Activists to protest Wal-Mart on Friday

By DOUG HARLOW

Staff Writer, Blethen Maine Newspapers Inc.
November 27, 2003

WATERVILLE -- Members of a local peace action group plan to distribute leaflets Friday protesting the use of overseas sweatshops making cclothing for Wal-Mart stores, the Disney corporation and other American companies.

Waterville Area Bridges for Peace and Justice will hand out informational leaflets beginning at 9:30 a.m. at the Wal-Mart store on Kennedy Memorial Drive, according to organizers.

"Members will wear sandwich boards and hand out leaflets until Wal-Mart sends someone out to ask the social justice group to leave," organizer Peter Sirois said. "At being invited to leave, the group will move on to Elm Plaza and continue leafleting in the common parking area.

"The action will not call for a boycott. It will ask that shoppers contact state legislators and private CEOs to suspend all support of sweatshops and the laws that make them possible."

Members will hand out 400 two-sided leaflets with information about Disney and Wal-Mart support of third world sweatshops, Sirois added.

"We are simply calling attention to sweatshops," organizer Claire Prontnicki said. "There is quite a lot of evidence for it. It's pretty horrible."

Prontnicki said the group showed a film on the subject last week in Waterville. Footage showed sweatshops in Bangladesh where workers are paid 11 to 17 cents per hour, an unlivable wage even in the poorest of nations, she said.

The rain date for the leafleting is Saturday.

"We started this winter when we were doing the bridge demonstrations against the war in Iraq on KMD," Prontnicki said. "There were some from that group who wanted to carry on peace and justice work."

Since starting up in the spring, the expanded group has sponsored a film and discussion series devoted to peace and justice at the Waterville Public Library. Members participated in Madison's Father Rasle Day parade with the theme Peace Around the World.

Members are planning a Peace & Justice Garden in Castonguay Square and the group is putting together an informational program dealing with militarism for local schools , according to Sirois. The group also supported the anti-Patriot Act resolution at a recent Waterville City Council meeting.

The group has approximately 25 active members from several surrounding towns and a mailing list of over 200 area supporters.

Wal-Mart set to super-size in California

By Bob Walter -- Sacramento Bee Staff Writer
November 30, 2003

The first Wal-Mart Supercenters won't open in California until spring, but their impending arrival is already changing the state's retail landscape.

The looming presence of these super-sized grocery stores, which are about half the size of Arco Arena and offer 100,000 products at cut-rate prices, is roundly blamed for the supermarket strike/lockout that has idled 70,000 workers in Southern California since October.

That strike/lockout has been underscored by efforts among unionized supermarkets to cut costs while competing against nonunion powers such as Wal-Mart.

Union and supermarket officials say a similar strike is all but inevitable next summer when labor contracts expire in Northern California.

In preparation for Wal-Mart's arrival, the Raley's and Bel Air supermarket chain has cut administrative costs with an early retirement offer and some layoffs. At the same time, the West Sacramento-based company is planning unprecedented growth, with 25 new stores scheduled to open in the next four years, said William J. Coyne, president of Raley's.

Like most of the supermarket officials and representatives interviewed, Coyne was reluctant to talk about specific competitors. But he acknowledged that Raley's is trying to become leaner, gearing up for a more competitive environment that includes everything from Supercenters to specialty grocers such as Trader Joe's and Whole Foods.

"We try to work every day with a sense of urgency," Coyne said, "to become more efficient in every area, from logistics and distribution to buying and service."

Starting in the Coachella Valley desert, Supercenters are coming to Southern California in the spring and to the rest of the state as fast as Wal-Mart can get permits.

Confirmed targets in Northern California include Lodi, Woodland, Stockton, Tracy, Yuba City, Turlock and Redding.

The Supercenters will employ thousands. Most of them will have $1 million in sales every 10 days or so, analysts say, a third higher than the typical Raley's and about double the average Safeway in the capital region.

Their low prices will reduce the cost of food, especially in the Sacramento area, which has some of the highest grocery prices in the nation, retail analysts say.

Some analysts say each of the Supercenters, which morph together a Wal-Mart discount department store and a large supermarket, will result in the closure of two traditional grocery stores. Others say entire supermarket divisions may flee the region.

And still others, mostly union officials and their supporters, say the Supercenters will spur economic policies that lower the standard of living for tens of thousands of supermarket employees. For those reasons, municipal and grass-roots forces have been marshaling from Calexico to Chico to keep the Supercenters from being built.

Bentonville, Ark.-based Wal-Mart says it plans to open 40 Supercenters in California in the next four years -- none of them closer to Sacramento than Lodi or Woodland. Analysts and Wal-Mart watchers say the number will be much higher and undoubtedly will include the capital.

David S. Rogers of suburban Chicago, a grocery analyst and academic who has done research on Wal-Mart for more than 10 years, said the company wants to open "100 to 200 stores" in California.

"With Wal-Mart," he said, "you have to look at what they do rather than what they say."

And what Wal-Mart has done -- using a combination of low prices and saturation -- in market after market is dominate or at least become a major player.

In Dallas, for example, Wal-Mart has 51 Supercenters, discount stores, neighborhood markets and Sam's Clubs, and has moved from being the sixth-ranked grocer to the top spot in less than five years, according to consulting firm Retail Forward.

In the Oklahoma City metropolitan area, where Wal-Mart operates 11 Supercenters, it went from capturing about 6 percent of that region's grocery business in 1997 to more than 30 percent in 2002, the latest year for which such data are available.

Such dominance helped push Wal-Mart's annual sales in 2002 to $247 billion, which is greater than the combined sales of the 10 largest supermarket chains in the United States.

When Wal-Mart topped the Fortune 500 for the second time this year -- by $60 billion over runner-up General Motors -- the magazine pondered whether anybody ever would displace the Bentonville behemoth.

The conclusion: not in this lifetime, barring something as unlikely as a merger of GM and Ford or Exxon Mobil and ChevronTexaco.

With about 1.45 million employees, Wal-Mart has more people in uniform than the U.S. Army (480,000 on active duty).

The company expects to hire more than 600,000 people next year, based on growth (160,000 new jobs) and turnover, said Christi Gallagher, Wal-Mart's human resources specialist in Bentonville.

Gallagher says Wal-Mart's turnover rate is about 45 percent. The industry average is 65 percent, according to the National Retail Federation.

Wal-Mart says it offers competitive wages in all of its markets and that 90 percent of its employees have health benefits, half of them through Wal-Mart. Most analysts estimate that Wal-Mart employees are paid a quarter to a third less than unionized workers in supermarkets and other retailers.

And in part because of lower labor costs, the company's relatively new Supercenters have turned Wal-Mart into the country's biggest grocer in less than a decade.

In 1992, Wal-Mart had 34 Supercenters that generated about $1 billion in sales, according to Retail Forward. By the end of 2002, the company's 1,258 Supercenters topped $100 billion.

As Wal-Mart has grown, so has its clout with suppliers. According to Retail Forward, the company accounts for 28 percent of Dial Corp.'s total sales. For Del Monte Foods, the proportion is 24 percent. Other totals, according to Retail Forward, include Clorox and Revlon at 23 percent, and Procter & Gamble at 17 percent.

And all those percentages are rising.

"If you are Procter & Gamble," said Jim Watt, a vice president at Modesto-based Save Mart Supermarkets, "and in five years, 30 percent of your business is Wal-Mart, then who owns whom?"

Wal-Mart says its relationship with its suppliers, plus its legendary distribution system, allows its Supercenters to sell groceries that cost 10 percent to more than 30 percent less than groceries at most warehouse and conventional supermarkets.

For much of the competition, the results of Wal-Mart's success are often brutal.

In Oklahoma City, more than two dozen supermarkets have closed or been converted to other uses in recent years. And the former market leader, Homeland Foods, though it still has more than 20 stores, has been in and out and back into bankruptcy protection.

In Sacramento, Raley's says it is waiting and ready. "Tom Raley would have relished this competition," Coyne said.

Raley, who died in 1991, started the $3.2 billion company that bears his name and has grown to 134 stores in California, Nevada and New Mexico. In the greater Sacramento region, Raley's controls nearly 35 percent of the grocery market share, according to Trade Dimensions, a Connecticut-based retail analyst.

Coyne said Raley's will compete not only with its "core competencies" such as service, quality products and community involvement, but also with aggressive growth.

Along with the 25 new stores in the pipeline, he did not rule out even faster growth through acquisitions of the kind that put Sacramento's Bel Air Markets and Bay Area-based Nob Hill Foods under the Raley's flag.

Raley's ultimate advantage, he said, comes from being "local," whether the store is in Land Park, Reno, Elk Grove or the Bay Area.

"We just have the ability to know our customers better than competitors that are based in Cincinnati or Boise or elsewhere," he said. "At the end of the day, I can assure you that Raley's will be standing tall."

Analysts agree with the Raley's president, though they say the company undoubtedly will lose some market share to Wal-Mart.

But not even the Supercenters will knock Raley's from the top of the charts in the Sacramento area, said Burt P. Flickinger III, a noted New York-based retail analyst.

Wal-Mart will move from nowhere into the second spot, he said, mostly at the expense of Ralphs, Albertsons and Safeway.

"The national chains will be caught in the middle," unable to compete with Wal-Mart's low prices or the loyalty of Raley's customers, he said.

Safeway spokesman Alexander Winslow wouldn't talk about competing with Supercenters but said Sacramento is a major market for Safeway, which has grown to two dozen stores in the capital region.

Trade Dimensions said Safeway has increased its market share in the last two years from about 13 percent to 17 percent.

Ralphs spokesman Terry O'Neil said his Kroger-owned firm has not grown as fast as planned in the Sacramento area and, in fact, closed five stores last year. Ralphs' market share dropped from almost 9 percent in 2001 to about 5 percent this year, Trade Dimensions said.

But O'Neil said Sacramento still holds an important place in Ralphs' long-term plans. Kroger has plenty of experience against Wal-Mart in other states, he said, "and we'll compete with what we do best: higher quality, better variety and better service."

Albertsons declined to comment.

David S. Rogers, the Chicago-area academic, and Paul Adams, an Olathe, Kan.-based analyst, agreed that the national chains were the most vulnerable.

"I think you will see significant division closures," Rogers said. "There is no God-given reason that anybody will survive, big chain or not."

Graphic: Wal-Mart overview

THE WAL-MART EFFECT
Grocery Unions Battle to Stop Invasion of the Giant Stores; Wal-Mart plans to open 40 of its nonunion Supercenters in California. Labor is fighting the expected onslaught, but the big retailer rarely concedes defeat.

Nancy Cleeland and Abigail Goldman
Times Staff Writers 

25 November 2003 - Los Angeles Times

Inglewood seemed to offer the perfect home for a new Wal-Mart Supercenter, with low-income residents hungry for bargains and a mayor craving the sales-tax revenue that flows from big-box stores.

But nearly two years after deciding to build on a 60-acre lot near the Hollywood Park racetrack, Wal-Mart is nowhere near pouring concrete. Instead, the world's biggest company is at war with a determined opposition, led by organized labor.

"A line has been drawn in the sand," said Donald H. Eiesland, president of Inglewood Park Cemetery and the head of Partners for Progress, a local pro-business group. "It's the union against Wal-Mart. This has nothing to do with Inglewood."

Indeed, similar battles are breaking out across California, and both sides are digging in hard. Wal-Mart Stores Inc. wants to move into the grocery business throughout the state by opening 40 Supercenters, each a 200,000-square-foot behemoth that combines a fully stocked food market with a discount mega-store -- entirely staffed by non-union employees. The United Food and Commercial Workers and the Teamsters are trying to thwart that effort, hoping to save relatively high-paying union jobs.

The unions have amassed a seven-figure war chest and are calling in political chits to fight Wal-Mart. The giant retailer is aggressively countering every move, and some analysts believe that Wal-Mart's share of grocery sales in the state could eventually reach 20%. The state's first Supercenter is set to open in March in La Quinta, near Palm Springs.

"If we have an advantage," said Robert S. McAdam, Wal-Mart's vice president for state and local government relations, "it's that we are offering what people want."

In fact, Wal-Mart has won allies by providing people of modest means a chance to stretch their dollars.

"We need to have retail outlets that are convenient and offer quality goods and services at low prices," said John Mack, president of the Los Angeles Urban League. "I really think that there are potential economic benefits for this community with the addition of a Wal-Mart."

Yet the Supercenters also threaten the 250,000 members of the UFCW and Teamsters who work in the supermarket business in California.

For decades, the unions have been a major force in the state grocery industry and have negotiated generous labor contracts. Wal-Mart pays its grocery workers an estimated $10 less per hour in wages and benefits than do the big supermarkets nationwide -- $19 versus $9. As California grocery chains brace for the competition, their workers face severe cutbacks in compensation.

"We're going to end up just like the Wal-Mart workers," said Rick Middleton, a Teamsters official in Carson who eagerly hands out copies of a paperback called "How Wal-Mart Is Destroying America." "If we don't as labor officials address this issue now, the future for our membership is dismal, very dismal."

The push for concessions has already started, prompting the longest supermarket strike in Southern California's history. About 70,000 grocery workers employed by Albertsons Inc., Kroger Co.'s Ralphs and Safeway Inc.'s Vons and Pavilions have been walking the picket lines since Oct. 11, largely to protest proposed reductions in health benefits. The supermarkets say they need these cuts to hold their own against Wal-Mart, already the nation's largest grocer.

Rick Icaza, president of one of seven UFCW locals in Southern California, has taken issue with much of the supermarkets' rhetoric since the labor dispute began. But he doesn't doubt that Wal-Mart is the biggest threat ever posed to the grocery chains -- and, in turn, his own members.

"The No. 1 enemy has still got to be Wal-Mart," he said.

The unions and their community allies have stopped Wal-Mart in some places and slowed it down in others. They have persuaded officials in at least a dozen cities and counties to adopt zoning laws to keep out Supercenters and stores like them.

Homeowner groups, backed by union money, sued to stop construction of two Supercenters in Bakersfield, arguing that the stores would drive local merchants out of business. Contra Costa County and Oakland also have passed measures that could block Supercenters.

In Los Angeles, several City Council members are drafting an ordinance to require an examination of how large-scale projects such as Supercenters would affect the community, including the possible loss of union jobs. As envisioned by supporters, the measure would allow the city to insist on higher wages as a condition of project approval.

"We want Wal-Mart to be able to help us with our economic development," said Councilman Eric Garcetti, who is co-sponsoring the measure. "We just want to be able to do it on our terms and not theirs."

Wal-Mart, however, can more than match its foes in resources and resolve.

To soften its outsider image, the retailer has hired local political insiders to coax projects through planning bureaucracies. It has promised jobs and sales-tax bonanzas to cities struggling with deficits and unemployment.

When the answer is "no," Wal-Mart rarely concedes defeat. At least nine times during its latest California push, the company has responded to legal barriers by threatening to sue or to take its case straight to local voters by forcing referendums.

That's what happened in Inglewood after the City Council in October 2002 adopted an emergency ordinance barring construction of retail stores that exceed 155,000 square feet and sell more than 20,000 nontaxable items such as food and pharmacy products. The measure was tailored to block a Supercenter.

Icaza declared victory. "Wal-Mart's plans to enter the retail grocery business in Inglewood are dead!" he crowed in a union newsletter.

But they weren't. Within a month, Wal-Mart gathered 9,250 signatures on petitions, more than enough to force a public vote. The company also threatened to sue the city for alleged procedural violations. Looking at a possible court battle or an embarrassing failure at the polls, Inglewood officials withdrew the ordinance they had passed a month earlier.

Furious with the council, Icaza ran his own candidate in city elections in June. Ralph Franklin, a former supermarket clerk and manager and now a UFCW business agent, won with 70% of the vote, ousting a council member who had gone against the union.

