Outten & Golden: Empowering Employees in the Workplace

Special-Interest Groups, Stop Picking on Poor Wal-Mart

January 19th, 2005 | Paula Brantner

Did you know that: Wal-Mart offers affordable health care benefits to its associates? Or that Wal-Mart does not encourage its associates to apply for public assistance? Or that currently, 74 percent of Wal-Mart’s hourly associates in the United States work full-time? (See walmartfacts.com for similar juicy tidbits) If this does not match your understanding (or personal experience) of Wal-Mart’s labor practices, then you’ve been listening to too many “special-interest groups…spread[ing] misinformation” according to Lee Scott, President and CEO of Wal-Mart. (See Ad Copy.) You can count us among them, but is it really misinformation?

On January 13, Wal-Mart took the unprecedented step of placing an ad in 100 major newspapers around the country. (See Press Release.) This ad was not designed to tout the company’s “always low prices,” and it didn’t come armed with the company’s trademark smiley face (although there were some smiling Wal-Mart associates at the bottom of the page, seemingly happy with their career choices). If this ad had a face, it was that of the angry and frustrated President and CEO Scott, who said,

For too long, others have had free rein to say things about our company that just aren’t true. Our associates are tired of it and we’ve decided it’s time to draw our own line in the sand. We understand that, as one of the most visible corporations in the world, we will be a target for criticism. When it is valid, we try to learn from it and become a better company. But we have made a commitment to our associates, customers and suppliers that when false allegations are made about Wal-Mart, we will actively correct the record.

While Scott was not more specific about who these “special-interest groups” are, it is clear that many groups are targeting Wal-Mart right now, and specifically taking aim at how the company treats its workers. Here’s just a little bit of the point/counterpoint:

Wal-Mart and Wages

Wal-Mart says:

Currently, 74 percent of Wal-Mart’s hourly associates in the United States work full-time. That is well above the 20 – 40 percent typically found in the retail industry. Our average hourly wage for regular full-time associates in the U.S. is $9.68 an hour, almost double the federal minimum wage. Wal-Mart’s average full-time wage in urban areas is slightly higher than the national average. For example: Chicago, $10.69; Austin, TX, $10.69; Washington D.C./Baltimore, $10.08; Atlanta, $10.80; and in Los Angeles, $9.99.

The United Food and Commercial Workers (UFCW) union begs to differ:

Based on employee contacts across the country and the U.S. Bureau of Labor Statistics pay averages between $7.50 and $8.50 an hour for non-supervisory employees. An average Wal-Mart associate makes about $8.00 an hour with about 32 hours a week–a monthly gross of barely $1,000. A Wal-Mart spokesperson told USA Today on 1/29/03 that their pay is close to or equal to union wages, but grocery workers are paid an average of $10.35/hour based on Bureau of Labor Statistics data.

In reading Wal-Mart’s assertions, one has to wonder, what does Wal-Mart consider full-time employment? And don’t you wonder why Wal-Mart selected the urban areas that it did for comparison’s sake, when it’s common knowledge that Wal-Mart has historically concentrated its stores in rural areas and the poorest sections of urban areas? As Betty Dukes, the lead plaintiff in a sex discrimination class action against Wal-Mart, remarks: “They don’t put Wal-Mart in Piedmonts. They don’t put Wal-Mart in those high-end parts of the community. They plant themselves right in the middle of Poorville.” (See Seattle Post-Intelligencer article.) And they keep their workers in Poorville as well.

Wal-Mart and Women:

Wal-Mart says:

Wal-Mart’s commitment to diversity starts with our board of directors and extends throughout the organization. Our 14-member board of directors includes a female, two African Americans and two Hispanics. Wal-Mart is a leading employer of Hispanics in the U.S. with more than 128,000 Hispanic associates; a leading employer of African Americans with more than 206,000 African Americans; and an employer of more than 220,000 seniors who are 55 and older.

