse, cited an internal memo written by the company’s chief human-resources executive, M. Susan Chambers, in which she suggested that the company could control personnel costs by not hiring unhealthy people. (To keep the sick and the lame off the payroll, Chambers suggested that all jobs should include "some physical activity; e.g., all cashiers do some cart-gathering.") In the same memo, Chambers noted that forty-six per cent of the children of Wal-Mart’s million-plus American employees were uninsured or on Medicaid.
More recently, the company experienced a run of bad publicity when it announced new scheduling policies for its store workers (known as "associates"). Under what critics call the "open availability" policy, workers must make themselves available for different shifts from month to month or risk losing hours. Kathleen MacDonald, a cosmetics-counter manager at a Wal-Mart in Aiken, South Carolina, explained to me, "It’s simple. They say you have to be there when the computer says the customers will be there. So if you have kids at home you can’t show up, but then your hours are being cut."
The company is facing more consequential challenges over its treatment of women. A class-action lawsuit filed in San Francisco in 2001 by six female Wal-Mart employees, alleging that the company has denied promotions and equal pay to women, is proceeding steadily to trial; by some estimates, the suit could cost the company as much as five billion dollars. Wal-Mart has denied that it discriminates against women. Kathleen MacDonald joined the suit after she learned that a male counterpart, who, like her, was stocking shelves, earned more than she did. When she raised the issue, she told me, "my immediate supervisor said, ‘Well, God made Adam first, and Eve came from him.’ I was, like, what? That’s when I decided enough was enough."
Full-time hourly workers at Wal-Mart stores make an average of $10.51 an hour, according to the company. Wal-Mart’s most energetic adversary, a group called Wake Up Wal-Mart, which is sponsored by the food workers’ union, notes that $10.51 may be the average full-time wage, but the company won’t disclose the average hourly wage of part-timers. "We think the true average is probably less than nine dollars," Chris Kofinis, the Wake Up Wal-Mart spokesman, said.
The company has had its bright moments, most notably in the immediate aftermath of Hurricane Katrina, when Wal-Mart mobilized its truck fleet to deliver goods to the storm zone. But that was a rare instance of good public relations. Owing in part to its status as a retail behemoth, Wal-Mart has met with resistance in numerous communities (including New York City) when it has tried to open stores. And its recent business performance has been less than stellar; sales have slowed, and the stock price is stagnant. Problems like these have concentrated the minds of Lee Scott, Wal-Mart’s C.E.O., and his top executives. "We used to be the David and now we’re seen as the Goliath," John Fleming, the company’s chief merchandising officer, told me.
The job of the Edelman people—there are about twenty, along with more than three dozen in-house public-relations specialists—is to help Wal-Mart scrub its muddied image. Edelman specializes in helping industries with image problems; another important client is the American Petroleum Institute, a Washington lobbying group that seeks to convince Americans that oil companies care about the environment and that their profits are reasonable. Edelman does its work by cultivating contacts among the country’s opinion élites, with whom it emphasizes the good news and spins the bad; by such tactics as establishing "Astroturf" groups, seemingly grass-roots organizations that are actually fronts for industry; and, as I deduced from my own visit to Bentonville, by advising corporate executives on how to speak like risk-averse politicians.
It became clear to me in Bentonville that Wal-Mart’s senior executives had been tightly scripted. When I talked with John Menzer, a company vice-chairman, a spokeswoman named Sarah Clark, my official escort there, told me that the conversation would be limited to the company’s new Jobs and Opportunity Zones concept, which is designed to help smooth the arrival of new stores in urban areas. (A company source told me that the Zones idea was intended by Edelman as a public-relations maneuver to soften Wal-Mart’s image among minority communities; the entire budget for the program is five hundred thousand dollars over two years.) Menzer, a slender man with a thin smile, explained the company’s attraction to underemployed inner-city residents, saying, "One of the biggest opportunities a person has at Wal-Mart is to be part of this growth company. There are always opportunities for promotion, learning, and education, and people know they can build a career here."