Worried that the council might try to trip it up again, Wal-Mart went on the offensive. In late August, the company, through a group called the Citizens Committee to Welcome Wal-Mart to Inglewood, began gathering a new batch of signatures to force a popular vote on the Supercenter. The initiative, which calls for building permits to be issued without a public hearing or environmental impact study, is expected to be on the March 2004 ballot.

"When people feel they're not getting a fair shake with the legislative process, they take things to a vote" of the electorate, said McAdam, the Wal-Mart vice president.

Wal-Mart's opponents have vowed to sue to block the initiative on the grounds that it oversteps the limits of the ballot process.

UFCW and Teamsters locals have raised dues or diverted funds from other programs to bankroll anti-Wal-Mart campaigns. With more than $1 million now available, thousands of members to draw from and encouragement from national leaders, local labor would seem to be in a strong position.

But union efforts have been hampered by personality conflicts and disagreements over strategies and goals, according to people close to the situation.

As in Inglewood, many union locals have focused on so-called site fights, winning zoning restrictions at the local level. That strategy can temporarily save union jobs and give leaders victories to celebrate, but it does little to stop the long-term march of Wal-Mart, critics say. After all, there are 478 cities in California, 88 in Los Angeles County alone.

Pushing for zoning restrictions also can backfire, stirring resentment among consumers and business owners -- even those who directly compete with Wal-Mart.

Wal-Mart opponents "try to use the government to accomplish things that they may not be able to accomplish in the marketplace," said Alan Zaremberg, president of the California Chamber of Commerce. "It's not government's role to interfere with what consumers want."

For their part, national labor strategists want local leaders to focus less on zoning campaigns and more on the daunting, long-term goal of unionizing Wal-Mart employees. Few take the advice, and those who do quickly realize just what they are up against.

George Hartwell, president of UFCW Local 1036 in Camarillo, hired 18 organizers to hit the nine Wal-Mart stores in his jurisdiction. With few leads to go on and employees in stores forbidden to talk about unions, progress was slow. Then in mid-summer, a group wearing union T-shirts was served with trespassing papers and asked to leave a Wal-Mart in Lompoc. Lawyers tussled over that for months. Now Hartwell and his crew can enter the stores, but with strict limitations. "We go through and say, 'good morning' or 'good afternoon,' just to be visible," he said.

Despite the long odds in taking on the company, many union activists insist they have no choice.

"I've put 29 years of my life into this job, and now they're trying to pull the rug out from under me," said Diane Johnson, a union cashier at a Pavilions store in Los Angeles who is helping to coordinate anti-Wal-Mart efforts in Inglewood through the Los Angeles Alliance for a New Economy.

Johnson and co-workers have made door-to-door visits and spoken from church pulpits, hoping to turn public opinion against the discounter. "For me to go backwards would just be hell," she said.

But Wal-Mart, the nation's largest seller of everything from toys to DVDs, has plenty of defenders too, some of them politically and financially powerful. They range from prominent Los Angeles toy importer Charlie Woo, who recently took up Wal-Mart's case before Los Angeles City Council members, to Jeffrey Katzenberg, a co-founder of Hollywood studio DreamWorks SKG. He lobbied former Gov. Davis against signing a statewide anti-big-box measure passed by the Legislature five years ago; Davis vetoed the bill.

McAdam said Wal-Mart doesn't order its suppliers to lobby on the company's behalf. But it does spell out for vendors the consequences of anti-Wal-Mart legislation.

"It's our belief that on certain issues, they have a vested interest in seeing ... that our company can continue to grow," McAdam said.

Wal-Mart also helps smooth entry into new markets by cultivating relationships with civic groups.

As it prepared last year to buy and renovate a former Macy's in the south Los Angeles community of Baldwin Hills, corporate officials met with leaders of the Los Angeles Urban League and arranged to hire some employees through the organization.

Allies in organized labor tried to dissuade the Urban League's Mack from cooperating. Normally pro-union, Mack turned them down, saying the community badly needed jobs and low-cost shopping options.

"I'd rather have a person on somebody's payroll -- even if it isn't at the highest wage -- than on the unemployment roll," Mack said. "We're not going to punish job seekers by refusing to refer them to Wal-Mart for a job."

By the time the Baldwin Hills-Crenshaw Plaza Wal-Mart opened in January, Wal-Mart had doled out thousands of dollars, mostly in $1,000 grants, to local institutions such as schools and youth programs. The company cut the Urban League a $3,000 check. It also provided $10,000 for new lights at the Martin Luther King Jr. Little League Baseball field.

The ordinance being considered in Los Angeles would ask planners to weigh the "community benefits" of a mega-store in any zone that receives federal, state or municipal funding or incentives -- essentially the entire city.

Like an environmental impact report, the community-benefits study would consider possible negative outcomes and propose ways to mitigate them. Wages could be held to "prevailing standards." If supermarkets were deemed the standard, that would mean union scale.

Backed by Garcetti and Councilman Ed Reyes, the ordinance could be ready for a council vote next month.

Several studies commissioned in recent years by independent groups, including the Orange County Business Council and the San Diego Taxpayers Assn., found the state would suffer a net economic loss if union jobs were traded for jobs at Wal-Mart.

Wal-Mart had declined to respond with numbers of its own until a few months ago, when it commissioned the Los Angeles County Economic Development Corp. to measure the effect of Supercenters on the region. Researcher Gregory Freeman said the study balanced wage losses with consumer savings, noting that Supercenter prices are typically 20% lower than at union markets.

The study was completed two weeks ago, Freeman said, but hasn't yet been released.

As he began his study in mid-summer, Freeman told council members that other analyses haven't fairly measured all the pros and cons of the Supercenters. For one thing, he said, savings from lower grocery prices could be used by working-class shoppers for other things, such as buying homes.

As for those merchants who won't be able to compete with Wal-Mart, others say, progress always carries a price.

"I grew up in Pennsylvania; my father had a corner market there. When I was 3 or 4, the A&P moved in and put him out of business," recalled the Chamber's Zaremberg. "That was tough for us, but I don't think anyone would go back and say we shouldn't have supermarkets."

Wal-Mart Discounts the American Dream

25 November 2003

Los Angeles Times - Home Edition

Re "An Empire Built on Bargains Remakes the Working World," Nov. 23: Wal-Mart represents a corporation that has gone amok. Its domination shows why elements of the civil society need to balance capitalism if it is to work for the entire population. When we save 7 cents on the toothpaste we buy, we don't realize that some of that 7 cents we save goes to taxes to pay for Medicaid, food stamps and emergency room visits for low-paid Wal-Mart workers. Wal-Mart has driven many companies out of business and has had the reverse effect of General Motors, which brought people into the middle class.

If Wal-Mart becomes even more dominant, it could enter a phase where it no longer needs to provide deep discounts in some areas because it will so dominate retailing. We will then have higher prices and low-wage workers. Not a pretty picture. It needs to be curbed.

Larry Wiener
Alhambra

*

Your article highlighting Wal-Mart's wage, benefits and anti-union policies explains why I am honoring the supermarket workers' picket lines. Led by Wal-Mart, American business is in a globalized race to the bottom, keeping worker compensation low and increasing productivity, which only means having one worker do the job of two. Even that archconservative Henry Ford realized that he had to pay his workers more in order for them to buy his cars and for the economy to grow. What we are witnessing today is tooth-and-claw competition that is leading to the sunset of the middle class in America.

Carl Martz
Redlands

*

With the huge and ever-increasing profits that Wal-Mart reaps, it most certainly can afford to pay its employees living wages and full health insurance benefits. The Walton family would probably not even notice a change in lifestyle if its profits were reduced by one-half because it decided to take better care of its employees. It's all about greed.

Carol May
Los Angeles

*

One shudders for the future of commercial America and, particularly, free-enterprise employment when reading your article on Wal-Mart. Our nation was built upon the foundation that anyone had the opportunity to build an enterprise to supply competitive goods to eager customers -- a concept that Wal-Mart itself so successfully exemplifies. However, in prior years, competition in most cases meant like comparisons conducted within the American environment of good wages and high standards of living.

Now, manufacturers and free-enterprise workers in our nation must compete against manufacturers and workers from some of the lowest-wage areas of the world. Little wonder there will soon be no meaningful manufacturing conducted in the United States. All the "good" jobs and professional opportunities in the future will go to those who have access to government resources: direct government workers, the medical profession and, of course, teachers and others involved in our huge educational establishment.

No surprise, therefore, that economists from institutes of higher learning are so supportive of Wal-Mart's constraints upon costs.

Daniel Eliason
Santa Barbara

*

Reading about Wal-Mart's relentless efforts to cut prices while providing quality products and listening to its customers leads me to one thought: I hope it decides to get into providing health-care services nationwide.

Ed Kushins
Hermosa Beach

*

In your long story on Wal-Mart you missed the bottom line: While the average "associate" is paid poverty-level wages, Sam Walton's five heirs are worth a combined total of more than $100 billion. Wal-Mart is a national disgrace.

John Horne
Redondo Beach

Wal-Mart stirs up grocery industry

By MARINA STRAUSS
November 25, 2003

From Monday's Globe and Mail

A labour dispute at 15 Loblaw Cos. Ltd. stores in Newfoundland highlights a trend that is transforming the North American grocery industry as retailers race to lower costs and compete with the mighty Wal-Mart Stores Inc.

Last week, Loblaw locked out about 1,600 workers at its 15 Dominion stores after the employees staged rotating walkouts to protest the company's demand for wage and benefit concessions. Underlying the fight is Loblaw's view that it needs to rein in wage and benefit expenses in order to take on non-unionized, lower paying rivals - with much of the focus on Wal-Mart.

The issue has already reared its head in Ontario where Loblaw succeeded this summer in getting the United Food and Commercial Workers Union, which represents employees in that province, to agree to concessions at new, discount Real Canadian Superstores.

In Newfoundland, the Loblaw employees are represented by a different union, the Canadian Auto Workers, which refused to accept the company's wage and benefit proposals.

"This is simply about greed," CAW president Buzz Hargrove said in an interview, adding that Wal-Mart should not set labour standards for Canada. "We're not going to let the lowest common denominator dictate what's going to happen to our members."

Indeed, Wal-Mart appears to be gradually setting employee compensation standards in the North American grocery sector as it aggressively bolsters its food offerings at its conventional stores, its Sam's Clubs and its mammoth U.S. supercentres that sell everything from food to furniture. Already the supercentres have pushed some U.S. supermarkets out of business.

The Wal-Mart supercentres have triggered a wave of labour protests as competing U.S. supermarkets try to gain concessions from employees to take on the non-unionized, low-wage Wal-Mart outlets.

The latest U.S. wrangle is in Southern California where 70,000 grocery workers are on strike, unhappy with supermarket chains' demands for concessions as the retailers brace for the arrival early next year of the first of 40 Wal-Mart supercentres.

In Canada, Loblaw has been no slouch in trying to head off Wal-Mart's challenge since the world's largest retailer entered this country more than nine years ago.

Loblaw's battle plan is to expand its own discount stores, led by the Real Canadian Superstore, already a successful format in Western Canada.

The superstores are a one-stop-shopping destination with general merchandise along with food, and are designed to compete head-on with Wal-Mart. Last month, Wal-Mart launched its first four Sam's Clubs in Ontario with an eye to opening many more across Canada. Sam's Clubs carry a full range of groceries.

Loblaw president John Lederer told analysts last week that the chain - this country's largest grocer - envisages between 30 and 50 Real Canadian Superstores in Ontario "over the next number of years." (A spokesman said later some of those stores will be in Quebec, too.)

Mr. Lederer praised the UFCW for its "strong collaborative" work with Loblaw . "We think that will lead to more union jobs and still allow us to compete toe-to-toe with global players."

Not everyone agrees with this collaboration. The UAW's Mr. Hargrove said Loblaw shouldn't pay "starvation wages" just to keep up with Wal-Mart, but rather should force Wal-Mart to raise its standards.

He said Loblaw is offering a 25-cent-an-hour raise in the first year of the contract for pay that starts at $6.25 an hour - 25 cents an hour above minimum wage - and ranges to $8.32 an hour. (The company spokesman wouldn't comment.)

In Ontario, where wages are considerably higher, a dissident group of UFCW members has challenged the secretly negotiated concessions for superstores at the Ontario Labour Relations Board, and is awaiting a decision.

Michael Fraser, national director of UFCW Canada, said Loblaw threatened to open non-unionized stores under the Real Canadian Superstore banners if the UFCW didn't agree to the contract cutbacks.

The alternative for union members could have been losing their jobs entirely, Mr. Fraser said in a recent interview.

"Loblaw is being somewhat forward thinking," Mr. Fraser said. "They realize Wal-Mart is probably going to come into Canada in a big way with Sam's Club. Loblaw is the only employer in Canada that's prepared to try to compete with them on the same basis ..... If we had sat back and done nothing ..... eventually we would be watching a lot of our members be put out of work by non-union competition."

But even The New York Times has weighed in about the potential dangers of what it called in an editorial last week "the Wal-Martization of America."

" Wal-Mart likes to wrap itself in American values," it wrote. "It should be reminded that one of those is paying workers enough to give their families a decent life."

WORKERS IN WAL-MART SUIT APPLY FOR CLASS ACTION STATUS WORK HOURS, PAY PRACTICES CALLED UNFAIR

24 November 2003 - The Associated Press
South Florida Sun-Sentinel

PANAMA CITY

Lawyers are asking a judge to decide whether as many as 230,000 Floridians can sue Wal-Mart Stores Inc. in a class action lawsuit that alleges the world's biggest retailer doesn't pay low-level employees for extra work.

A former night shift manager in the Panama City Beach Wal-Mart Supercenter and several former employees of Chipley Wal-Mart sued the company in 2001. They said they were forced to work through breaks, skip meals and return to unfinished tasks after they had clocked out.

They want to include all the hourly workers Wal-Mart has employed in Florida since 1997 in a class action suit -- a type of suit that combines the complaints of people with similar claims and damages against the same company. Wal-Mart said that would include 232,358 people.

Circuit Court Judge Glenn Hess will determine whether the arguments meet the legal criteria of class action suits. If he allows the suit to continue, it could open the door for greater claims against Wal-Mart, and possibly punitive damages. If he rejects the request, each employee could file individually, probably in small claims court.

Requests to file similar lawsuits in other states have met mixed success. Minnesota and Indiana allowed class action lawsuits. Seven other states -- California, Georgia, Louisiana, Michigan, Ohio, Oregon and Texas -- did not.

The attorney for Farris Cobb, the former night shift manager, said Wal-Mart files show the company understaffs its stores, pressures managers to overwork employees and strictly prohibits overtime. The attorney, Russell Lloyd, said the company pressures managers to keep wages at 8 percent of each store's sales totals. Competitors allow wages to reach 15 percent to 16 percent of sales, he said.

Lloyd says Wal-Mart provides incentives for the managers to reach these goals, including bonuses that are higher than managers' $50,000 base salary.

Lloyd said Florida employees lost 900,000 hours of pay because of these practices in one year.

Wal-Mart attorneys Bradley Johnson and Weyman Johnson said there are too many different allegations to make this case a class action lawsuit and argued most of the plaintiffs signed onto the suit only after seeing a law firm's advertisement.

They said many of the plaintiffs acknowledged they were only asked to work through breaks during busy times, and one man admitted the store would probably have paid him for extra work if he had pushed harder.

Wal-Mart versus the workers

By Neil Buckley
November 19 2003 - Financial Times

For Victor Zavala, the American dream ended at 7am on a chilly Thursday last month. As he walked across the car park of the Wal-Mart superstore in Piscataway, New Jersey, where he had spent an overnight shift

scrubbing floors, two police cars and two unmarked cars sped towards him. Within seconds, he was in handcuffs.

Mr Zavala, an illegal immigrant from Mexico, says he had worked for three years cleaning Wal-Mart stores seven nights, or 60 hours, a week, earning about $6 an hour. He got no overtime pay, health insurance or

sick leave; he also paid no taxes or social security. He never got a day off; his request for a week's honeymoon leave in February was denied.