In the U.S. District Court’s opinion which allowed the sex discrimination class action against Wal-Mart to go forward (now under appeal by Wal-Mart), U.S. District Judge Martin Jenkins says,

In sum, Plaintiffs have exceeded the permissive and minimal burden of establishing commonality by providing: (1) significant evidence of company-wide corporate practices and policies, which include (a) excessive subjectivity in personnel decisions, (b) gender stereotyping, and (c) maintenance of a strong corporate culture; (2) statistical evidence of gender disparities caused by discrimination; and (3) anecdotal evidence of gender bias. Together, this evidence raises an inference that Wal-Mart engages in discriminatory practices in compensation and promotion that affect all plaintiffs in a common manner.

The National Organization for Women says,

The Wal-Mart model sacrifices workers, especially women, through low wages, unattainable promotions and unaffordable benefits, in order to drive down costs and boost profits. Former Wal-Mart employees told NOW activists that while employed they complained about unequal wages and failed attempts at promotion to management. For example, store managers, responsible for their stores’ performance and results, are said to freely express the view that women can afford to make less, since they are not breadwinners, and accordingly pay them wages lower than male counterparts. Women comprise 70 percent of all employees at Wal-Mart, so paying them 4.5 to 5.6 percent less than male counterparts results in significant savings that add profit to their bottom line.

While Scott’s press blitz was notably silent on the issue of how Wal-Mart’s female workers are treated (on the advice of his lawyers, perhaps?), it’s clear that Wal-Mart’s day of reckoning cannot be forestalled much longer, as this and other lawsuits progress.

Wal-Mart and Overtime Pay:

Wal-Mart says:

Currently, there are more than 40 pending wage-and-hour cases seeking class certification status. All of these cases are equally important to Wal-Mart. These allegations go against our three basic beliefs – respect for the individual, service to our customers and strive for excellence – and we take these allegations very seriously. Wal-Mart’s policy is to pay hourly associates for every minute they work. However, with a company this large, there will inevitably be instances of managers doing the wrong thing.

Just today, CNN/Money reports:

Three Wal-Mart Stores Inc. hourly workers in California have sued the company for failing to pay them for all the time they worked. The lawsuit, filed last Friday in Alameda County Superior Court, seeks class action status…[and attorneys estimate] there are more than 200,000 potential class members. The suit charges that Wal-Mart “deleted thousands of hours of time worked from employees’ payroll records” by erasing overtime hours and by penalizing employees who forgot to punch in after their meal breaks by denying them pay for the remainder of those days, according to court documents….

Issues related to Wal-Mart’s compliance with labor regulations have dogged the Bentonville, Ark. company. Last year, three assistant managers sued the company in Los Angeles for forcing them to work overtime without pay and denying them breaks. Also, a Washington state court last year gave the go ahead to a large class action accusing Wal-Mart of violating the state’s wage and hour laws. In 2002, a jury in Oregon found Wal-Mart forced employees to work unpaid hours between 1994 and 1999.

Special interest groups or not (and just why is it that groups representing business interests are never characterized as “special interest groups?”), the number of lawsuits now pending against Wal-Mart, as well as the unionization campaigns, will shed increasing light on Wal-Mart’s business practices. There’s already enough evidence out there that Wal-Mart’s actions have created a vicious economic circle: Wal-Mart’s employment practices and competitive effect on other employers in a community drive down wages, which creates a larger class of low-income workers, who, you guessed it, have to shop at Wal-Mart because they can’t afford to shop elsewhere (like the other businesses who pay their employees higher wages.)

The question is what will it take for the American public to fight back? Do these mean “special-interest groups” exposing what’s really going on stand a chance at educating enough folks to stop this massive force? Or will Wal-Mart’s dogged adherence to its values, along with its sheer size and strength, trigger an irreversible decline in the status of American workers?

More Information:

UFCW Wal-Mart Workers Campaign

Wal-Mart Class Website

Wal-Mart versus Women (featuring Miss America 1992 Carolyn Sapp)

NOW’s Wal-Mart Campaign

Miami Herald article: Wal-Mart defends its labor practices in media campaign

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