When I asked about the "open availability" policy, Clark interrupted, while Menzer stared at me. "I can certainly take that one," Clark said. "I’ll make a note of that. We’ll talk about that later. We don’t have ‘open availability.’ " Menzer continued as if the question had not been asked. "Now we’re expanding outside our four walls to invest in the community, so let me add that in as another step we’re taking," he said. (Sometime later, Clark suggested that I interview an employee about flexible scheduling, and she provided the name and number of one who would talk to me: Latoya Machato, a cashier at a Texas Supercenter. I called the store and asked for Machato, but was told that "cashiers can’t come to the phone during work." I called later and was told that Machato could speak to me on her break, but would not be allowed to call long-distance from a company phone. I asked Clark if Machato could talk to me after her shift, but Clark said that that would be impossible, because the store would have to put her "on the clock," and thus file the paperwork to get her paid an extra hour’s wage.)
The Edelman team assigned to Wal-Mart, I learned, is divided into three groups: "promote," "response," and "pressure." The Jobs and Opportunity Zones notion came from the promotions team. The response-team members—veterans of political campaigns—are supposed to quickly counter criticism in the press or on the Web. The pressure group works on opposition research, focussing on the unions and the press.
There is great mistrust of the press at Wal-Mart headquarters. The chief spokeswoman for the company, a former A. T. & T. executive named Mona Williams, keeps on a shelf a framed cover of a 2003 issue of Business Week featuring a story titled "Is Wal-Mart Too Powerful?" The story asked tough questions about Wal-Mart’s influence on the American economy. "I keep that there to remind me never to trust reporters," she said, without smiling. Sarah Clark was friendlier, but similarly suspicious. It was Clark who, without enthusiasm, brought me to Action Alley for a brief glimpse inside.
Before opening the door, she instructed me not to write down anything I saw—the third time that this particular directive had been issued. In some ways, the home office is not unlike the headquarters of the National Security Agency—both contain a large number of windowless rooms and both are staffed by people who are preoccupied by the movement of strangers in their midst. The N.S.A.’s headquarters, though, seemed to me more aesthetically appealing; the Wal-Mart home office resembles a poorly funded elementary school. Wal-Mart executives take pride in their ostentatiously shabby surroundings. "When I was working internationally, I got to be friends with Henry Kissinger, and so I invited Henry to have lunch with us," Menzer told me. "We had lunch in the Quail Room, and it’s got pictures of Sam Walton and all his bird hunting, and we handed out Subway sandwiches and said, ‘Well, you’re very special, so we threw in a bag of chips,’ and I daresay I don’t know if he ever saw a Subway sandwich before, but he was actually so impressed that we live our culture."
I pointed out to Menzer that his salary would allow him to purchase something more elegant. His face clouded over. "I’m just not going to talk about that," he said. In 2005, Menzer earned six and a half million dollars in salary, bonuses, and options.
Clark opened the door of Action Alley to reveal a dark, threadbare room, its walls, like most of Wal-Mart’s walls, painted battleship gray. Six desks were clustered at the center of the room, and at these desks sat five Edelman executives.
When the presence of a reporter was announced, three of the executives looked away and two stood up to greet me. One was Greg St. Claire, at the moment the senior Edelman employee there. St. Claire, who is about forty and is a former Republican congressional staff member, got Wal-Mart in some trouble last year, because of a group called Working Families for Wal-Mart, which advertised itself as a "grass-roots" organization. St. Claire was one of the forces behind Working Families for Wal-Mart, which paid for his sister, Laura St. Claire, to travel across America in a recreational vehicle and keep a blog about visits with Wal-Mart employees. Everyone she talked to was delighted with Wal-Mart. At about the time that the trip came to an end, Business Week revealed that Wal-Mart had financed the journey. When I asked Richard Edelman, the company’s chairman, about this rather blatant example of Astroturfing, he said, of Working Families for Wal-Mart, "I do believe that it is a real group of real people, as far as I know." Working Families for Wal-Mart is housed in Edelman’s Washington office; its steering-committee members, some of whom have business ties to the company, were recruited by Edelman. They include the singer Pat Boone, who told me by e-mail that he volunteered his public-relations services to Wal-Mart several years ago, and Wal-Mart passed his name on to the group.