Now facing deportation, Mr Zavala, 28, was employed by a cleaning contractor, not by Wal-Mart. But he is one of nine cleaners suing the world's largest retailer in what they aim to make a class action suit. It alleges Wal-Mart knew the workers were illegal and violated federal racketeering laws by conspiring with cleaning contractors to pay them low wages.

The nine are among 250 illegal workers arrested in raids on October 23 outside 61 Wal-Mart stores in 21 states, in one of the biggest operations of its kind. Immigration officers also searched a mid-level

manager's office at Wal-Mart's Bentonville, Arkansas, headquarters, taking boxes of documents. Wal-Mart has since confirmed that a federal grand jury is determining whether it should be charged with knowingly employing contractors who were using illegal workers.

"This is a case of the strongest company in the world preying on the most vulnerable poor people," says James Linsey, a lawyer representing

the nine illegal workers. "What is heartening is that the federal authorities are not just picking on the littlest of the little, but have sent Wal-Mart a letter saying they are the target of a criminal investigation. This is very serious stuff."

Wal-Mart says it has no evidence that employees at any level knew illegal workers were being employed, and is co-operating fully with investigators.

"We are as eager as anyone to see what evidence federal officials might have," says Mona Williams, vice- president of communications. "If anyone

at Wal-Mart has broken a law, we want to know who it is, and we will make sure that the person will no longer work for our company."

But the immigrant worker case is throwing an uncomfortable spotlight on to the employment practices of what is the world's largest company by

revenues - with 1.4m employees, $245bn sales and $8bn net profits last year - and is arguably the most powerful.

Coupled with three dozen lawsuits alleging that Wal-Mart forced employees to work unpaid overtime, it raises questions over whether the retailer's relentless drive to cut costs is causing it to stray too close to the boundary of legality.

On top of that, a strike by 70,000 supermarket workers in southern California over their employers' plans to slash healthcare benefits - to compete with cut-price Wal-Mart - has provoked a debate over the

so-called "race to the bottom". The US is already jumpy about domestic industry being undercut by cheap labour overseas. Now many fear that

Wal-Mart's low pay and benefits are undermining efforts by competitors and suppliers to pay their workers a decent wage.

Wal-Mart's size and power make it a magnet for criticism. It has long been accused of destroying Main Street USA by shutting down "mom-and-pop" stores, and driving manufacturing jobs abroad by

aggressively screwing down suppliers' prices and costs. That has not deterred the estimated 138m shoppers who visit its giant stores each week. But for a company whose business model relies, in part, on a

plentiful supply of willing, non-union labour, controversy over its employment standards touches a nerve.

Gary Balter, retail analyst at UBS Warburg in New York, says Wal-Mart is a "very honourable company". But he warns that many powerful businesses

eventually run into an issue that threatens to hold back their progress. With Microsoft, it was regulation. Could labour issues become the kind

of thorn in the side for Wal-Mart that antitrust probes became for Microsoft?

"It is very hard to regulate a company because they are giving you low prices," he says. "But there may be someone looking for the one thing they did wrong, so that they can use that, for example, to force them to let more unions in.

"In the public relations battle, you have Wal-Mart on one side saying we want to cut prices for consumers. And on the other side you have more and more people saying Wal-Mart is hurting the fabric of America."

Wal-Mart's spartan "home office", in a converted warehouse in rural Arkansas, presents an image of thrift and propriety. Employees are reluctant even to let visitors buy them a coffee, so strong is the policy against accepting gifts. And vendors trying to persuade Wal-Mart to carry their products meet buyers in bare rooms with signs proclaiming that Wal-Mart will not accept bribes.

The company admits its workers' basic pay is less than that of rivals, but it insists respect for its workers - studiously referred to as "associates" - is central to its philosophy. Employees carry cards bearing the three core values of Sam Walton, the company's founder. Number one is "respect for the individual".

Lee Scott, chief executive, says he is committed to preserving the folksy culture of "Mr Sam", who died in 1992. Mr Walton, he recalls, said there were only two people to whom he would never give a second

chance: "anyone who stole, or managers who abused their people".

The challenge Wal-Mart faces is to preserve Mr Sam's culture as it grows to 2m or even 3m employees, and - with 4,700 stores worldwide already, two-thirds of them in the US - to ensure that managers always meet the standards head office demands.

A rash of lawsuits against the company allege there have been abuses. The latest is from the immigrant workers but Wal-Mart says 240 of the 250 workers detained last month were employed by third-party contractors for which it cannot be held responsible.

However, federal officials confirm that they have recorded conversations indicating that Wal-Mart employees knew illegal workers were being used.

Mr Zavala, the Mexican immigrant, and his lawyers say it would have been hard for Wal-Mart staff, at least at store level, not to know. Cleaners, they say, were supervised by Wal-Mart assistant store managers.

"Whoever was in charge of making these contracts with contractors knew what they were doing," adds Gilberto Garcia, a lawyer representing the illegal workers. "The people negotiating had to know that there was a reason why one [bid] was cheaper than another."

Wal-Mart's Ms Williams says the company cannot be expected to check every worker's papers at hundreds of outside providers of services and

products. She adds that the immigrant workers' lawsuit is baseless, and Wal-Mart will move to dismiss it.

But, she says: "We are especially concerned about allegations that undocumented workers were not treated properly, that contractors took advantage of [them]. That is wrong. We would never condone such

treatment and we are sorry it happened in our stores."

The immigrant workers' case follows 37 suits pending against the company on a different issue. These allege Wal-Mart tried to cut costs by making

employees work unpaid overtime.

One verdict has already gone against the company. A jury in Oregon last December found a "pattern of practice" at Wal-Mart permitting 400 employees to work overtime without pay between 1994 and 1999. Two similar cases have been granted class action status this month, in Minnesota and California; Wal-Mart is appealing against an earlier class certification in Indiana.

Ms Williams says Wal-Mart's policy - "to pay associates for every minute they work" - is clear. "Any manager who requires or even tolerates

off-the-clock working would be violating company policy and is subject to disciplinary action up to and including termination," she says. "We have had a huge education effort to make sure that all of our managers and hourly associates know that off-the-clock working isn't tolerated. . . We have fired some managers who have been doing this."

A third area in which the company faces a lawsuit - potentially the biggest civil rights class action in US history - is over alleged sex discrimination. The suit, filed by six women in 2001, claims Wal-Mart

systematically denies promotion and equal pay to women. If certified by the federal judge considering the case, it would cover almost 1.6m current and former female employees. The plaintiffs say that while two-thirds of Wal-Mart's hourly employees are female, women fill only a third of store management team jobs and fewer than 15 per cent of top store manager positions. They also say women at all levels earn less than men.

Ms Williams says the case has no merit. She says women are promoted in direct proportion - or better - to the numbers applying for management jobs. Women workers have sometimes been reluctant to apply for senior jobs that would require them to move, or work antisocial hours, and Wal-Mart is working on tackling that.

The retail group has also found itself cited as indirect cause of the strike in southern California by 70,000 workers for the three biggest US supermarket chains. The companies, Kroger, Albertson's and Safeway, say they have to cut healthcare costs and restrain pay increases to compete with Wal-Mart, which plans to open 40 "super-centres" in California. These, unlike older Wal-Mart stores, sell groceries and as well as

non-food goods. The United Food and Commercial Workers Union, the supermarket union, has seized on the issue of health insurance - for which most Americans rely on their employers to pay much of the cost - as a battleground.

It says that while two-thirds of Wal-Mart employees qualify for company health insurance, fewer than half participate, because they cannot afford the high contributions Wal-Mart requires them to make. That

leaves some uninsured or forces either their spouses' employers, or federal government programmes, to provide healthcare for them.

Wal-Mart disputes the figures, saying 78 per cent of its workers are eligible for its healthcare plan and 50 per cent participate. About 40 per cent of its workers, it says, get healthcare through other sources; but this is partly because, for example, they are students or senior citizens.

About 40 per cent of those in its scheme had no health insurance before joining Wal-Mart. "These are people who would have fallen through the cracks or been on the public health rolls," says Ms Williams, noting that the company provides cover to about 500,000 American families.

In the background of all of these issues is a so far unsuccessful four-year campaign by the UFCW to get a toe-hold in Wal-Mart stores (see below).

Wal-Mart says it is not anti-union, but "pro-associate"; it does not believe its workers need unions when it operates an "open-door" policy up to chief executive level, allowing staff to voice complaints to managers. "When it comes to our people, we think we are more effective if we're dealing with you as an individual rather than having to go through some intermediary," says Mr Scott.

Wal-Mart says stores are free to vote to unionise, but none has done so. The UFCW says the reason is that at the first sign of union activity, Wal-Mart dispatches labour relations teams from head office that employ aggressive tactics to persuade workers not to join. The company admits that these teams exist, but only to explain their rights to staff and

use legal means to get the company's views across.

Al Zack, assistant director of strategic programmes at the UFCW, says: "This is all about the fact that the nation's number one employer is setting a lowest common denominator standard - as opposed to the

standard set by General Motors in the past, when it was the number one employer, of setting the bar higher," he says.

Yet however much unions and competitors may attack Wal-Mart, an army of analysts and economists readily defends it. Gary Stibel, chairman of New

England Consulting Group, a marketing management consulting firm, says Wal-Mart is right to be aggressive on costs, and should stand firm against anything that would increase them.

"I've worked with Wal-Mart directly and indirectly for 30 years," he says. "Are they coming close to the boundary [of acceptability]? Yes. Are they stepping over the line? Absolutely not. They are one of the

most ethical companies we work with anywhere," he says. "But the job of the retail industry is to stay close to the boundary, because if you don't somebody else will go round you."

Mr Stibel says the productivity gains Wal-Mart has achieved - he estimates it saved US consumers at least $20bn last year - have given a huge boost to the economy, pushing down prices and creating wealth and jobs.

"In a world where new jobs are not being created every hour, Wal-Mart is creating them every second. I have walked into retail environments where staff are being paid better than those at Wal-Mart and been given much worse service. At Wal-Mart, the service I get is pretty good. People seem to enjoy working there."

An Empire Built on Bargains Remakes the Working World

Wal-Mart is so powerful that it moves the economies of entire countries, bringing profit and pain. The prices can?t be beat, but the wages can.

By Abigail Goldman and Nancy Cleeland

Times Staff Writers

November 23, 2003

LAS VEGAS -- Chastity Ferguson kept watch over four sleepy children late one Friday as she flipped a pack of corn dogs into a cart at her new favorite grocery store: Wal-Mart.

The Wal-Mart Supercenter, a pink stucco box twice as big as a Home Depot, combines a full-scale supermarket with the usual discount mega-store. For the 26-year-old Ferguson, the draw is simple.

"You can't beat the prices," said the hotel cashier, who makes $400 a week. "I come here because it's cheap."

Across town, another mother also is familiar with the Supercenter's low prices. Kelly Gray, the chief breadwinner for five children, lost her job as a Raley's grocery clerk last December after Wal-Mart expanded into the supermarket business here. California-based Raley's closed all 18 of its stores in the area, laying off 1,400 workers.

Gray earned $14.68 an hour with a pension and family health insurance. Wal-Mart grocery workers typically make less than $9 an hour.

"It's like somebody came and broke into your home and took something huge and important away from you," said the 36-year-old. "I was scared. I cried. I shook."

Wal-Mart gives. And Wal-Mart takes away.

From a small-town five-and-dime, Wal-Mart Stores Inc. has grown over 50 years to become the world's largest corporation and a global economic force.

It posted $245 billion in sales in its most recent fiscal year ? nearly twice as much as General Electric Co. and almost eight times as much as Microsoft Corp. It is the nation's largest seller of toys, furniture, jewelry, dog food and scores of other consumer products. It is the largest grocer in the United States.

Wal-Mart's decisions influence wages and working conditions across a wide swath of the world economy, from the shopping centers of Las Vegas to the factories of Honduras and South Asia. Its business is so vital to developing countries that some send emissaries to the corporate headquarters in Bentonville, Ark., almost as if Wal-Mart were a sovereign nation.

The company has prospered by elevating one goal above all others: cutting prices relentlessly. U.S. economists say its tightfistedness has not only boosted its own bottom line, but also helped hold down the inflation rate for the entire country. Consumers reap the benefits every time they push a cart through Wal-Mart's checkout lines.

Yet Wal-Mart's astonishing success exacts a heavy price.

By squeezing suppliers to cut wholesale costs, the company has hastened the flight of U.S. manufacturing jobs overseas. By scouring the globe for the cheapest goods, it has driven factory jobs from one poor nation to another.

Wal-Mart's penny-pinching extends to its own 1.2 million U.S. employees, none of them unionized. By the company's own admission, a full-time worker might not be able to support a family on a Wal-Mart paycheck.

Then there are casualties like Kelly Gray. As Wal-Mart expands rapidly into groceries, it is causing upheaval in yet another corner of the economy. When a Supercenter moves into town, competitors often are wiped out, taking high-paying union jobs with them.

Wal-Mart's plans to enter the grocery business in California early next year have thrown the state's supermarket industry into turmoil. Fearful of Wal-Mart's ability to undercut them on price, the Ralphs, Vons and Albertsons chains have sought concessions from their unionized workers in Southern and Central California, leading to a work stoppage now entering its seventh week.

Half a century ago, the nation's largest and most emulated employer was General Motors Corp. "Today," said Nelson Lichtenstein, a history professor at UC Santa Barbara, "for better or worse, it's Wal-Mart."

GM brought prosperity to factory towns and made American workers the envy of the world. With a high-wage union job, an assembly-line worker could afford a house, a decent car, maybe even a boat by the lake.

There was a bit of truth, Lichtenstein said, to the famous assertion by Charles Wilson, General Motors chief from 1941 to 1953, that what was good for GM was good for the country.

With Wal-Mart, the calculus is considerably more complex.

'We Have Split Brains'

Glenn Miraflor used to chide his wife for shopping at Wal-Mart.

As a member of Ironworkers Local 416, the 50-year-old father of four is well aware of the retailer's anti-union stance. But when the family's credit card debt topped $10,000, Wal-Mart's deals suddenly looked irresistible.

"Where else are you going to find a computer for $498?" he asked, looking for a PC with his wife, Debbie, at the Supercenter on Serene Avenue, far from the glitz of the Las Vegas Strip. "Everyone I work with shops here."

Surveys by the Teamsters and the United Food and Commercial Workers ? the two unions most threatened by Wal-Mart ? show that many of their own members shop at the discounter.

"We have split brains," said Robert Reich, U.S. secretary of Labor under President Clinton and now a professor of economic and social policy at Brandeis University in Waltham, Mass. "Most of the time, the half of our brain that wants the best deal prevails."

The connection may be lost on many, Reich said, but consumers' addiction to low prices is accelerating a shift toward a two-tiered U.S. economy, with a shrinking middle class and a growing pool of low-wage workers.

"Wal-Mart's prices may be lower," he said, "but that's small consolation to a lot of people who end up with less money to spend."

Others insist there is a net benefit whenever consumers can get more for less. "If you have lower real prices, you're saving money," said Arthur Laffer, a key advisor to President Reagan who is now an economic consultant in San Diego. "The prices' falling, in effect, raises the wages of everyone who buys their products."

That's basically the way the Miraflors saw it as they cruised the aisles of the Supercenter ? Wal-Mart Store No. 2593 ? and snapped up deals: Ragu pasta sauce for 89 cents, Aunt Jemima pancake mix for 48 cents, pork shoulder steaks for $1.49 a pound and five cans of Del Monte vegetables for $2.

After making their way through the groceries, the Miraflors turned their attention to the housewares section, stopping in front of a 20-inch box fan. Glenn Miraflor checked the price and made room for it in their cart.

"Ten bucks," he said. "You can't beat that. That's why we come here."

Vendors' Alley

The fan was made 1,700 miles away in Chicago at Lakewood Engineering & Manufacturing Co. A decade ago, the same fan carried a $20 price tag.

