Wal-Mart Retailing Giant
Redux Pictures file
Every week, about 112 million Americans shop at Wal-Mart. The firm had net income of $10.2 billion last year.
By Tom Curry National affairs writer
updated 7/5/2005 1:24:00 PM ET 2005-07-05T17:24:00

A union crusade against America's largest retailer, Wal-Mart, has the potential to not only hurt the company’s balance sheet and alter Americans’ shopping habits, but also to change the course of the 2006 and 2008 campaigns.

Americans cast their votes not just on Election Day but every day, by deciding where to spend their money. And the United Food and Commercial Workers Union is urging Americans to not spend their money at Wal-Mart.

Wal-Mart has successfully fought the union's efforts to organize its workforce.

Now the union has recruited strategists from the 2004 Howard Dean and Wesley Clark campaigns, and they are mounting a crusade that goes beyond the usual union tactics, such as the boycott or shareholder resolution expressing disapproval of a company’s policies.

Paul Blank, who served as political director for the Dean campaign, is running the "Wake-Up Wal-Mart” campaign, and Chris Kofinis, a strategist for the Clark campaign, is the effort's communications adviser.

Blank and Kofinis are deploying election campaign-tested tactics to assail Wal-Mart: running petition drives and holding house parties, canvassing at farmers’ markets, stockpiling an e-mail list and conducting conference calls to marshal the efforts of local anti-Wal-Mart activists.

“We need a broad social movement to change this company,” said Blank. “This is a moral question about what kind of America we want to live in. Do we want to live in Wal-Mart’s version of America, where you drive down wages, don’t provide health insurance, provide no retirement security, ship jobs overseas and have complete abandonment of your values in the relentless pursuit of profit?”

“This is going to become a very important wedge issue that political leaders on Capitol Hill and across the country are going to have to face,” said Kofinis.

Focus on health insurance
At the moment, the union’s indictment of Wal-Mart is focused on the charge that the company does not provide adequate medical insurance for its employees, some of whom must turn to Medicaid, the federal-state insurance program for low-income people.

The company’s response: It offers health insurance plans to both full-time and part-time workers. The full-time worker must wait six months before being eligible and the part-timer must wait two years. The Arkansas-based Wal-Mart has 1.2 million employees, of which 568,000, or 47 percent, are covered by the plan.

Blank offers a longer bill of anti-Wal-Mart particulars:

  • "Poverty-level wages, which have a huge negative impact not only on the workers but also in terms of driving down wages for the entire industry."
  • A retirement plan that is "an empty promise which leaves more than 550,000 Wal-Mart employees ineligible for any retirement benefits at all."
  • "Exploitation of sweatshop labor and foreign–sourced labor."
  • "The destruction of small businesses in communities and downtowns."
  • "Sprawl" caused by the company’s proliferating stories.

One possibility is that the Americans who shop at Wal-Mart — about 112 million of them every week — have digested these charges and nonetheless still like the store's low prices.

But Kofinis said the company will have no choice but to change its practices to keep customers. “If consumers say, ‘You do not reflect our values right now, the way you treat you employees, the effect you have on the country; if you don’t change your behavior, we’re not going to do business with you.’ Wal-Mart is going to respond to that," he said.

Blank added, "This is not about destroying Wal-Mart. This is about making a better America and that starts by making Wal-Mart be a more responsible company."

If consumers sour on Wal-Mart, grocery store chains such as Kroger and Giant and discounters such as Costco stand to gain. All three have workforces that are at least partly unionized.

Creating jobs
Wal-Mart’s response to the United Food and Commercial Workers Union is that it offers people a way out of poverty, with an average wage of $9.68 per hour. (One Wal-Mart competitor, Costco, says its average wage is $16.72 per hour.)

“Wal-Mart often provides the mechanism for associates to remove themselves from public assistance and build a better life,” said Wal-Mart spokesman Nate Hurst. “Seventy-six percent of our store management began in hourly jobs at our stores, often their first jobs.

Another company spokesman, Dan Fogleman, responded to the "destroying neighborhood business" charges by saying, "Look outside almost every Wal-Mart store. You'll find business cropping up. Businesses want to locate near Wal-Mart locations to take advantage of the customer flow we create."