Greg St. Claire was not interested in talking to me, but the other Edelman executive stood up and said hello. He was a man of about thirty named Fred Baldassaro. I was surprised to see him. We had last crossed paths more than a year earlier, in a union hall in Albuquerque, New Mexico. At the time, Baldassaro was working for the Democratic National Committee chairman, Howard Dean, as his top travelling aide. Dean had spoken about democratic values at a rally, and said, "When you see that you’re putting in as many hours as the C.E.O. of your company, and he’s making five hundred and thirty-eight times what you’re making, do you think capitalism works for you?"
Down some stairs from Action Alley is the office of Lee Scott, Wal-Mart’s president and C.E.O., who last year earned $15.7 million in salary and bonuses. Early this month, the company announced that it was granting him an additional twenty-two million dollars in stock. In the past year, Scott earned roughly two thousand times the salary of the average Wal-Mart worker.
Sarah Clark was eager to move along, but I asked Baldassaro why he went from Dean’s Democratic National Committee to Scott’s Wal-Mart.
"Well, it’s interesting here," he said. "I’m getting married soon, anyway, and, you know . . ." He trailed off, as Clark invited me to leave.
Later that day, I drove to a Wal-Mart Supercenter in the nearby town of Rogers with one of Clark’s deputies, a young New Yorker named David Tovar, who, before joining Wal-Mart, spent nine years as a spokesman and lobbyist for Philip Morris, including a stint arguing against government regulation of cigarettes. He explained his position: "It’s a legal product that adults can choose to use, or not use, as they see fit. I learned a lot by doing that sort of work." As we drove out of Bentonville, I asked Tovar if he thought it odd to find ostensibly pro-labor Democrats at the headquarters of Wal-Mart. In fact, he said, it would be quite normal for Democrats to join Wal-Mart’s "cause," because Wal-Mart’s customers are the Party’s natural constituency.
Wal-Mart’s executives are angry about Democratic attacks on the company. Tovar’s boss, Mona Williams, told me, "Wal-Mart is taking care of the people the Democratic Party says it represents—the poor, the middle class. The Democrats are not taking care of them. We’re like Lyndon Johnson’s Great Society."
Tovar offered a more self-interested explanation for his service in the public-relations industry: "Why did I go work for Philip Morris? Because I wanted to get out of my parents’ house. Why do people take jobs? It’s like in ‘Thank You for Smoking’ "—Christopher Buckley’s satire of the Washington public-relations industry. "What do they all say in that book? ‘I’ve got to pay the mortgage.’ You know, everybody’s got to pay the mortgage."
In another novel, Buckley devoted a chapter to the exploits of a fictional White House advance man named Leslie R. Dach. "His motto was ‘Get the fuck out of my way,’ " Buckley writes of Dach. "Leslie was serene in his contempt for fools, a category which in his view included most of humanity."
Buckley borrowed Dach’s name from an actual Leslie Dach, who was his roommate at Yale, and who, thirty years later, remains a close friend. The real Dach also worked in Presidential politics—first as an advance man for Senator Edward Kennedy in his failed run for the nomination in 1980, and, later, as communications director for Michael Dukakis’s campaign in 1988 (a campaign that is still recalled for the moment when Dukakis was photographed, and ridiculed for, wearing a helmet as he rode in a tank). Today, Dach is Wal-Mart’s executive vice-president for corporate affairs and government relations. Last year, Lee Scott hired Dach away from Edelman, where, among other duties, he was vice-chairman, and where he managed the Wal-Mart account. "Fresh from his triumph in staging Michael Dukakis’s tank ride, it’s on to Bentonville," Buckley said to me earlier this month. When I mentioned Buckley’s comment to Dach, he demurred: "I was thousands of miles away in my office at that famous moment."
Dach, who is fifty-two, is the son of Holocaust survivors and grew up in Queens. He is wiry, with wavy graying hair and a pointed sense of humor—an improbable addition to the ranks of Wal-Mart’s senior managers. He is not as impolitic as his fictional counterpart, although Buckley told me that Dach’s friends are "bemused that he ended up in public relations, because, roughly speaking, he was the least tactful person on the planet."