But that wasn't low enough for Wal-Mart. So Lakewood owner Carl Krauss cut costs at every turn. He automated production at the red-brick factory built by his grandfather on the city's West Side. Where it once took 22 people to put together a product, it now takes seven. Krauss also badgered his suppliers to knock down their prices for parts.

In 2000, he took the hardest step of all: He opened a factory in Shenzhen, China, where workers earn 25 cents an hour, compared with $13 in Chicago. About 40% of his products now are made in China, including most heaters and desktop fans. The Miraflors' box fan was assembled in Chicago, but its electronic guts were imported.

"My father was dead set against it," Krauss said of the move overseas. "I have the same respect for American workers, but I'm going to do what I have to do to survive."

Survival in an age when consumers are hyper-vigilant about prices means shaving expenses again and again. "Nobody wants to be on the shelf with the same item for $1 more," Krauss said.

All the retailers he supplies ? including Home Depot Inc. and Target Corp. ? drive a hard bargain with manufacturers. But none is as tough as Wal-Mart, Krauss said.

Twice a year, his sales representatives travel to Wal-Mart headquarters to pitch their products. There, competitors sit side by side, waiting to be ushered into one of 60 glass-sided cubicles ? a space some call Vendors' Alley.

Then the haggling begins. "You give them your price," Krauss said. "If they don't like it, they give you theirs."

The suppliers are at a disadvantage. The Wal-Mart buyer can always go out to the waiting room and find someone who will go lower. "Your price is going to be whittled down like you never thought possible," Krauss said.

After moving much of his manufacturing abroad, Krauss doesn't see any way to push costs lower. "If you're doing things legally, you can't," he said.

He may have to find a way.

At the Serene Avenue store, shopper Sarah Saxon, 17, pulled a $40 Lakewood heater off the shelf. She looked it over, then put it back in favor of an AirTech model selling for $34.88. She said it looked better than the Lakewood.

"Besides," she said, "it's cheaper."

Wal-Mart's culture of cheap emanates from Bentonville, a town of 20,000 tucked into the low green hills of northwest Arkansas, where a young Sam Walton opened his first five-and-dime in 1950. Even then, Walton had a vision of a different kind of retail.

Rather than charging a little less than his competitors, Walton wanted to slash prices as much as he could and still make a profit. Other stores would use price breaks from manufacturers as a way to boost their bottom lines, paying less at wholesale while leaving retail prices untouched.

Walton passed such savings on to his customers as his discount business evolved into Wal-Mart stores in 1962. He figured he would make up the difference in volume. He was right.

By the mid-1980s, Wal-Mart's success had catapulted Walton to No. 1 on the Forbes list of richest Americans. Still, he drove an old pickup truck to haul around his bird dogs, refused to fly first class and shared hotel rooms with colleagues on business trips.

Bentonville, like the man who put it on the map, is a combination of Southern charm and Midwestern practicality. The town square is anchored by the original Walton's five-and-dime (now a visitors' center) and dotted with small shops. But the real action is down Business Route 71, where the Wal-Mart Supercenter rises up, big enough to fit three 747s with room to spare.

Across the street is the base of Wal-Mart operations: the Home Office. The world's biggest company occupies an industrial-looking hodgepodge of windowless work spaces, connected by bunker-like hallways. The drab gray-and-blue walls display the visage and sayings of Sam Walton, who died in 1992:

"Listen to your associates.... They're the best idea generators."

"To succeed, stay out in front of change."

"Swim upstream. Go the other way. Ignore the conventional wisdom."

Lists abound. The best-performing stores. The worst-performing stores. Under a picture of the founder asking, "Who's taking your customers?" is a roster of competing retailers, including Costco Wholesale Corp., Circuit City Stores Inc. and Target, with the name and picture of each company's chief executive.

It's all part of the Wal-Mart culture: a zealous attention to competition, customers and costs.

Wal-Mart employees, unlike their counterparts at other retailers, are forbidden to accept so much as a soda from vendors ? or anybody else the company does business with ? on the theory that such frills ultimately are paid for by consumers. The company's meticulous management of the flow of goods, from the factory floor to the store shelf, has shaved shipping and inventory costs to a degree that retailing experts say is unprecedented.

"You could argue that some of what Wal-Mart does to cut costs has been win-win," said Richard S. Tedlow, a professor of business administration at Harvard Business School. "What's being squeezed out is waste."

The company is so ruthlessly efficient that 4% of the growth in the U.S. economy's productivity from 1995 to 1999 was due to Wal-Mart alone, researchers at the McKinsey Global Institute estimated last year. No other single company had a measurable impact. Wal-Mart also has forced competitors to become more efficient, driving the nation's productivity ? output per hour of work ? even higher.

Walton, who still is referred to as Mr. Sam throughout the corporation, worked in a ground-floor office barely big enough for a conference table. The current occupant, Chief Executive H. Lee Scott Jr., is the keeper of Mr. Sam's vision. Like all Wal-Mart executives, he empties his own trash and shares budget hotel rooms when traveling. Everyone flies coach.

"We do not have limousines," said Scott, who certainly could afford one, having made nearly $18 million last year in salary, bonus and stock, plus options with an estimated value of $11.3 million. "I drive a Volkswagen Bug."

Wal-Mart's stinginess reaches from the executive suite to the loading dock.

Some truckers complain that they must unload their own cargo ? or pay Wal-Mart to do it. Other big retail chains absorb that cost themselves. "They're awful," said independent driver George Hauschild of Palm Springs. "They don't even let you use the bathroom."

At every one of the 2,966 Wal-Marts in the U.S., thermostats are kept at a steady 73 degrees in summer, 70 degrees in winter; raising or lowering the temperature is considered a waste of money.

Such measures seem mild compared with what Wal-Mart has done to cut payroll costs. In one case, a jury in Oregon last year found that company managers had coerced hundreds of employees to work overtime without pay.

The managers were driven by intense pressure from Bentonville, witnesses said. Managers whose labor costs were considered too high were singled out during the company's weekly in-house satellite broadcasts. In response, managers tampered with electronic time cards or bullied employees to work off the clock, according to trial testimony.

The Oregon jury found last December that Wal-Mart's behavior was illegal and willful. A separate trial to determine damages for the 290 plaintiffs is set for early next year.

Wal-Mart settled similar overtime suits in Colorado and New Mexico for undisclosed amounts. More than 40 other cases are awaiting trial.

The company says it prohibits off-the-clock work and blames the problems on a small number of rogue managers.

Last month, Wal-Mart ran into trouble because of another cost-cutting practice: using dirt-cheap janitorial services.

A grand jury is investigating whether Wal-Mart knew that janitors provided by subcontractors were illegal immigrants cheated out of overtime pay. Federal agents raided 61 Wal-Marts across the country and seized boxes of documents from the Bentonville headquarters. Wal-Mart has denied wrongdoing.

Scott, the CEO, lauded Wal-Mart's employment record. Even in tight labor markets, he said, the company never has trouble finding workers.

"It is not forced labor," he said. "The truth is, I go to the stores and shake hands with the associates, and they like working at Wal-Mart."

On the Fast Track

Aaron Rios liked working at Wal-Mart so much that he decided to make his career there.

Like two-thirds of Wal-Mart's store managers, Rios started off as an hourly worker ? in his case, stocking shoes on the graveyard shift at the Wal-Mart in his hometown of Hanford in the San Joaquin Valley.

After two years, Rios was recommended for management training ? the company's fast track ? leading him to quit community college and pursue a climb through the Wal-Mart ranks.

"There's just something about a Wal-Mart environment," said Rios, who became manager of the Serene Avenue Supercenter in Las Vegas at age 26. "It changed who I am, where I was going and what my career goals were."

Wal-Mart store managers earn about $95,000 annually, including bonuses, according to the company. Supercenter managers earn $130,000.

A management position requires long hours ? as many as 80 a week ? and, often, a willingness to relocate. Rios worked at six California Wal-Mart stores before taking the helm at Serene Avenue.

"It doesn't come free," said Rios, a divorced father who shares custody of his 2-year-old son.

Still, he said, the benefits outweigh the sacrifices.

"I have an open opportunity. I could go into real estate for Wal-Mart. I could do systems, analysis, accounting. It's endless," Rios said. "If I wanted to go to Germany or Japan or Brazil or any of the markets we have, I believe I could go."

A few weeks later, Rios snared another promotion, moving back to California as a district manager in the Antelope Valley, overseeing seven stores from Barstow to Palmdale.

Larry Allen had his own dreams of climbing the Wal-Mart ladder.

In the fall of 2001, he and his wife, Jacque, left Portland, Ore., where the economy was sputtering, and headed to Las Vegas. He was an executive chef and she worked in catering. They looked forward to a fresh start in unionized casino jobs, making more than $15 an hour, with health insurance and pensions.

But their timing was lousy. Recession and terrorism were hitting the gaming industry hard, and work of any kind was scarce.

Just before their money ran out, the Allens lowered their expectations and took jobs at the Serene Avenue Wal-Mart. Jacque, then 43, worked the counter at the in-store restaurant, Radio Grill. Larry, 46, stocked produce. They each earned $8 an hour.

Despite the letdown, Larry Allen said he attacked the job with enthusiasm. Inspired by tales of well-paid Wal-Mart managers who had started out as hourly employees, such as his manager Aaron Rios, he figured on working his way up. That was Sam's way, he said.

"I've been following Sam Walton since the 1970s," he said. "He's the American dream."

The glow faded quickly. At his 90-day review, Allen said, he received an unenthusiastic write-up and an hourly raise of 35 cents. His supervisor told him that if he continued working hard, in two years he might make his way up to $10 an hour.

Allen thinks he knows why he received such mediocre marks. For one thing, he was prone to question company policy. Then, Allen committed the ultimate act of disloyalty: He openly promoted unionization.

West Coast Ambitions

For decades, Wal-Mart has tantalized and frustrated union organizers. But the company's move into the grocery business ? a labor stronghold ? has raised the stakes dramatically.

Union organizers say the high wages and benefits of their members are at risk, as Wal-Mart expands its Supercenters beyond the South and Midwest. The company recently established a beachhead in Las Vegas, with five centers.

Next stop: California, where Wal-Mart plans to open 40 Supercenters starting early next year. In a sense, it has already arrived. Wal-Mart's low wages are a central factor in the labor dispute between California's three major supermarket chains and the United Food and Commercial Workers.

"They are the third party now that comes to every bargaining situation," said Mike Leonard, director of strategic programs for the UFCW.

Over many years of hard negotiating, the union has won and maintained premier contracts for its 800,000 grocery workers. But with the opening of each new Supercenter, the union's clout erodes.

Every one of the giant stores sucks away about 200 UFCW jobs, said retail consultant Burt P. Flickinger III, who runs Strategic Resource Group in New York. That means less power at the bargaining table and less money to hire organizers.

On average, Flickinger says, Wal-Mart's wage-and-benefit package is about $10 an hour less than those offered by unionized supermarkets.

For shoppers, that makes a big difference. A cartful of groceries is 17% to 39% cheaper at a Wal-Mart Supercenter than at a unionized supermarket, according to a survey last year in Las Vegas, Dallas and Tampa, Fla., by investment bank UBS Warburg.

Wal-Mart's move into groceries has led 25 regional supermarket chains around the nation to close or file for bankruptcy protection, eliminating 12,000 mostly union jobs, Flickinger said.

With this in mind, Safeway Inc. recently aired a videotaped message to employees, whose contract in Las Vegas expires next fall.

"Wal-Mart wants our customers and your jobs," said Safeway executive Larree Renda. Total wage and benefit costs represent 15% of sales at Safeway, Renda said. At Wal-Mart, they account for 9%.

"If we don't change," Renda said, "you bet we'll lose jobs ? and it will be in the thousands."

Staying Unorganized

From their first day on the job, Wal-Mart employees are advised to avoid unions and to report any organizing activities to their supervisors.

"If a union got in here, every benefit we've got could go on the negotiating table, every one of them," says a man identified as Russell, a veteran employee, in a video shown to new hires. "Unions will negotiate just about anything to get the right to have dues deducted out of paychecks. You see, they need big money to pay union bigwigs and their lawyers."

Company policy prohibits any union talk in work areas, and organizers say they routinely are asked to leave stores. The retailer sought, and last year received, a court order keeping organizers out of all of its stores in Arkansas. The state Supreme Court nullified the order in July.

At the first hint of union activity, Wal-Mart managers are supposed to call a hotline, usually prompting a team visit from Bentonville.

Wal-Mart spokeswoman Mona Williams said the intervention was meant to help store managers respond effectively and legally.

"Our philosophy is that only an unhappy associate would be interested in joining a union," she said, "so that's why Wal-Mart does everything it can to make sure that we are providing our associates what they want and need."

But dozens of times in the last four years, attorneys for the National Labor Relations Board have claimed that the company infringed on the supermarket union's legal right to organize.

Although some of those claims have been thrown out, others have been upheld by administrative law judges, who have ruled that Wal-Mart illegally influenced employees with offers of raises, promotions and improved working conditions just before they were to vote on whether to join a union.

Judges also have found that Wal-Mart illegally implied that workers could lose benefits such as insurance and profit sharing if they unionized.

What's more, managers illegally confiscated union literature, threatened to close down a store if workers voted to join the union, fired several union supporters and failed to promote others, according to rulings from Minnesota to Florida.

Stymied in their previous attempts to organize Wal-Mart workers, UFCW leaders adopted a new strategy in 2000. They decided to marshal their resources for a concerted organizing effort in one place: Las Vegas.

The union reached out to workers with a Web site and a weekly radio talk show, and posted organizers outside Wal-Mart stores at all hours. When they could, UFCW members would leave union literature inside stores, hoping that workers would see it before managers ordered the material thrown away.

Larry Allen got his first glimpse at a union pamphlet last year as he carried it to the garbage at the Serene Avenue Supercenter. He was hooked, and began advocating for an election to bring in the union.

"Somebody has got to step up and fight for what is right," Allen said.

Ripple Effect

Less than a mile away from the Serene Avenue store, another shopping center stands deserted, in desperate need of an anchor.

A year ago, the Raley's grocery store here drew thousands of shoppers who spilled out to neighboring businesses, buying flowers, mailing packages, getting their nails done. Today, the store is gone. The remaining shops are struggling.

"I'm probably down 45%," said Bonnie Neisius, who owns a UPS Store franchise in the center. "I just don't get the foot traffic anymore."

A few doors away, Windmill Flowers owner Diana I. Murphy leaned on a table where she would have been arranging bouquets ? had there been customers.

"There are a couple of things in play," Murphy said. "The recession, terrorism. And Wal-Mart. It's had a direct effect on me, because they sell flowers, too.... They even deliver."

Unlike small towns with boarded-up commercial centers, fast-growing Vegas quickly loses track of its Wal-Mart victims.

Wal-Mart's costs to the community tend to show up in subtler ways.

In an informal survey in the late 1990s of people who used Las Vegas emergency rooms for routine medical care, patients who said they were employed but uninsured were asked where they worked.

"Wal-Mart came up more than any other," said Dr. Raj Chanderraj, a Las Vegas cardiologist and chairman of the Clark County Health Care Access Consortium, a group that works to provide medical services to the uninsured.

The reason, say critics: Because Wal-Mart pays such low wages, many employees can't afford the health insurance the company offers. And those who do have health coverage through the company often can't afford deductibles that run as high as $3,000 a year.

"Their employees are ending up at the county hospital and become the burden of the county," said Clark County Manager Thom Reilly.

Wal-Mart disputes that. Williams, the company spokeswoman, said that 48% of employees are covered by Wal-Mart's health insurance plan. Among those who aren't, 26% have coverage from another source such as a spouse's employer or Medicare, Williams said.

The notion that Wal-Mart doesn't provide adequate health coverage is "just rhetoric," she said. "It's simply not true."

According to the Employee Benefit Research Institute in Washington, nearly 44% of workers in the retail sector as a whole have employer-provided health coverage. Among big companies in all industries, the figure is 66%.

