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Wal-Mart's drive to keep wages and benefits low

September 8, 2006 | Page 6

BOB QUELLOS provides the facts about Corporate America's biggest bully.

WAL-MART is the largest private employer in the United States, with 1.3 million employees.

For most of the last decade, it was the world's largest corporation, with annual profits topping $9 billion. In just 2004, it grew by the equivalent of one Dow Chemical, PepsiCo, Microsoft or Lockheed Martin.

But even more striking testimony to its economic power can be found in the number of major American corporations that rely on Wal-Mart as their largest consumer--including Walt Disney, Procter & Gamble, Kraft, Revlon, Gillette, Campbell Soup and RJ Reynolds.

Wal-Mart is also the largest film developer and optician in the country, it owns the largest private truck fleet, and it is the largest single revenue generator for Hollywood in the world.

What else to read

Two union-sponsored Web sites--Wake Up Wal-Mart and Wal-Mart Watch--contain a wealth of information on the giant retailers scandalous behavior toward workers, as well news of various activist campaigns.

For a book that details the company's rise to economic dominance, try Anthony Bianco's The Bully of Bentonville. Charles Fishman's The Wal-Mart Effect looks at the impact of the company and its policies on the U.S. economy. Liza Featherstone's Selling Women Short: The Landmark Battle for Worker's Rights at Wal-Mart documents the class-action lawsuit filed by women workers over sex discrimination in promotions, pay and job assignments.


Wal-Mart's signature slogan is "Everyday Low Prices." To follow through on this promise, Wal-Mart provides minimal wages and benefits to its employees. Forbes magazine estimates that the average Wal-Mart employee earns an average of $7.50 an hour--or about $15,000 a year, well shy of the federal poverty line for a family of three.

Paid overtime is out of the question, but that doesn't mean Wal-Mart employees don't work for free off the clock. By one estimate from 2002, Wal-Mart shortchanged its Texas workers $150 million over four years by regularly not paying them for working through their 15-minute breaks.

While Wal-Mart employees struggle to survive, the company's CEO Lee Scott made more than $17 million in total compensation in 2004--twice the national average for a CEO and 871 times higher than a U.S. Wal-Mart worker.

Wal-Mart is also leading the attack on employee health care benefits. The company health plan refuses to pay for child vaccinations and many routine procedures, and any type of contraception.

That's for the workers who are covered. The New York Times reported that fewer than 45 percent of Wal-Mart's workers receive the company's health insurance, and that 46 percent of the children of Wal-Mart workers are either uninsured, or covered by Medicaid. In Alabama, almost 4,000 children of Wal-Mart employees are on Medicaid, at an estimated yearly cost of somewhere between $1.7 million and $2.4 million to that state alone.

Wal-Mart has been helped by its political connections, and not only to the favored party of big business, the Republicans. Throughout the 1990s, as the company prospered as never before, the Walton family cultivated close relations with another famous Arkansas couple. Hillary Clinton's law firm represented the company for years, and Hillary herself served on its board of directors.

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FOR CONDITIONS to change at Wal-Mart, the labor movement must be willing to fight a battle that isn't limited to Wal-Mart and its suppliers.

Target, another non-union retail chain, pays it employees only $7.25 an hour to start off. A United Food and Commercial Workers (UFCW) survey found that starting wages were similar in Target and Wal-Mart--and Wal-Mart's benefits package was actually easier to qualify for than Target's.

The UFCW has had an operating campaign to organize Wal-Mart, but, as Anthony Bianco, author of The Bully of Bentonville, an exposé of Wal-Mart, states, "Throughout the 1990s, the UFCW essentially fought a publicity war against the company instead."

After the UFCW's defeat in the 2003 California grocery strike, the union called off its Wal-Mart campaign. It has continued a publicity campaign against Wal-Mart, mainly through the Web site Wake Up Wal-Mart.

Additionally, another umbrella group called Wal-Mart Watch, formed with $1 million in seed money from the Service Employees International Union, is pushing the same type of publicity campaign.

Both campaigns say their long-term goals are to raise awareness. But as a recent Zogby International survey attests, 4 in 10 people already have a negative view of the company.

Because of competition from other retailers, Wal-Mart can't raise prices to beef up profit margins. Its main options for increased earnings are continued pressure on workers' wages and benefits, and expanding into new markets.

Wal-Mart plans on increasing its retail space by 8.4 percent this year alone. While shutting down stores was once an option for defeating union organizing drives, Wal-Mart's business model anticipates expanding into urban areas the company earlier tried to avoid. This will create further openings for workers to fight the retail giant.

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