Upon graduating from Yale, Dach worked for a time for the National Audubon Society, and then for the Environmental Defense Fund, and he became involved in Democratic politics. (He has worked in seven Presidential campaigns.) After the 1988 race, the public-relations expert John Scanlon, who was volunteering on the Dukakis campaign, recommended Dach to Edelman. He went to work there and stayed for seventeen years, interrupted quadrennially for campaigns. In 2000, he managed the program at the Democratic National Convention for the Gore campaign. At Edelman, he did public relations for a range of corporate interests, along with Michael Deaver, Ronald Reagan’s former image-maker, who also works for Edelman in Washington.
One of Dach’s first big clients was Starkist, a division of Heinz, which was being accused by environmentalists of slaughtering dolphins during tuna harvests. Richard Edelman told me that Dach worked to bring the two sides together, and helped create the dolphin-safe tuna campaign. Dach maintained his ties with the environmental movement throughout his career at Edelman. In 1995, he helped to plan a seminar for petroleum-industry executives on ways to counter the bad publicity that comes with oil spills, while at the same time serving on the board of the National Audubon Society.
Ethical ambidexterity is no barrier to success in the public-relations field, particularly in Washington. Many prominent Democrats spend the years between national elections representing corporate clients: the political consultant Carter Eskew, who has worked for such Democratic politicians as Al Gore and Christopher Dodd, also worked for the tobacco industry; Mike McCurry, the former Clinton White House press secretary, represents the telecommunications industry in its fight against, among others, Democratic bloggers on issues of Internet access. Democrats and Republicans frequently come together to build bipartisan lobbying firms that seek corporate clients; Clinton’s onetime counsel Jack Quinn, who had as a client the international fugitive Marc Rich, for whom he helped arrange a Presidential pardon, built a successful firm with Ed Gillespie, the former Republican National Committee chairman.
Dach and Edelman have been innovators in their field. A press release issued in 2000 outlines a strategy that Dach has used repeatedly to good effect. "You’ve got an environmental disaster on your hands," the document reads. "Have you consulted with Greenpeace in developing your crisis response plan? Co-opting your would-be attackers may seem counterintuitive, but it makes sense when you consider that N.G.O.s (non-governmental organizations) are trusted by the public nearly two to one to ‘do what’s right’ compared with government bodies, media organizations and corporations." The document goes on to describe Amnesty International, the Sierra Club, and the World Wildlife Fund as "brands" that the public believes "do what’s right."
Edelman’s co-option policy may already be on display at Wal-Mart. Greenpeace has talked with the company about the issue of environmentally sound product packaging, and earlier this year Lee Scott joined Andy Stern, the leader of the Service Employees International Union, in a coalition of businesses and unions calling for quality health care to be made available to all Americans by 2012. Stern, whose union pays for the activities of a group called Wal-Mart Watch, which regularly criticizes the company, told me he did not believe that he had been co-opted by Wal-Mart, but his allies in the labor movement weren’t so sure. "Anyone who wants to take health-care lessons from Wal-Mart," Chris Kofinis, of Wake Up Wal-Mart, said, "needs to have a serious reality check." Government-sponsored universal health coverage would, of course, free Wal-Mart and other companies of the burden of providing health insurance for their employees.
Dach declined to take credit for Wal-Mart’s foray into the health-care-policy debate, but Richard Edelman suggested that he is seeing Dach’s influence on the company. Edelman called Dach an "idealist" who has carried to Wal-Mart his fervor for such traditional Democratic causes as universal health care and environmentalism. "I feel very strongly that Leslie Dach is making a very real contribution to Wal-Mart," he said. "When he left, I didn’t get weepy, but I said, ‘Go and make a great contribution.’ "
Wal-Mart, in turn, is making a great contribution to Dach: he was given three million dollars in stock and a hundred and sixty-eight thousand stock options, in addition to an undisclosed base salary. He and his wife, a nutritionist, recently bought a $2.7-million house in the Cleveland Park neighborhood of Washington. He commutes to Bentonville during the week, to an apartment furnished out of a Wal-Mart store.