Those who accuse Wal-Mart of shortchanging its employees, Williams suggested, don't understand the modern service economy. "Retail and service wages are what they are," she said, "whether you look at a department store, a discount store, the local dry cleaners, the bakery or whatever.

"Wal-Mart is a great match for a lot of people," Williams added. "But if you are the sole provider for your family and do not have the time or the skills to move up the ladder, then maybe it's not the right place for you."

'I Still Believe in Wal-Mart'

Larry Allen spent about a year advocating for the supermarket union while working at Wal-Mart.

In the parking lot and in the break room, he passed out fliers and talked up the benefits of unionizing. But he and his fellow union backers didn't get as far as they hoped. About 42% of workers in the grocery department at Serene Avenue signed UFCW cards ? not enough for the union to feel confident about winning an election.

In August, Allen was fired. NLRB attorneys said it was because of his union activities and filed a complaint against Wal-Mart, seeking his reinstatement.

On a recent afternoon outside the Supercenter, dozens of union members rallied to support Allen. "Larry, Larry, Larry," they chanted. Over at the store entrance, the demonstration was a muffled, distant bit of noise. Store managers watched on a screen as surveillance cameras scanned the crowd.

Asked about the commotion, a gray-haired Wal-Mart greeter named Robert just smiled. "They want to make the store union," he said. "But that would make the prices go up for our customers. We can't let that happen."

On some level, even Larry Allen understands. "I still believe in Wal-Mart," said Allen, who now is on the union payroll as an organizer. "I like the idea of it ? give a quality product at a low price. It's what the American public wants."

COMING MONDAY

Overseas, Wal-Mart's low-cost suppliers feel the heat.

Wal-Mart, county at odds

Letters To The Editor
Silicon Valley Business Times

Published: Friday, November 14, 2003

As a proud resident of Contra Costa County, I am deeply concerned about the effort by Wal-Mart to muscle their way into our county on their terms.

The Contra Costa County Board of Supervisors recently voted unanimously to welcome Wal-Mart to operate on county lands, provided they would operate within certain parameters. The board sought to address several concerns, particularly the negative impact new mega centers will have on traffic.

Given our already-stretched freeways and roads, new mega centers on county lands that do not have the infrastructure to support new traffic could significantly worsen the gridlock.

But, rather than respecting our tradition of locally controlling our own growth, Wal-Mart instead mobilized their limitless financial resources to force a 2004 ballot measure to overturn the ordinance. (Editor's note: To re-affirm the board's original ordinance, voters must vote "yes" on the measure. So, in other words, a "yes" vote on the measure is a vote against Wal-Mart. See full story, Biz Ink, Nov. 7.)

We must not yield to outside interests who are far more concerned with extracting profits from our community than adding value to it.

Contra Costa County is a special place to live because it has been managed by local business, community and elected leaders who care about it. Please reaffirm that tradition and support the ballot measure in March 2004. 

Kish Rajan
Alamo

Wal-Mart: Cruising for a Bruising?

November 14, 2003 - BusinessWeek Online

STREET WISE

By Amy Tsao

The day may be coming when the retailing giant is a magnet for lawsuits and probers. Dubious? Ponder the Microsoft precedent

In recent weeks, the world's biggest discounter has shown up as a fatter target on the radars of those who would shoot it down. In late October, federal officers raided Wal-Mart (WMT ) and accused it of using cleaning contractors that it knew hired illegal immigrants. Based on those allegations, lawyers for some of the immigrants have filed a class action, contending that Wal-Mart conspired to avoid paying overtime. Weeks later, independent gas-station owners accused it of predatory competition by cutting prices so low that smaller operations are driven out of business.

So far, Wall Street has hardly batted an eye. Neither dispute affects Wal-Mart "in the overall scheme of things," Blaylock & Partners analyst Mark Mandel noted a few days before the discounter released its third-quarter results.

Analysts still expect Wal-Mart's sales and profits to rise at a double-digit pace year-in and year-out, as it opens new stores (many of them huge superstores) at a rate of more than one a day and racks up greater market share in toys, groceries, apparel, and jewelry. Ever with an eye for new opportunities, Wal-Mart may even embrace online businesses such as music. Its stock is up 10% this year, to $55.62 on Nov. 13.

POINTING THE FINGER. As Wal-Mart's power grows, some analysts are starting to wonder: What if allegations and lawsuits against it proliferate? What if its growing control over suppliers turns them into subjects that survive only at the discount king's whim?

Outfits like Safeway (SWY ) and Albertson's (ABS ) in groceries, Toys 'R' Us (TOY ), and lower-end department stores have started to blame disappointing financial results on Wal-Mart's competition. What if they were to fall victim to the giant's steady expansion?

If these complaints continue to build, might they transform the behemoth of Bentonville, Ark., into the discount equivalent of that other colossus, the one in Redmond, Wash.? If it isn't careful, Wal-Mart could take Microsoft's (MSFT ) place as both the target of endless government probes and a symbol of heavyhanded corporate practices (see BW, 10/6/03, "Is Wal-Mart Too Powerful?").

"NEGATIVE PUBLICITY." If that happens, it would affect investors' thinking about Wal-Mart -- just as government probes dulled Microsoft's shine. Dominant companies in major industries often become targets by virtue of their mere preeminence, says John Zielinski, portfolio manager at Neuberger Berman Century Fund in Chicago, who adds: "Investors always have to gauge that risk and how much is reflected in the stock."

Certainly, that issue is on analysts' minds in the wake of Wal-Mart's third-quarter report, released Nov. 13. The 13% increase in profits for the period was below Wall Street's forecast, with the company saying this might be due to customers concentrating on its lowest-price goods.

"Recent negative publicity is not likely to help what we view as deteriorating appearances at many Wal-Mart stores and may gradually impact the [price-earnings] multiple," wrote Gary Balter, an analyst at UBS, in reaction to the earnings report. Wal-Mart's stock fell 4% on Nov. 13, even though it expects to earn $2.03 to $2.05 a share for all of 2003 -- in sync with the $2.05 analysts expect.

WHOLESALE SUITS. Whatever the financial effects might be, it's getting harder for Wal-Mart to project a positive image, analysts say. "It worked very hard to develop a corporate culture and persona in the minds of consumers," says Zielenski, who fears Wal-Mart will suffer a loss of consumer goodwill, despite those attractive prices. Adds Zielinski: "The impact may be small financially, but you shouldn't discount it."

Besides the illegal-immigrants complaint, Wal-Mart faces dozens of suits over alleged wage discrimination, gender bias, and antitrust violations. Most analysts don't anticipate significant increases in the outfit's legal costs, which are a pittance in comparison with annual sales of $245 billion.

"Paying a judgment isn't much [of a cost] from a shareholder standpoint," says Peter Cohan, president of Peter S. Cohan Associates in Marlborough, Mass. Yet he adds: "If they have to raise wages and can't offset that, they could be forced to find cost cuts somewhere else" since one of Wal-Mart's biggest competitive advantages is lower wages.

WHAT IF... Realistically, Wal-Mart would have to get a lot bigger and meaner before it could be charged with violating antitrust laws. Blaylock's Mandel points out that it probably has only about 6% of the $3 trillion taken in by U.S. retailers. And while Microsoft had strong corporate enemies who accused it of antitrust activity -- not to mention a legion of state attorneys general -- Wal-Mart's main detractors are all "small, diffuse, and silent," says Donald Luskin, chief investment officer at research boutique Trend Macrolytics.

Nor does Wal-Mart encounter ill feeling in Europe, where Microsoft is now fighting regulators who argue that the Windows operating system was designed to work better with Microsoft's own network software than that of competitors. Microsoft's stock -- $25 as of Nov. 13 -- hasn't budged this year, even as the Nasdaq composite staged its impressive rally. Analysts speculate that its malaise is probably a combination of tech spending's slow recovery and continuing legal issues.

However, if regulators were to reconsider their current definitions of what constitutes marketplace wrongs by a dominant company, Wal-Mart could end up in the hot seat. Antitrust actions traditionally have focused on monopoly abuse by a seller, says Burt Foer, president of the American Anti-Trust Institute, who argues that Wal-Mart's unprecedented buying power could prompt lawmakers to think about "how to draw lines between legitimate use of size by a buyer, and illegitimate use."

CHINA CHALLENGE. That could mean "mid- and large-size suppliers that are getting raked over the coals and are worried there won't be anyone else to sell to eventually" could coalesce as an opposing force, Foer says -- just as a number of computer outfits banded together against Microsoft. Wal-Mart couldn't be reached for comment.

Both Wal-Mart and Microsoft have contributed on a grand scale to a restructuring of the business environment: Microsoft's technology has boosted efficiency at businesses large and small all over the world, while Wal-Mart has exploited information technology to revolutionize inventory control and other business processes, notes Luskin. But Microsoft is viewed as a key U.S. exporter -- a "good guy" role -- whereas Wal-Mart figures in domestic suppliers' fears that Chinese imports will challenge them on their own doorsteps, adds Luskin.

Despite the image Wal-Mart cultivates as a buy-American company, it's a "major catalyst for bringing in cheap Chinese goods" and, as a byproduct, displacing American workers, says Luskin. "That makes Wal-Mart more vulnerable" to image problems, he adds.

WHAT WINS IN THE END. Of course, Wal-Mart's ultimate weapon against public outrage is a powerful one: rock-bottom prices. As much as consumers might fret over the social, economic, and cultural impacts of Wal-Mart's practices "they still want the cheapest price," says San Francisco-based Tiburon Research analyst Rob Wilson, who adds: "That wins out at the end of the day."

For now, analysts and investors are still focusing on the bright side of the Wal-Mart story. Many of those who patronize the stores adore it. But that was also true of Microsoft -- before it started to swing more weight than any rival could counter.

Fighting mega-center may cost city mega-bucks

By JACK DOO and TIM MORAN

BEE STAFF WRITERS

November 16, 2003,

If Turlock wants to block Wal-Mart from opening a supercenter, the city should brace itself for a long and costly fight, said a Contra Costa County supervisor battling Wal-Mart over a similar ban.

"They should start raising money," Supervisor John Gioia of Richmond said. "Probably working with busi-nesses that think they might be im-pacted."

The Turlock City Council is considering an ordinance, similar to one Contra Costa County adopted in June, that would prevent discount stores of more than 100,000 square feet from using more than 5 percent of the space for groceries and other nontaxable items.

Wal-Mart, which opened a 125,000-square-foot store on Fulkerth Road in Turlock in 1993, has proposed building a 225,000-square-foot supercenter, which would feature groceries.

The company's relationship with city officials already has deteriorated.

Mayor Curt Andre and City Councilman John Lazar said Wal-Mart's tactics have been "threatening" and "heavy-handed."

Wal-Mart representatives checked political contribution records for elected city officials before meeting with them, Andre and Lazar said.

They also said Wal-Mart officials threatened to do whatever they could to oppose the ordinance, including an initiative drive, a lawsuit or simply moving the supercenter outside the city.

"It alarmed me that Wal-Mart would take the low road before it is even before the council," Andre said.

The mayor said Wal-Mart community relations official Peter Kanelos told him the company would use "any means, legal, political or otherwise" to get the store built.

"I was shocked," Lazar said. "For people who want to do business in the community, instead of coming in friendly, it's 'do it my way or be executed.'"

Kanelos said researching the records of the council members is a normal practice for many companies.

"It's perfectly legitimate and logical for anyone who has an issue before the council to look for potential conflicts of interest," Kanelos said.

As far as being aggressive and heavy-handed, Kanelos noted that the city officials had met with grocery store and union representatives before drafting the ordinance, but not with Wal-Mart.

"The fact that the City Council is even considering an ordinance against a company already doing business in their city without input is disappointing," he said.

Kanelos said he didn't intend to threaten officials when he told them about the possibility of a lawsuit, an initiative or locating the store outside the city limit.

"I wanted to make sure they had all the facts. It's important for them to understand our intentions, so they don't cost the city tax dollars down the road," Kanelos said. "I apologize if they perceive it as a threat."

Wal-Mart challenged the Contra Costa ordinance by hiring a Sacra-mento firm to secure 27,000 signatures to qualify for a referendum overturning the ban. The issue will be on the March ballot.

Amy Hill, community affairs man- ager for Wal-Mart, said the retail giant previously collected signatures for referendums overturning similar bans in Calexico and Inglewood as well as Clark County, Nev.

She said Inglewood and Clark County repealed their ordinances rather than putting referendums on ballots, and Calexico voters overwhelmingly supported Wal-Mart's position.

"We got a 70 percent margin to overturn," she said. "It demonstrates the public is not supportive of these ordinances. They don't want local government telling them where they can shop."

In Contra Cost County, Gioia said he expects Wal-Mart to pull out all stops. "We won't be surprised if they decide to spend over $1 million," he said.

The other side plans to fight back with a direct-mail promotion, Gioia said.

"We're raising money to run a campaign," he said. "We know they will out-spend us, but we need to spend enough to get our message out of sound public policy."

Lazar suggested the Turlock ordinance, and Andre brought it to the council.

As for the Wal-Mart tactics, Lazar commented, "Turlock is growing up. I guess we are not in Kansas anymore."

Kanelos said it is premature to say whether Wal-Mart would challenge Turlock's ordinance, because it is only a proposal, but he is watching it closely.

"I will be up there. This is nothing we're going to ignore or take lightly," Kanelos said. "We will be participating in the process.

Public hearing coming up

WHAT: The Turlock Planning Commission will hold a public hearing on a proposal to limit large discount stores with substantial grocery departments.

WHEN: 7 p.m. Thursday.

WHERE: Turlock City Hall, 156 S. Broadway.

The commission's recommendation will go to the Turlock City Council, which is scheduled to hold a hearing Dec. 9 and could make a decision in January.

The Wal-Martization of America

New York Times Editorial
November 15, 2003
 The 70,000 grocery workers on strike in Southern California are the front line in a battle to prevent middle-class service jobs from turning into poverty-level ones. The supermarkets say they are forced to lower their labor costs to compete with Wal-Mart, a nonunion, low-wage employer aggressively moving into the grocery business. Everyone should be concerned about this fight. It is, at bottom, about the ability of retail workers to earn wages that keep their families out of poverty.

Grocery stores in Southern California are bracing for the arrival, in February, of the first of 40 Wal-Mart grocery supercenters. Wal-Mart's prices are about 14 percent lower than other groceries' because the company is aggressive about squeezing costs, including labor costs. Its workers earn a third less than unionized grocery workers, and pay for much of their health insurance. Wal-Mart uses hardball tactics to ward off unions. Since 1995, the government has issued at least 60 complaints alleging illegal anti-union activities.

Southern California's supermarket chains have reacted by demanding a two-year freeze on current workers' salaries and lower pay for newly hired workers, and they want employees to pay more for health insurance. The union counters that if the supermarkets match Wal-Mart, their workers will be pushed out of the middle class. Those workers are already only a step — or a second family income — from poverty, with wages of roughly $18,000 a year. Wal-Mart sales clerks make about $14,000 a year, below the $15,060 poverty line for a family of three.

Wal-Mart may also be driving down costs by using undocumented immigrants. Last month, federal agents raided Wal-Marts in 21 states. Wal-Mart is facing a grand jury investigation, and a civil racketeering class-action filed by cleaners who say they were underpaid when working for contractors hired by Wal-Mart. Wal-Mart insists that it was unaware of its contractors' practices. But aware or not, it may have helped to deprive legally employable janitors of jobs and adequate pay.

This Wal-Martization of the work force, to which other low-cost, low-pay stores also contribute, threatens to push many Americans into poverty. The first step in countering it is to enforce the law. The government must act more vigorously, and more quickly, when Wal-Mart uses illegal tactics to block union organizing. And Wal-Mart must be made to pay if it exploits undocumented workers.