Last year, he said, Wal-Mart purchased $150 billion in goods and services from more than 61,000 suppliers in the United States .

As for "sprawl," Fogleman said, "Look at a Wal-Mart super center. You can do your shopping, get an oil change for your car, get prescriptions filled, get a hair cut. It is the truly the convenience of a one-stop shopping experience."

Rebutting Blank’s charge of “no retirement security,” Fogleman said Wal-Mart offers a combined profit sharing/401(k) plan and contributes up to 4 percent of an employee's wages, whether the employee contributes his own money or not.

So for a worker making $30,000 a year, Wal-Mart will contribute $1,200 a year.

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Both full- and part-time workers are eligible to participate in the plan after completing 13 months of service and 1,000 hours.

The company also offers a stock purchase plan and matches 15 percent of a worker’s purchases. More than half of the employees own Wal-Mart stock obtained through the purchase plan.

In Congress and in some state legislatures, the union is getting support from its Democratic allies. This year, the Democratic-controlled Maryland Legislature passed a law requiring firms with more than 10,000 employees to spend an amount equal to at least 8 percent of its payroll costs on health care benefits. The only employer to fall into this category was Wal-Mart.

Governor vetoes bill on health insurance
Gov. Robert Ehrlich, a Republican who is running for re-election next year, vetoed the measure, saying it jeopardized Wal-Mart's plans to build a distribution center in Somerset County, Md., that would provide up to 750 jobs at an average of $12 an hour, $2.50 more than the county's current average wage.

The law, Ehrlich said, is “bad policy because it imposes an arbitrary number on employers and health care and further establishes that a state will dictate to businesses the type and level of health insurance they must provide for their employees.”

Blank predicted that Ehrlich would "pay a political price for standing with Wal-Mart.”

Meanwhile, Sen. Edward Kennedy, D-Mass. has been touting his bill to require states to identify which companies with 50 or more employees have workers receiving Medicaid or other taxpayer-funded health insurance. The bill would also require states to estimate the cost to taxpayers of providing health insurance to employees of large firms who are enrolled in Medicaid.

“Every American worker across this country is contributing a part of their taxes to pay for health care for those families in need who work at Wal- Mart,” Kennedy said at a recent Capitol Hill rally . “And at the same time we see record profits, which they (Wal-Mart executives) are distributing to themselves and to their shareholders.”

The bill’s purpose, according to its House sponsor, Rep. Anthony Weiner, D-N.Y., is to “find out how much that dollar that we’re saving on a pair of jeans is costing us in other ways.”

Kennedy said his bill “is the first step, but it certainly will not be the last,” hinting at a federal law along the lines of the Maryland legislation that Ehrlich vetoed.

Arguing that Wal-Mart’s low wages undercut its competitors, whose workers are represented by labor unions, Sen. Jon Corzine, D- N.J. said, “Our friends who work in the labor movement struggle every day in collective bargaining to try to provide health care to their workers… It is absolutely essential that we level the playing field, that we make sure that workers are treated equally everywhere.”

Contributor to Clinton, Bayh campaigns
If one believes that campaign contributions give a donor political clout, then Kennedy, Corzine, and Weiner face an uphill battle in Congress.

The Wal-Mart political action committee, which ranked 20th among all PACs in the amount of its donations in the 2004 campaign, gave 78 percent of its contributions to Republican candidates and 22 percent to Democrats.

Among the prominent Democrats receiving Wal-Mart PAC money for the 2004 and 2006 campaigns are Sen. Hillary Clinton of New York, Senate Minority Leader Harry Reid of Nevada, Sen. Evan Bayh of Indiana, and House Democratic Whip Steny Hoyer of Maryland. In the early 1990s, while living in Arkansas, Hillary Clinton served on Wal-Mart's board of directors.

If the Wal-Mart issue grows in prominence, then Clinton and Bayh, potential contenders for the 2008 Democratic presidential nomination, may find themselves facing tough questioning from anti-Wal-Mart activists on the campaign trail.

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