Dach’s decision to join Wal-Mart has brought him, by his own admission, some mockery, most recently at a seventy-fifth birthday party for his former boss Edward Kennedy. (Dach said that, for each person who teased him, "two others asked if they could do business with us.") It has also strained relations with some friends. Joseph Sellers, a prominent civil-rights lawyer who is one of the lead attorneys in the Wal-Mart sex-discrimination lawsuit, said that his relationship with Dach has become awkward. "There’s no question that his profession views reality as malleable," Sellers said. "I’m in the reality business."
Even Andy Stern, the president of the service-employees’ union, who maintains a diplomatic relationship with Lee Scott, suggested that Dach is a turncoat. Lee Scott, he said, pursues harsh labor policies but is not a hypocrite about it, while Dach, an ostensible progressive, has, by declaring his allegiance to Bentonville, abandoned core principles of Democratic activism. "I would respect him if he said, ‘Listen, I’m just trying to get rich,’ " Stern told me. "If that was your goal, you did really well. If your goal is to say you’re a progressive, then you’re full of it."
In a recent conversation, Dach wanted to emphasize that he was not doing this for the money. He added, "I think I’ve been a person who has cared about issues over my entire professional career, and through seven Presidential campaigns I’ve tried to make a difference in my own limited way, and I firmly believe Wal-Mart’s core proposition of saving people money so they live better, working on sustainability, being part of the solution, moving these policies forward."
Dach knows how to divert an unfriendly question with a flood of words, few of which address the subject at hand. I asked him whether it was moral for a self-styled progressive Democrat to work for a company that, among other things, maintains a mobile squad of union busters who can be dispatched by corporate jet to any store that gives off the faintest rumblings of union activity.
"I think that, first of all, morality is not the right language," he said. "I think the more than one hundred and thirty million people who shop at Wal-Mart each week, who are saving money so they can live a better life, who save money there, they’d be insulted by that frame. Some of these issues are complex, and the debates are complex."
Like the best P.R. men, Dach seems to find joy in spin. One day, while we were having lunch in the Wal-Mart cafeteria, I asked him why all the televisions in the building seemed to be tuned to Fox News. The television in the main lobby was on Fox, as were the televisions in the P.R. wing of the building and in the cafeteria, including one that was ten feet from his head.
"Is that true?" he said. After I assured him that it was, he said, "What about in the mornings? Do you know if they’re on Fox in the mornings?"
Such matters, he said, are sideshows. The important thing, he told me, is that Wal-Mart is making changes that even the most loyal Democrat would have to acknowledge are beneficial to the working poor and to the environment. Dach mentioned Wal-Mart’s newly instituted plan to provide its customers with generic drugs for four dollars a prescription. The program has been a success, even though, so far, a relatively small number of drugs—about three hundred—are on the four-dollar list. The program is being marketed as a way for Wal-Mart to "give back to the community," as Dach put it. It, too, has its critics. Charlie Sewell, a senior vice-president of the National Community Pharmacists Association, a lobbying group, called the Wal-Mart plan a "classic bait-and-switch," adding that most of the drugs on the list are older, less prescribed drugs.
Wal-Mart’s executive vice-president responsible for pharmacies, Bill Simon, told me that the company is making large profits on the program. "It’s not like these are twenty-dollar items that we’re selling for four dollars as a loss leader," he said. By applying the Wal-Mart model to the generic-drug industry—pressuring manufacturers to sell to Wal-Mart for less—Simon said, the company has been able to make "more money" in pharmaceuticals "than we made last year." Wal-Mart’s cost for some generics, he said, is as low as thirty-two cents. Not far from Simon’s office is a wall covered with exhortations to the company’s workers. One reads, "If you aren’t working on sales or the things that enhance the profitability of this company, then you are working on the wrong things."