Unions understand that the quickest way to win this war is to organize Wal-Mart workers. And Wal-Mart's competitors have to strive for Wal-Mart's efficiency without making workers bear the brunt. Consumers can also play a part. Wal-Mart likes to wrap itself in American values. It should be reminded that one of those is paying workers enough to give their families a decent life.

The trouble with Wal-Mart

By Dan K. Thomasson - Scripps Howard News Service

Thursday November 13th

It used to be that what was good for General Motors was good for the nation. At least that's what people said in the old days before the Japanese invasion when the industrial behemoth was running roughshod over the rest of the world's automobile manufacturers.

Now it seems there are those who would apply that slogan to Wal-Mart, the world's largest retailer. But is it an accurate assessment of the Arkansas-based giant's value to the free enterprise system? There are a growing number who would disagree, citing numerous instances where the Wal-Mart way - and the way it built its business - isn't quite the American way. In fact, it frequently appears to be the antithesis of fair competition, deriving its enormous selling power through an injection of questionable practices.

Substantiation of those allegations came recently when it was revealed that Wal-Mart was subcontracting its daily cleaning chores in many of its stores to companies that employed illegal immigrants at low wages and without overtime or benefits and apparently without collecting payroll taxes. Federal agents raided 60 stores in 20 states rounding up more than 250 illegal aliens and the company has been notified that it is the target of a grand jury investigation.

There are serious charges that Wal-Mart executives were aware of the practice, which by all estimations saved the company millions of dollars over what it would have had to pay otherwise. Not to have known is almost incomprehensible for a company that is tightly managed at all levels. One commentator noted that Wal-Mart is not the kind of place where they permit janitors to run around in their stores at night without some company supervision. Some of those janitors now have filed a class action suit against the company charging that it violated federal racketeering charges by conspiring with cleaning contractors to cheat them out of wages.

This is just the latest questionable event in the spectacular life of the late Sam Walton's brainchild. There have been charges of predatory practices almost from the company's humble beginnings, ranging from the sale of goods produced in foreign sweat shops to using its enormous buying power to sell near or below wholesale until its competitors are put out of business to low wages that destroy the prevailing local pay scales. In smaller communities a rule of thumb has been that five local businesses will fail during the first year after a Wal-Mart opens as the under pricing bites off an ever increasing percentage of sales of everything from groceries to drugs to dry goods and, in some areas, even haircuts.

In my hometown of 15,000 to 20,200 residents where there was once a wide array of retail stores, virtually only Wal-Mart and a few grocery outlets survive. For variety one must drive the 25 miles to downtown Indianapolis. Some of the town's retail demise can be blamed on the Interstate highway system that allowed easy access to a large urban area, but not all by any means. When Wal-Mart arrived the remaining vestiges of local retail businesses disappeared overnight. Now Wal-Mart can charge what it wants without fear of competition.

An entire cottage industry has grown up to coach smaller to midsize communities on how to avoid the Wal-Mart menace. Mainly it boils down to advising chambers of commerce to let them in at peril to their own existence, a strategy that obviously hasn't worked well given the company's incredible growth.

There is no better example of the Wal-Mart impact than the current battle being fought by 70,000 unionized grocery workers against three supermarket chains in Southern California over wages that the companies claim are too high in the face of Wal-Mart's plan to open 40 grocery-selling super centers in that part of the state over the next five years. Picketing workers carry signs that proclaim, "Don't Let Us Become Another Wal-Mart." The grocery workers now earn from $7.40 an hour for baggers after 30 months on the job to $17.90 for cashiers. Wal-Mart grocery workers reportedly earn $9 an hour average.

While GM was undoubtedly good for the country in many respects and so is Wal-Mart, which remains a symbol of one man's retail vision of providing ever increasing numbers with one-stop shopping, there also were downsides that caused complaints that General Motors, like Standard Oil of another time, had gotten too big and should be broken up. As it gobbles up more and more of the nation's retail business, Wal-Mart is going to face increasing criticism and with that more and more government attention. It's the American way. Perhaps there is such a thing as too big.

The Wal-Mart You Don't Know

The giant retailer's low prices often come with a high cost. Wal-Mart's relentless pressure can crush the companies it does business with and force them to send jobs overseas. Are we shopping our way straight to the unemployment line?

From: Fast Company Magazine -  Issue 77 December 2003, Page 68

By: Charles Fishman

A gallon-sized jar of whole pickles is something to behold. The jar is the size of a small aquarium. The fat green pickles, floating in swampy juice, look reptilian, their shapes exaggerated by the glass. It weighs 12 pounds, too big to carry with one hand. The gallon jar of pickles is a display of abundance and excess; it is entrancing, and also vaguely unsettling. This is the product that Wal-Mart fell in love with: Vlasic's gallon jar of pickles.

Wal-Mart priced it at $2.97--a year's supply of pickles for less than $3! "They were using it as a 'statement' item," says Pat Hunn, who calls himself the "mad scientist" of Vlasic's gallon jar. "Wal-Mart was putting it before consumers, saying, This represents what Wal-Mart's about. You can buy a stinkin' gallon of pickles for $2.97. And it's the nation's number-one brand."

Therein lies the basic conundrum of doing business with the world's largest retailer. By selling a gallon of kosher dills for less than most grocers sell a quart, Wal-Mart may have provided a ser-vice for its customers. But what did it do for Vlasic? The pickle maker had spent decades convincing customers that they should pay a premium for its brand. Now Wal-Mart was practically giving them away. And the fevered buying spree that resulted distorted every aspect of Vlasic's operations, from farm field to factory to financial statement.

Indeed, as Vlasic discovered, the real story of Wal-Mart, the story that never gets told, is the story of the pressure the biggest retailer relentlessly applies to its suppliers in the name of bringing us "every day low prices." It's the story of what that pressure does to the companies Wal-Mart does business with, to U.S. manufacturing, and to the economy as a whole. That story can be found floating in a gallon jar of pickles at Wal-Mart.

Wal-Mart is not just the world's largest retailer. It's the world's largest company--bigger than ExxonMobil, General Motors, and General Electric. The scale can be hard to absorb. Wal-Mart sold $244.5 billion worth of goods last year. It sells in three months what

number-two retailer Home Depot sells in a year. And in its own category of general merchandise and groceries, Wal-Mart no longer has any real rivals. It does more business than Target, Sears, Kmart, J.C. Penney, Safeway, and Kroger combined. "Clearly," says Edward Fox, head of Southern Methodist University's J.C. Penney Center for Retailing Excellence, "Wal-Mart is more powerful than any retailer has ever been." It is, in fact, so big and so furtively powerful as to have become an entirely different order of corporate being.

Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don't change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. But what almost no one outside the world of Wal-Mart and its 21,000 suppliers knows is the high cost of those low prices. Wal-Mart has the power to squeeze profit-killing concessions from vendors. To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.

Of course, U.S. companies have been moving jobs offshore for decades, long before Wal-Mart was a retailing power. But there is no question that the chain is helping accelerate the loss of American jobs to low-wage countries such as China. Wal-Mart, which in the late 1980s and early 1990s trumpeted its claim to "Buy American," has doubled its imports from China in the past five years alone, buying some $12 billion in merchandise in 2002. That's nearly 10% of all Chinese exports to the United States.

One way to think of Wal-Mart is as a vast pipeline that gives non-U.S. companies direct access to the American market. "One of the things that limits or slows the growth of imports is the cost of establishing connections and networks," says Paul Krugman, the Princeton University economist. "Wal-Mart is so big and so centralized that it can all at once hook Chinese and other suppliers into its digital system. So--wham!--you have a large switch to overseas sourcing in a period quicker than under the old rules of retailing."

Steve Dobbins has been bearing the brunt of that switch. He's president and CEO of Carolina Mills, a 75-year-old North Carolina company that supplies thread, yarn, and textile finishing to apparel makers--half of which supply Wal-Mart. Carolina Mills grew steadily until 2000. But in the past three years, as its customers have gone either overseas or out of business, it has shrunk from 17 factories to 7, and from 2,600 employees to 1,200. Dobbins's customers have begun to face imported clothing sold so cheaply to Wal-Mart that they could not compete even if they paid their workers nothing.

"People ask, 'How can it be bad for things to come into the U.S. cheaply? How can it be bad to have a bargain at Wal-Mart?' Sure, it's held inflation down, and it's great to have bargains," says Dobbins. "But you can't buy anything if you're not employed. We are shopping ourselves out of jobs."

The gallon jar of pickles at Wal-Mart became a devastating success, giving Vlasic strong sales and growth numbers--but slashing its profits by millions of dollars.

There is no question that Wal-Mart's relentless drive to squeeze out costs has benefited consumers. The giant retailer is at least partly responsible for the low rate of U.S. inflation, and a McKinsey & Co. study concluded that about 12% of the economy's productivity gains in the second half of the 1990s could be traced to Wal-Mart alone.

There is also no question that doing business with Wal-Mart can give a supplier a fast, heady jolt of sales and market share. But that fix can come with long-term consequences for the health of a brand and a business. Vlasic, for example, wasn't looking to build its brand on a gallon of whole pickles. Pickle companies make money on "the cut," slicing cucumbers into spears and hamburger chips. "Cucumbers in the jar, you don't make a whole lot of money there," says Steve Young, a former vice president of grocery marketing for pickles at Vlasic, who has since left the company.

At some point in the late 1990s, a Wal-Mart buyer saw Vlasic's gallon jar and started talking to Pat Hunn about it. Hunn, who has also since left Vlasic, was then head of Vlasic's Wal-Mart sales team, based in Dallas. The gallon intrigued the buyer. In sales tests, priced somewhere over $3, "the gallon sold like crazy," says Hunn, "surprising us all." The Wal-Mart buyer had a brainstorm: What would happen to the gallon if they offered it nationwide and got it below $3? Hunn was skeptical, but his job was to look for ways to sell pickles at Wal-Mart. Why not?

And so Vlasic's gallon jar of pickles went into every Wal-Mart, some 3,000 stores, at $2.97, a price so low that Vlasic and Wal-Mart were making only a penny or two on a jar, if that. It was showcased on big pallets near the front of stores. It was an abundance of abundance. "It was selling 80 jars a week, on average, in every store," says Young. Doesn't sound like much, until you do the math: That's 240,000 gallons of pickles, just in gallon jars, just at Wal-Mart, every week. Whole fields of cucumbers were heading out the door.

For Vlasic, the gallon jar of pickles became what might be called a devastating success. "Quickly, it started cannibalizing our non-Wal-Mart business," says Young. "We saw consumers who used to buy the spears and the chips in supermarkets buying the Wal-Mart gallons. They'd eat a quarter of a jar and throw the thing away when they got moldy. A family can't eat them fast enough."

The gallon jar reshaped Vlasic's pickle business: It chewed up the profit margin of the business with Wal-Mart, and of pickles generally. Procurement had to scramble to find enough pickles to fill the gallons, but the volume gave Vlasic strong sales numbers, strong growth numbers, and a powerful place in the world of pickles at Wal-Mart. Which accounted for 30% of Vlasic's business. But the company's profits from pickles had shriveled 25% or more, Young says--millions of dollars.

The gallon was hoisting Vlasic and hurting it at the same time.

Young remembers begging Wal-Mart for relief. "They said, 'No way,' " says Young. "We said we'll increase the price"--even $3.49 would have helped tremendously--"and they said, 'If you do that, all the other products of yours we buy, we'll stop buying.' It was a clear threat." Hunn recalls things a little differently, if just as ominously: "They said, 'We want the $2.97 gallon of pickles. If you don't do it, we'll see if someone else might.' I knew our competitors were saying to Wal-Mart, 'We'll do the $2.97 gallons if you give us your other business.' " Wal-Mart's business was so indispensable to Vlasic, and the gallon so central to the Wal-Mart relationship, that decisions about the future of the gallon were made at the CEO level.

Finally, Wal-Mart let Vlasic up for air. "The Wal-Mart guy's response was classic," Young recalls. "He said, 'Well, we've done to pickles what we did to orange juice. We've killed it. We can back off.' " Vlasic got to take it down to just over half a gallon of pickles, for $2.79. Not long after that, in January 2001, Vlasic filed for bankruptcy--although the gallon jar of pickles, everyone agrees, wasn't a critical factor.

By now, it is accepted wisdom that Wal-Mart makes the companies it does business with more efficient and focused, leaner and faster. Wal-Mart itself is known for continuous improvement in its ability to handle, move, and track merchandise. It expects the same of its suppliers. But the ability to operate at peak efficiency only gets you in the door at Wal-Mart. Then the real demands start. The public image Wal-Mart projects may be as cheery as its yellow smiley-face mascot, but there is nothing genial about the process by which Wal-Mart gets its suppliers to provide tires and contact lenses, guns and underarm deodorant at every day low prices. Wal-Mart is legendary for forcing its suppliers to redesign everything from their packaging to their computer systems. It is also legendary for quite straightforwardly telling them what it will pay for their goods.

"We are one of Wal-Mart's biggest suppliers, and they are our biggest customer, by far. We have a great relationship. That's all I can say. Are we done now?"

John Fitzgerald, a former vice president of Nabisco, remembers Wal-Mart's reaction to his company's plan to offer a 25-cent newspaper coupon for a large bag of Lifesavers in advance of Halloween. Wal-Mart told Nabisco to add up what it would spend on the promotion--for the newspaper ads, the coupons, and handling--and then just take that amount off the price instead. "That isn't necessarily good for the manufacturer," Fitzgerald says. "They need things that draw attention."

It also is not unheard of for Wal-Mart to demand to examine the private financial records of a supplier, and to insist that its margins are too high and must be cut. And the smaller the supplier, one academic study shows, the greater the likelihood that it will be forced into damaging concessions. Melissa Berryhill, a Wal-Mart spokeswoman, disagrees: "The fact is Wal-Mart, perhaps like no other retailer, seeks to establish collaborative and mutually beneficial relationships with our suppliers."

For many suppliers, though, the only thing worse than doing business with Wal-Mart may be not doing business with Wal-Mart. Last year, 7.5 cents of every dollar spent in any store in the United States (other than auto-parts stores) went to the retailer. That means a contract with Wal-Mart can be critical even for the largest consumer-goods companies. Dial Corp., for example, does 28% of its business with Wal-Mart. If Dial lost that one account, it would have to double its sales to its next nine customers just to stay even. "Wal-Mart is the essential retailer, in a way no other retailer is," says Gib Carey, a partner at Bain & Co., who is leading a yearlong study of how to do business with Wal-Mart. "Our clients cannot grow without finding a way to be successful with Wal-Mart."

Many companies and their executives frankly admit that supplying Wal-Mart is like getting into the company version of basic training with an implacable Army drill sergeant. The process may be unpleasant. But there can be some positive results.

"Everyone from the forklift driver on up to me, the CEO, knew we had to deliver [to Wal-Mart] on time. Not 10 minutes late. And not 45 minutes early, either," says Robin Prever, who was CEO of Saratoga Beverage Group from 1992 to 2000, and made private-label water sold at Wal-Mart. "The message came through clearly: You have this 30-second delivery window. Either you're there, or you're out. With a customer like that, it changes your organization. For the better. It wakes everybody up. And all our customers benefited. We changed our whole approach to doing business."

But you won't hear evenhanded stories like that from Wal-Mart, or from its current suppliers. Despite being a publicly traded company, Wal-Mart is intensely private. It declined to talk in detail about its relationships with its suppliers for this story. More strikingly, dozens of companies contacted declined to talk about even the basics of their business with Wal-Mart.

Here, for example, is an executive at Dial: "We are one of Wal-Mart's biggest suppliers, and they are our biggest customer by far. We have a great relationship. That's all I can say. Are we done now?" Goaded a bit, the executive responds with an almost hysterical edge: "Are you meshuga? Why in the world would we talk about Wal-Mart? Ask me about anything else, we'll talk. But not Wal-Mart."

No one wants to end up in what is known among Wal-Mart vendors as the "penalty box"--punished, or even excluded from the store shelves, for saying something that makes Wal-Mart unhappy. (The penalty box is normally reserved for vendors who don't meet performance benchmarks, not for those who talk to the press.)