The generic-drug program has taken some public pressure off the company on the subject of its medical benefits. According to one study, Wal-Mart spends an average of thirty-five hundred dollars per employee per year on health benefits; the average for the retail industry over all is forty-eight hundred dollars. Recently, the company offered employees a "value plan" for health insurance, at a monthly premium as low as eleven dollars in some areas. But a family on the plan would have a three-thousand-dollar deductible, which would make it functionally unaffordable to a worker making seventeen thousand dollars a year. When I asked Linda Dillman, the company’s vice-president for benefits, about this potential financial strain, she said, "Well, that’s the problem we all have." Dillman was a strong defender of Wal-Mart’s benefits plan, and said that the Susan Chambers memo that called for Wal-Mart to cease hiring unhealthy people had been misinterpreted. "The fact that we have to apologize because we want our associates to be healthier is absurd to me," she said.
At the core of Dach’s campaign to prove that Wal-Mart is changing is the new "green" campaign—the company’s efforts to cut fuel and electricity consumption and make its stores eco-friendly. The green campaign has won some important allies. John Flicker, the president of the National Audubon Society, told me that he is pleased to see Dach at Wal-Mart: "He truly believes in the cause, and at a company the size of Wal-Mart he can truly make a difference." Dach gives credit to Wal-Mart. "All of this began way before I got here," he told me. "The passion for change is widespread throughout the company. I’m just a helper."
As part of the green campaign, Wal-Mart has committed itself to cutting the fuel consumption of its truck fleet, the second-largest in America, and to reducing its electricity bill—Wal-Mart is one of the largest private consumers of electricity in the world—by twenty per cent in the next five years. Dach arranged for me to visit a recently opened Supercenter near Bentonville that was built to conserve energy.
For any number of reasons, this Wal-Mart seemed different from other Wal-Marts I’d been to. The prices were still low, but the workers appeared to be more enthusiastic, and I was impressed, in particular, by the store’s environmental innovations. Skylights allowed so much natural illumination that the fluorescent lights were switched off. The lights in the vast freezers were controlled by motion sensors, so they switched on only if someone walked nearby. "In this store alone, we’ll save more than a hundred thousand dollars in electricity this year," Charles Zimmerman, a Wal-Mart vice-president who showed me around, said. "What we’re trying to do is make sustainability sustainable," Dach said.
Even doubters in the environmental movement acknowledge that Wal-Mart is attempting to lower its energy consumption. "The energy-efficiency piece of this is real," Carl Pope, the executive director of the Sierra Club, told me. "They will deliver on it. But it’s a straight-out business call." Pope, who worked with Dach while he was at Audubon—"He was very good at what he did," he said—is now a member of the coalition that makes up Wal-Mart Watch. "The third and by far the most intriguing initiative is that they’re going to green their supply chain"—to press their more than sixty thousand suppliers to embrace conservation as well. "They, and perhaps only they, have the market power to do it," Pope said. "It will be phenomenally important if they actually did it."
Pope acknowledged that Wal-Mart’s liberalizing environmental strategy will win it new supporters, but he is skeptical of the company’s motives. "You can’t be a good progressive and support Wal-Mart because Wal-Mart is saving money on energy—that’s all they’ve done so far," he said. On Dach, he was acerbic: "One of the remarkable things about the environmental movement is how rarely people from our side end up on the other side, and Leslie is on the other side."
Environmentalists, he said, should not be swayed by cost savings alone. "You can’t say that they have a good business model. Their model is efficient. Henry Ford used efficiency to raise standards, to bring his workers into the middle class. Wal-Mart has that choice. Their game is to say that there’s no other way to be efficient. But they’ve driven down wages across the retail industry, and they don’t have to, in order to be profitable." Pope cited Costco, the chief rival to Sam’s Club, Wal-Mart’s membership warehouse. "Costco pays their workers well"—the average wage at Costco is $17.46 an hour—"and we know they’re profitable."
Mona Williams, the chief spokeswoman for Wal-Mart, disagreed. When she was asked why the company could not simply give two-dollar-per-hour across-the-board raises to its store employees, her reply was free of obfuscation. "Wal-Mart’s profit per associate is six thousand four hundred dollars," she said. "If we were to pay two dollars more an hour to associates, that would cut four thousand dollars out of our per-employee profit. If anybody ever stopped to do the math, they’d see this. It would take two-thirds of the profit if we gave everyone two dollars more." She added, "You could raise prices, but what about the woman who is shopping for Easter shoes for her kids? We can’t raise prices on her."
Dach told me, "Wal-Mart pays competitive wages everywhere we have a store or club. We’re one of the only companies to support an increase in the federal minimum wage. We have many more applicants than we have jobs, and we have more than one million people on our health care."
Dach, whose 1988 candidate for President, Michael Dukakis, called for "good jobs at good wages," said that "it’s too early to tell" if he will work on the 2008 campaign. (He would not say which candidate he favored, or whether he would remain on the Wal-Mart payroll.) The company, Dach said, is handing out political donations in a more "evenhanded" manner now than it did before his arrival.
"It was very smart of Wal-Mart to appoint him to this job," Kenneth Adelman, the former Reagan Administration arms-control official and one of Dach’s former colleagues at Edelman, said. "He’s brilliant at what he does. He’s a great advocate for Democratic causes." Each election year, Adelman recalled, he and Dach would stage a mock debate before employees in the Edelman office. "It would always start out seriously, and then get funny," he said. "I would argue the Republican line, and Leslie played the part of the Democrat."
More Information & Links
Reclaim Democracy's Articles, Studies and Resources on Wal-Mart
Wal-Mart versus Women
Wal-Mart Subsidy Watch from Good Jobs First
Wake Up Wal-Mart website of the United Food and Commercial Workers International Union
Wal-Mart: The High Cost of Low Price. Brave New Films, 2005. Directed by Robert Greenwald.
Dicker, John. The United States of Wal-Mart (Tarcher, 2005).
Fishman, Charles. The Wal-mart Effect: The High Cost of Everyday Low Prices (2006).
Norman, Al. The Case Against Wal-Mart (Raphel Marketing, 2004).
Norman, Al. Slam-Dunking Wal-Mart! (2003).
Ortega, Bob. In Sam We Trust: The Untold Story of Sam Walton and How Wal-Mart Is Devouring America (Times Business, 1998).
Quinn, Bill. How Wal-Mart Is Destroying America and What You Can Do About It (Ten Speed Press, 1998).
Slater, Robert. The Wal-Mart Triumph: Inside the World's #1 Company
Soderquis, Don. The Wal-Mart Way: The Inside Story of the Success of the World's Largest Company (Nelson Business, 2005).
Spotts, Greg and Robert Greenwald. Wal-Mart : The High Cost of Low Price (2005).
Taylor, Don. Up Against the Wal-Marts: How Your Business Can Prosper in the Shadow of the Retail Giants (1996).
Lichtenstein, Nelson, editor.Wal-Mart: A Field Guide to America's Largest Company and the World's Largest Employer (2006).
Articles & Reports
Lorrie Grant, An Unstoppable Marketing Force: Wal-Mart Aims for Domination of the Retail Industry Worldwide, USA Today, Nov. 1998.
John Huey and Sally Solo, America's Most Successful Merchant, Fortune, Sept. 23, 1991.
Richard Freeman and Arthur Ticknor, Wal-Mart is Not a Business, It's An Economic Disease, Executive Intelligence Review, Nov 13, 2003.
Choice: The Wal-Mart paradox. By Lisa Carrricaburu. Salt Lake Tribune, May 23, 2004. Americans do not like being told what to do. We are an independent people. We like to have choices. We value diversity and take pride in the depth it gives our culture. The trouble is, we also like to pay less for more, and we admire business acumen and innovation that makes that possible. Therein lies the Wal-Mart paradox. U.S. consumers hate the gigantic retailer and its invasion-like expansion, but they also love it. They hold their noses just long enough to fill their shopping carts..."
The Wal-Mart Effect. Los Angeles Times, November 2003.