"You won't hear anything negative from most people," says Paul Kelly, founder of Silvermine Consulting Group, a company that helps businesses work more effectively with retailers. "It would be committing suicide. If Wal-Mart takes something the wrong way, it's like Saddam Hussein. You just don't want to piss them off."

As a result, this story was reported in an unusual way: by speaking with dozens of people who have spent years selling to Wal-Mart, or consulting to companies that sell to Wal-Mart, but who no longer work for companies that do business with Wal-Mart. Unless otherwise noted, the companies involved in the events they described refused even to confirm or deny the basics of the events.

To a person, all those interviewed credit Wal-Mart with a fundamental integrity in its dealings that's unusual in the world of consumer goods, retailing, and groceries. Wal-Mart does not cheat suppliers, it keeps its word, it pays its bills briskly. "They are tough people but very honest; they treat you honestly," says Peter Campanella, who ran the business that sold Corning kitchenware products, both at Corning and then at World Kitchen. "It was a joke to do business with most of their competitors. A fiasco."

But Wal-Mart also clearly does not hesitate to use its power, magnifying the Darwinian forces already at work in modern global capitalism.

Caught in the Wal-Mart squeeze, Huffy didn't just relinquish profits to keep its commitment to the retailer. It handed those profits to the competition.

What does the squeeze look like at Wal-Mart? It is usually thoroughly rational, sometimes devastatingly so.

John Mariotti is a veteran of the consumer-products world--he spent nine years as president of Huffy Bicycle Co., a division of Huffy Corp., and is now chairman of World Kitchen, the company that sells Oxo, Revere, Corning, and Ekco brand housewares.

He could not be clearer on his opinion about Wal-Mart: It's a great company, and a great company to do business with. "Wal-Mart has done more good for America by several thousand orders of magnitude than they've done bad," Mariotti says. "They have raised the bar, and raised the bar for everybody."

Mariotti describes one episode from Huffy's relationship with Wal-Mart. It's a tale he tells to illustrate an admiring point he makes about the retailer. "They demand you do what you say you are going to do." But it's also a classic example of the damned-if-you-do, damned-if-you-don't Wal-Mart squeeze. When Mariotti was at Huffy throughout the 1980s, the company sold a range of bikes to Wal-Mart, 20 or so models, in a spread of prices and profitability. It was a leading manufacturer of bikes in the United States, in places like Ponca City, Oklahoma; Celina, Ohio; and Farmington, Missouri.

One year, Huffy had committed to supply Wal-Mart with an entry-level, thin-margin bike--as many as Wal-Mart needed. Sales of the low-end bike took off. "I woke up May 1"--the heart of the bike production cycle for the summer--"and I needed 900,000 bikes," he says. "My factories could only run 450,000." As it happened, that same year, Huffy's fancier, more-profitable bikes were doing well, too, at Wal-Mart and other places. Huffy found itself in a bind.

With other retailers, perhaps, Mariotti might have sat down, renegotiated, tried to talk his way out of the corner. Not with Wal-Mart. "I made the deal up front with them," he says. "I knew how high was up. I was duty-bound to supply my customer." So he did something extraordinary. To free up production in order to make Wal-Mart's cheap bikes, he gave the designs for four of his higher-end, higher-margin products to rival manufacturers. "I conceded business to my competitors, because I just ran out of capacity," he says. Huffy didn't just relinquish profits to keep Wal-Mart happy--it handed those profits to its competition. "Wal-Mart didn't tell me what to do," Mariotti says. "They didn't have to." The retailer, he adds, "is tough as nails. But they give you a chance to compete. If you can't compete, that's your problem."

In the years since Mariotti left Huffy, the bike maker's relationship with Wal-Mart has been vital (though Huffy Corp. has lost money in three out of the last five years). It is the number-three seller of bikes in the United States. And Wal-Mart is the number-one retailer of bikes. But here's one last statistic about bicycles: Roughly 98% are now imported from places such as China, Mexico, and Taiwan. Huffy made its last bike in the United States in 1999.

As Mariotti says, Wal-Mart is tough as nails. But not every supplier agrees that the toughness is always accompanied by fairness. The Lovable Company was founded in 1926 by the grandfather of Frank Garson II, who was Lovable's last president. It did business with Wal-Mart, Garson says, from the earliest days of founder Sam Walton's first store in Bentonville, Arkansas. Lovable made bras and lingerie, supplying retailers that also included Sears and Victoria's Secret. At one point, it was the sixth-largest maker of intimate apparel in the United States, with 700 employees in this country and another 2,000 at eight factories in Central America.

Eventually Wal-Mart became Lovable's biggest customer. "Wal-Mart has a big pencil," says Garson. "They have such awesome purchasing power that they write their own ticket. If they don't like your prices, they'll go vertical and do it themselves--or they'll find someone that will meet their terms."

In the summer of 1995, Garson asserts, Wal-Mart did just that. "They had awarded us a contract, and in their wisdom, they changed the terms so dramatically that they really reneged." Garson, still worried about litigation, won't provide details. "But when you lose a customer that size, they are irreplaceable."

Lovable was already feeling intense cost pressure. Less than three years after Wal-Mart pulled its business, in its 72nd year, Lovable closed. "They leave a lot to be desired in the way they treat people," says Garson. "Their actions to pulverize people are unnecessary. Wal-Mart chewed us up and spit us out."

Believe it or not, American business has been through this before. The Great Atlantic & Pacific Tea Co., the grocery-store chain, stood astride the U.S. market in the 1920s and 1930s with a dominance that has likely never been duplicated. At its peak, A&P had five times the number of stores Wal-Mart has now (although much smaller ones), and at one point, it owned 80% of the supermarket business. Some of the antipredatory-pricing laws in use today were inspired by A&P's attempts to muscle its suppliers.

There is very little academic and statistical study of Wal-Mart's impact on the health of its suppliers and virtually nothing in the last decade, when Wal-Mart's size has increased by a factor of five. This while the retail industry has become much more concentrated. In large part, that's because it's nearly impossible to get meaningful data that would allow researchers to track the influence of Wal-Mart's business on companies over time. You'd need cooperation from the vendor companies or Wal-Mart or both--and neither Wal-Mart nor its suppliers are interested in sharing such intimate detail.

Bain & Co., the global management consulting firm, is in the midst of a project that asks, How does a company have a healthy relationship with Wal-Mart? How do you avoid being sucked into the vortex? How do you maintain some standing, some leverage of your own?

This July, in a mating that had the relieved air of lovers who had too long resisted embracing, Levi Strauss rolled blue jeans into every Wal-Mart in the United States.

Bain's first insights are obvious, if not easy. "Year after year," Carey, a partner at Bain & Co., says, "for any product that is the same as what you sold them last year, Wal-Mart will say, 'Here's the price you gave me last year. Here's what I can get a competitor's product for. Here's what I can get a private-label version for. I want to see a better value that I can bring to my shopper this year. Or else I'm going to use that shelf space differently.' "

Carey has a friend in the umbrella business who learned that. One year, because of costs, he went to Wal-Mart and asked for a 5% price increase. "Wal-Mart said, 'We were expecting a 5% decrease. We're off by 10%. Go back and sharpen your pencil.' " The umbrella man scrimped and came back with a 2% increase. "They said, 'We'll go with a Chinese manufacturer'--and he was out entirely."

The Wal-Mart squeeze means vendors have to be as relentless and as microscopic as Wal-Mart is at managing their own costs. They need, in fact, to turn themselves into shadow versions of Wal-Mart itself. "Wal-Mart won't necessarily say you have to reconfigure your distribution system," says Carey. "But companies recognize they are not going to maintain margins with growth in their Wal-Mart business without doing it."

The way to avoid being trapped in a spiral of growing business and shrinking profits, says Carey, is to innovate. "You need to bring Wal-Mart new products--products consumers need. Because with those, Wal-Mart doesn't have benchmarks to drive you down in price. They don't have historical data, you don't have competitors, they haven't bid the products out to private-label makers. That's how you can have higher prices and higher margins."

Reasonable advice, but not universally useful. There has been an explosion of "innovation" in toothbrushes and toothpastes in the past five years, for instance; but a pickle is a pickle is a pickle.

Bain's other critical discovery is that consumers are often more loyal to product companies than to Wal-Mart. With strongly branded items people develop a preference for--things like toothpaste or laundry detergent--Wal-Mart rarely forces shoppers to switch to a second choice. It would simply punish itself by seeing sales fall, and it won't put up with that for long.

But as Wal-Mart has grown in market reach and clout, even manufacturers known for nurturing premium brands may find themselves overpowered. This July, in a mating that had the relieved air of lovers who had too long resisted embracing, Levi Strauss rolled blue jeans into every Wal-Mart doorway in the United States: 2,864 stores. Wal-Mart, seeking to expand its clothing business with more fashionable brands, promoted the clothes on its in-store TV network and with banners slipped over the security-tag detectors at exit doors.

Levi's launch into Wal-Mart came the same summer the clothes maker celebrated its 150th birthday. For a century and a half, one of the most recognizable names in American commerce had survived without Wal-Mart. But in October 2002, when Levi Strauss and Wal-Mart announced their engagement, Levi was shrinking rapidly. The pressure on Levi goes back 25 years--well before Wal-Mart was an influence. Between 1981 and 1990, Levi closed 58 U.S. manufacturing plants, sending 25% of its sewing overseas.

Sales for Levi peaked in 1996 at $7.1 billion. By last year, they had spiraled down six years in a row, to $4.1 billion; through the first six months of 2003, sales dropped another 3%. This one account--selling jeans to Wal-Mart--could almost instantly revive Levi.

Last year, Wal-Mart sold more clothing than any other retailer in the country. It also sold more pairs of jeans than any other store. Wal-Mart's own inexpensive house brand of jeans, Faded Glory, is estimated to do $3 billion in sales a year, a house brand nearly the size of Levi Strauss. Perhaps most revealing in terms of Levi's strategic blunders: In 2002, half the jeans sold in the United States cost less than $20 a pair. That same year, Levi didn't offer jeans for less than $30.

For much of the last decade, Levi couldn't have qualified to sell to Wal-Mart. Its computer systems were antiquated, and it was notorious for delivering clothes late to retailers. Levi admitted its on-time delivery rate was 65%. When it announced the deal with Wal-Mart last year, one fashion-industry analyst bluntly predicted Levi would simply fail to deliver the jeans.

But Levi Strauss has taken to the Wal-Mart Way with the intensity of a near-death religious conversion--and Levi's executives were happy to talk about their experience getting ready to sell at Wal-Mart. One hundred people at Levi's headquarters are devoted to the new business; another 12 have set up in an office in Bentonville, near Wal-Mart's headquarters, where the company has hired a respected veteran Wal-Mart sales account manager.

Getting ready for Wal-Mart has been like putting Levi on the Atkins diet. It has helped everything--customer focus, inventory management, speed to market. It has even helped other retailers that buy Levis, because Wal-Mart has forced the company to replenish stores within two days instead of Levi's previous five-day cycle.

And so, Wal-Mart might rescue Levi Strauss. Except for one thing.

Levi didn't actually have any clothes it could sell at Wal-Mart. Everything was too expensive. It had to develop a fresh line for mass retailers: the Levi Strauss Signature brand, featuring Levi Strauss's name on the back of the jeans.

Two months after the launch, Levi basked in the honeymoon glow. Overall sales, after falling for the first six months of 2003, rose 6% in the third quarter; profits in the summer quarter nearly doubled. All, Levi's CEO said, because of Signature.

"They are all very rational people. And they had a good point. Everyone was willing to pay more for a Master Lock. But how much more can they justify?"

But the low-end business isn't a business Levi is known for, or one it had been particularly interested in. It's also a business in which Levi will find itself competing with lean, experienced players such as VF and Faded Glory. Levi's makeover might so improve its performance with its non-Wal-Mart suppliers that its established business will thrive, too. It is just as likely that any gains will be offset by the competitive pressures already dissolving Levi's premium brands, and by the cannibalization of its own sales. "It's hard to see how this relationship will boost Levi's higher-end business," says Paul Farris, a professor at the University of Virginia's Darden Graduate School of Business Administration. "It's easy to see how this will hurt the higher-end business."

If Levi clothing is a runaway hit at Wal-Mart, that may indeed rescue Levi as a business. But what will have been rescued? The Signature line--it includes clothing for girls, boys, men, and women--is an odd departure for a company whose brand has long been an American icon. Some of the jeans have the look, the fingertip feel, of pricier Levis. But much of the clothing has the look and feel it must have, given its price (around $23 for adult pants): cheap. Cheap and disappointing to find labeled with Levi Strauss's name. And just five days before the cheery profit news, Levi had another announcement: It is closing its last two U.S. factories, both in San Antonio, and laying off more than 2,500 workers, or 21% of its workforce. A company that 22 years ago had 60 clothing plants in the United States--and that was known as one of the most socially reponsible corporations on the planet--will, by 2004, not make any clothes at all. It will just import them.

In the end, of course, it is we as shoppers who have the power, and who have given that power to Wal-Mart. Part of Wal-Mart's dominance, part of its insight, and part of its arrogance, is that it presumes to speak for American shoppers.

If Wal-Mart doesn't like the pricing on something, says Andrew Whitman, who helped service Wal-Mart for years when he worked at General Foods and Kraft, they simply say, "At that price we no longer think it's a good value to our shopper. Therefore, we don't think we should carry it."

Wal-Mart has also lulled shoppers into ignoring the difference between the price of something and the cost. Its unending focus on price underscores something that Americans are only starting to realize about globalization: Ever-cheaper prices have consequences. Says Steve Dobbins, president of thread maker Carolina Mills: "We want clean air, clear water, good living conditions, the best health care in the world--yet we aren't willing to pay for anything manufactured under those restrictions."

Randall Larrimore, a former CEO of MasterBrand Industries, the parent company of Master Lock, understands that contradiction too well. For years, he says, as manufacturing costs in the United States rose, Master Lock was able to pass them along. But at some point in the 1990s, Asian manufacturers started producing locks for much less. "When the difference is $1, retailers like Wal-Mart would prefer to have the brand-name padlock or faucet or hammer," Larrimore says. "But as the spread becomes greater, when our padlock was $9, and the import was $6, then they can offer the consumer a real discount by carrying two lines. Ultimately, they may only carry one line."

In January 1997, Master Lock announced that, after 75 years making locks in Milwaukee, it would begin importing more products from Asia. Not too long after, Master Lock opened a factory of its own in Nogales, Mexico. Today, it makes just 10% to 15% of its locks in Milwaukee--its 300 employees there mostly make parts that are sent to Nogales, where there are now 800 factory workers.

Larrimore did the first manufacturing layoffs at Master Lock. He negotiated with Master Lock's unions himself. He went to Bentonville. "I loved dealing with Wal-Mart, with Home Depot," he says. "They are all very rational people. There wasn't a whole lot of room for negotiation. And they had a good point. Everyone was willing to pay more for a Master Lock. But how much more can they justify? If they can buy a lock that has arguably similar qual-ity, at a cheaper price, well, they can get their consumers a deal."

It's Wal-Mart in the role of Adam Smith's invisible hand. And the Milwaukee employees of Master Lock who shopped at Wal-Mart to save money helped that hand shove their own jobs right to Nogales. Not consciously, not directly, but inevitably. "Do we as consumers appreciate what we're doing?" Larrimore asks. "I don't think so. But even if we do, I think we say, Here's a Master Lock for $9, here's another lock for $6--let the other guy pay $9."

Judge certifies 100,000-strong class for
Wal-Mart hours case

By Jahna Berry - The Recorder

November 11, 2003

As Wal-Mart braces for a key ruling in a massive sex-discrimination suit in federal court, an Alameda County judge has certified a wage-and-hour class action on behalf of more than 100,000 California Wal-Mart employees.

The East Bay suit, the largest wage-and-hour case ever to be certified, could force the nation's No. 1 retailer to shell out millions in back pay, one plaintiffs' attorney says.