Part I: An Empire Built on Bargains (11/23/03)
Part II: An Obsession With Costs (11/24/03)
Part III: Unions Battle to Stop Invasion (11/25/03)
Wal-Mars Invades Earth, By Barbara Ehrenreich, New York Times, July 25, 2004.
Study Cites Social Costs of Wal-Mart, By Abigail Goldman, Los Angeles Times Staff Writer, Aug 3, 2004.
"Inadequate wages and benefits force workers at Wal-Mart stores in California to seek $86 million a year in state aid, according to a report released Monday by the UC Berkeley Labor Center. Hidden Costs of Wal-Mart Jobs by Arindrajit Dube and Ken Jacobs (University of California-Berkeley Labor Center, Aug 2, 2004)
Moreover, if other retailers cut their wages and benefits to the levels offered by Wal-Mart Stores Inc., the cost to California's public-assistance programs would rise by $410 million annually, the study said.|
In their report, Berkeley researchers Arindrajit Dube and Ken Jacobs contend that more than other retail workers, Wal-Mart employees rely on a variety of public-aid programs, including food stamps, Medicare and subsidized housing.
"In effect, Wal-Mart is shifting part of its labor costs onto the public," the researchers wrote. "Wal-Mart's long-term impact on compensation in the retail industry has the potential to place a significant strain on the state's already heavily burdened social safety net."
Bentonville, Ark.-based Wal-Mart, the world's largest retailer, maintains that it pays competitive wages and relieves public assistance burdens by giving jobs to many people who otherwise would not be employed.
"It's unfortunate that these UC Berkeley researchers would release a study whose findings are questionable," Wal-Mart spokeswoman Cynthia Lin said. The company employs more than 60,000 people in California.
The public debate about whether Wal-Mart benefits or hurts local communities has grown considerably louder over the last few years, particularly in California, where some communities have opposed the company's expansion plans.
The company's wage and benefit structure was also cited as a reason behind last year's strike and lockout of unionized grocery workers in Southern California; the largest supermarket chains said they needed to revamp costs to compete with the retail giant.
Dube and Jacobs' study took into account statewide data on wages paid by large retailers, the numbers of workers throughout the retail industry who use state assistance programs and information gleaned from lawsuits about Wal-Mart's pay and benefits.
Dube, of Berkeley's Institute of Industrial Relations, and Jacobs, of the school's Center for Labor Research and Education, said they did not contact Wal-Mart in preparing their report.
The report found that Wal-Mart's wages on average were 31% below those of the broader group of large retailers - $9.70 an hour versus $14.01 an hour.
And with less earning power, Wal-Mart workers rely more heavily on state resources, Dube and Jacobs found, costing the state $32 million in health-related expenses and $54 million in other assistance.
The study contends that the average non-management Wal-Mart employee receives $1,952 in public assistance compared with $1,401 for workers at large retailers in general.
"The disproportionate use by Wal-Mart workers of the various healthcare and social safety net programs, and the cost that that brings to the state, is an important consideration for policymakers," Jacobs said in an interview.
Dube and Jacobs noted that other studies have reported similar findings.
In Georgia, a state survey of the state's children's health insurance program found that Wal-Mart employees' families disproportionately relied on the program, accounting for more than 10,000 of the 166,000 children enrolled.
In Congress, a report by Democratic staffers on the House Committee on Education and the Workforce looked at employee eligibility for assistance programs and found that a typical 200-employee Wal-Mart store could cost federal taxpayers $420,750 a year, or more than $2,000 per employee.
Wal-Mart has disputed those findings."
Wal-Mart's New Spin. New York Times editorial, Sept 14, 2004.
"All We Want to Do is Grow": Wal-Mart Looks for New Worlds to Conquer
Corporate Research E-Letter, No. 52, March-April 2005
Fighting Chains Stores Past and Present: The Roots of the Campaign Against Wal-Mart
Corporate Research E-Letter No. 54, July-August 2005
Grand Jury Probing Wal-Mart Spending: Federal Grand Jury Probes Wal-Mart Misspending Allegations After Retailer Hands Over Documents, By Chuck Bartels, Associated Press, ABCNews.com, April 22, 2005.