On Thursday, Judge Ronald Sabraw cleared the way for plaintiffs to litigate Savaglio v. Wal-Mart, C835687, a suit alleging that Wal-Mart routinely asked workers to toil "off the clock" but didn't pay them for it. The work included times when workers were told to shorten, skip or interrupt lunch and other breaks.

"The court finds that plaintiffs have presented substantial evidence that Wal-Mart had uniform policies of encouraging employees to assist customers at all times ... and discouraging overtime work," Sabraw wrote.

Wal-Mart's attorney, Teresa Beaudet of the Los Angeles office of Mayer, Brown, Rowe & Maw, referred press calls to Wal-Mart spokeswoman Sarah Clark. Clark could not be reached for comment Monday afternoon.

Savaglio is one of several similar suits pending in other states, said lead plaintiff attorney Frederick Furth of The Furth Firm in San Francisco.

Wal-Mart's practices are "hard on [workers] physically and emotionally," Furth said, noting that employees had to help any customer within 10 feet, whether they were working or not. "For a lot of them, this was the only job available to them."

The suit extends to past and present hourly California Wal-Mart employees who've worked with the retailer since 1997.

Although the East Bay case is the largest certified class action against Wal-Mart so far, Dukes v. Wal-Mart, 01-2252, may soon dwarf it. That case, which is pending before U.S. District Judge Martin Jenkins, alleges that Wal-Mart pays women less and promotes them less often than men. If the class, which includes 1.6 million past and present female employees, is certified, it would be the largest employment discrimination class in the nation's history.

Reporter Jahna Berry's e-mail address is mailto:jberry@therecorder.com

P&G, Wal-Mart store did secret test of RFID

Howard Wolinsky - Chicago Sun-Times
November 9,  2003

Shoppers in a suburban Tulsa, Okla., Wal-Mart were unwitting guinea pigs earlier this year in a secret study that two of America's largest corporations never expected you'd know about.

In the study, uncovered by the Chicago Sun-Times, shelves in a Wal-Mart in Broken Arrow, Okla., were equipped with hidden electronics to track the Max Factor Lipfinity lipstick containers stacked on them. The shelves and Webcam images were viewed 750 miles away by Procter & Gamble researchers in Cincinnati who could tell when lipsticks were removed from the shelves and could even watch consumers in action.

The study involved a new technology, known as Radio Frequency Identification (RFID), that enables retailers to use radio signals to electronically track products in warehouses and on store shelves, a technology critics fear ultimately could be used to track people once they leave the store.

Manufacturers and retailers are looking at ultimately putting the tiny chips into everything from soda cans and cereal boxes to shoes, clothing and car tires.

This worries privacy-rights advocates who envision tags in shoes and other personal items being linked to credit-card information so that retailers and government agencies could spy on the public.

Experts on RFID said the four-month study in Broken Arrow, Okla., was the first of its kind in the United States. Up to now, industry leaders have denied such testing had been conducted in this country.

The Sun-Times learned of the trial from a disgruntled Procter & Gamble executive and also from the firm that designed the "smart shelf" system. Researchers concealed "readers" in contact paper placed under the shelves and embedded RFID antenna chips in Lipfinity packaging.

Kevin Ashton, executive director of the Auto-ID Center at the Massachusetts Institute of Technology, downplayed the trial. "I think that the idea that someone's privacy is at stake because there are a few RFID tags in a few lipsticks in one store is silly," Ashton said.

The Auto-ID Center was founded in 1999 to develop RFID technology.

But Katherine Albrecht, founder of CASPIAN, a privacy rights group, said, "On the surface, the Broken Arrow trial may seem harmless. But the truth is that the businesses involved pushed forward with this technology in secret, knowing full well that consumers are overwhelmingly opposed to it. This is why we have called for mandatory labeling of products containing RFID chips."

Procter & Gamble spokeswoman Jeannie Tharrington reluctantly confirmed the Broken Arrow test.

She said there was a sign at the Lipfinity display that "alerted customers that closed-circuit televisions and electronic merchandise security systems are in place in the store."

She said there were no specific warnings about RFID tags in the lipstick packages.

Tharrington said the tags had a short read range -- about a half inch. That meant that once the packages left the shelves, researchers could not track them or the people carrying them.

Albrecht said: "Customers do not go into a Wal-Mart expecting to be used as research subjects. And they certainly don't expect these companies to slip tiny tracking devices into the products they buy."

Tom Williams, spokesman for Wal-Mart, initially denied that the study had been done, only to call back the next day to say he found that indeed the test had been conducted from late March until mid- July.

The Chicago Sun-Times learned that an Oklahoma Wal-Mart and Procter & Gamble did a study earlier this year of Radio Frequency Identification. Shelves in a display similar to this (minus the computers) were equipped with hidden electronics to track packages of Lipfinity lipstick.

Judge certifies Wal-Mart suit class action

BY JULIE FORSTER - St. Paul Pioneer Press
6 November 2003

More than 64,000 former and current employees of Wal-Mart and Sam's Club stores in Minnesota will be eligible to join a lawsuit against the giant retailer that claims employees were forced to work off the clock and without breaks.

Thomas R. Lacy, a Dakota County district court judge, this week gave class-action status to a wage-and-hour case against the Bentonville, Ark., company. The case could be worth upwards of $200 million based on the number of potential claimants.

Across the nation, there are 37 class-action lawsuits against Wal-Mart with similar types of claims. Minnesota's is only the second to be certified. The other such case, in Indiana, is on appeal. Wal-Mart said it is "looking at options" for an appeal in the Minnesota case.

The case was originally filed in September 2001 by four former hourly employees who maintain that they did not receive rest and meal breaks to which they were entitled under Wal-Mart policy and Minnesota law. Each of the four women also claims that she worked off the clock without compensation, a violation of Wal-Mart policy and state wage-and hour laws. Wal-Mart denies these claims.

The majority of cases filed as class actions are never certified. And as is often the case, it would be unlikely that the plaintiffs would have the wherewithal to proceed individually.

In this case, the judge was convinced that tens of thousands of potential class members have common circumstances and similar claimed injuries and that the merits of the case should be decided on a class-wide basis.

"It's not easy to do. That's why it is somewhat extraordinary when a judge allows a class action, particularly against such a power like Wal-Mart," said Joe Daly, a law professor at Hamline University who is also a federal mediator in labor disputes.

"The unusual part is that they are going against a company that is very large," he said. "They are going against a company that has projected itself in advertising as family-friendly and old-people-friendly. Now Wal-Mart is going to have to deal with thousands and thousands of employees who may not have even thought about this and are now realizing that they very well may have been short-changed."

Wal-Mart has 58 stores in Minnesota, including its Sam's Club, supercenter and discount stores. Altogether, these stores employ 15,749 hourly workers and have employed 64,642 hourly workers since 1998. The plaintiffs — Nancy Braun, Debbie Simonson, Cindy Severson and Pamela Reinert — are all former employees who worked at various stores in Minnesota during or after 1997.

A key piece of evidence in the case is a time record audit conducted by Wal-Mart in 2000. Wal-Mart disputes the accuracy of these records but, according to the court order, Wal-Mart's own internal auditors concluded — based on data from those records — that hourly employees in a sample of 127 stores, including six Minnesota stores, were denied more than 76,000 rest and meal breaks for a one-week period during June 2000. The audit's own author concluded that "Wal-Mart may face several adverse consequences as a result of staffing and scheduling not being prepared appropriately," court records said.

The central issue in the case is whether Wal-Mart's conduct, as reflected in the time records, resulted in employees being denied earned rest breaks, meal periods and compensation for time worked.

The time records show that in some cases payroll managers edited time cards, shaving off time or manually inserting a 30-minute unpaid meal period into hourly workers' previous day's time entries. Wal-Mart admits the manual insertion in only one case and had no explanation for other instances of edited time records, court records said. "While the court is not making a determination of the merits, for class certification purposes, the evidence submitted by plaintiffs, based on Wal-Mart's time records, tends to show that these practices were widespread and not limited to the four named plaintiffs," Judge Lacy wrote.

The attorneys for the former employees maintain that store managers are under enormous pressure to keep labor costs to a minimum and that the company stacks the deck so that managers cannot meet their budgets without resorting to these types of practices. "They are constantly pressured to decrease payroll, both the number of employees and the total payroll expense as a percentage of sales," said Jonathan Parritz, the lead plaintiff's attorney who is arguing the case.

A Wal-Mart spokeswoman said the company's policy is to pay hourly workers for every minute that they work. "Certifying this as a class action does not mean that the company has done anything wrong or improper," said Sarah Clark, a Wal-Mart spokeswoman. "There has been no ruling on the merits of the plaintiff's claims."

The courts have denied certification in eight states, including a decision filed last week in Georgia.

Wal-Mart influence across U.S. grows

By Greg Schneider and Dina ElBoghdady

November 6, 2003 - Washington Post

Wal-Mart, known for selling goods at rock-bottom prices, has forced other retailers to follow suit or fall behind.

A Wal-Mart and Sam's Club will open next year in Honolulu. For retailers, competing with Wal-Mart means not just holding down wages, but curbing healthcare costs. Wal-Mart workers typically earn $7-$8 an hour.

MORGANTOWN, W.Va. As a young man, Roy Bukrim found a job that seemed better than working in dangerous coal mines like his relatives: He hired on at the Kroger supermarket, where 27 years later he's head night stocker and supports a wife, two kids and a mortgage.

But Bukrim, 48, figures he wouldn't have that career option today. Young people who hire on now get minimum wage and no health benefits, then leave after a few months. Bukrim said the future that he saw in grocery work no longer exists.

To Bukrim and other workers as well as Kroger Co. executives the juggernaut driving that change is the store's most-feared competitor, Wal-Mart Stores Inc.

"All we've heard is Wal-Mart this and Wal-Mart that," said Kroger cashier Victoria Marano. "They want to be like Wal-Mart so they can compete."

Wal-Mart, the world's biggest retailer and the nation's biggest private employer, has become so powerful that its practices reverberate throughout the U.S. economy. About as many people work for Wal-Mart 1.3 million as serve active duty in the U.S. military. Its most recent annual sales $245 billion are greater than the gross domestic product of Switzerland. It's no wonder the company has more than 3,000 stores in the United States; on Oct. 29 Wal-Mart opened 39 stores, and it once opened 47 in a day.

Next year, the company will open a 317,000-square-foot Wal-Mart/Sam's Club center on a 10.5-acre site in Honolulu known as the "Ke'eaumoku superblock."

Because it wields enormous buying power, Wal-Mart influences the makers of virtually all household products, dictating everything from pricing to packaging. What's more, Wal-Mart's mania for selling goods at rock-bottom prices has trained consumers to expect deep discounts everywhere they shop, forcing competing retailers to follow suit or fall behind.

Part of the reason the chain is able to offer a microwave oven for under $30 or a 24-can package of Sam's Choice cola for $3.64 or a gas-powered lawn mower for under $150, for instance, is that it contracts with outside janitorial services some of which have questionable hiring practices and relies heavily on lower-paid part-time workers, say unions and competitors.

Wal-Mart's vast, nonunionized workforce earns a typical wage of about $7 to $8 an hour. Unionized workers at Kroger, by contrast, said they were making between $11 and $13 an hour, with full health benefits. About 62 percent of Wal-Mart workers are eligible for benefits, but less than half of the workforce participates. Critics say the low participation is because Wal-Mart requires steep employee contributions.

As other retailers follow Wal-Mart's lead, workers without technical training are feeling a tightening squeeze. And untrained people entering today's workforce the way Bukrim did three decades ago have dwindling odds of reaching the middle class.

"These are jobs that have historically yielded a middle-class lifestyle," said Jared Bernstein, an economist with the Economic Policy Institute. "But with a much more lean and mean approach to services, many of those jobs are going by the wayside."

Nowhere is that shift more evident than at supermarkets, such as Kroger, which have seen Wal-Mart rocket to the top of their industry in only 10 years. Bukrim and 70,000 other unionized workers at the Kroger, Safeway and Albertsons chains in several states including West Virginia, California and Kentucky are now on strike or locked out in a conflict over wage and benefits changes their employers say are necessary to compete with Wal-Mart.

Some economists argue that the Wal-Martization of the American workforce is simply the free-market system functioning as it should. Gary Stibel, founder and principal of the New England Consulting Group, said Wal-Mart has saved consumers more than $20 billion through its discount pricing. Figuring in Wal-Mart's pressure on other retailers to lower prices, savings top $100 billion, he said.

"In this day and age, the United States needs more companies like Wal-Mart to create jobs, even if not at the highest pay," Stibel said.

Wal-Mart morphed from a single store in Rogers, Ark., in 1962 into a retail powerhouse by mastering the art of low pricing in a way that has transformed its competitors, its suppliers and the industries it now dominates including groceries, toys and apparel.

Founder Sam Walton pioneered the "supercenter" retail phenomenon. His use of technology such as bar code price scanners and his reinvention of the supply chain, with stores reordering stock only as needed instead of keeping mountains of goods in warehouses, changed the way of business in America.

"Wal-Mart creates its own weather," said John Challenger, chief executive of Challenger, Gray & Christmas Inc., a Chicago outplacement firm that tracks retail jobs. "It sets the standards in many ways for retailers throughout the country."

Kmart Corp., which dwarfed Wal-Mart only 15 years ago, filed for bankruptcy protection in 2002 and eliminated 57,000 positions in part because it tried to compete with Wal-Mart on prices and failed. FAO Inc., the iconic toy seller, filed for protection from its creditors in part because it did not try to compete with Wal-Mart on prices. Both retailers have since emerged from bankruptcy proceedings. And since Wal-Mart began aggressively expanding into groceries in the past decade, some national supermarket chains have gone bankrupt.

It's within the food sector that the nonunionized retailer is most affecting labor relations in this country, said Ira Kalish, a global director at Deloitte Research.

For supermarkets, which operate on razor-thin profit margins, labor is perhaps the highest cost of doing business, said Michael J. Silverstein, a senior vice president at Boston Consulting Group.

"The less you pay (for labor), the lower your prices can be," Silverstein said. "The grocery store is a war zone, and the weak are going down fast and with them go a lot of jobs."

Wal-Mart's supercenters have labor costs 20 percent to 30 percent lower than those of unionized supermarkets, according to a study from consulting firm Retail Forward. So groceries at Wal-Mart cost about 15 percent less than the competition, the study said.

Retail Forward concluded that for every Wal-Mart Supercenter that opens in the next five years, two supermarkets will close their doors. That means the supermarket industry could lose 2,000 more stores over the next five years, or 400 a year.

Wal-Mart is applying the same heavy pressure on grocery suppliers that it exerts on makers of other consumer goods, leaving them beholden to the retailing giant for a significant part of their revenue. Wal-Mart made up 30 percent or more of U.S. sales for Clorox Co., Gillette Co., Mattel Inc. and Procter & Gamble Co. in fiscal 2002, according to Fitch Ratings.

For retailers, competing with Wal-Mart means not just holding down wages, but curbing healthcare costs.

A report by the AFL-CIO said the retailer insures only about 45 percent of its work force. Wal-Mart workers must pay about one-third of the cost of their healthcare premiums, while employees at other large companies typically pay 16 percent to 25 percent, the report said.

The result is that many Wal-Mart workers transfer the healthcare burden either to their spouse's employer or to government agencies, the report said.

Wal-Mart defends its practices, arguing that its employees have generous access to insurance and that worker contributions to health care $57 per two-week pay period for a family plan are in line with the rest of the industry.

As for wages, Wal-Mart's entry-level jobs "are not designed for someone who is the sole support for a family" but for those looking to advance, said Mona Williams, Wal-Mart's chief spokeswoman. About two-thirds of Wal-Mart's managers were once hourly workers for the chain.

Wal-Mart's everyday high costs
By Froma Harrop

22 October 2003 - Providence Journal

AMERICA WORSHIPS at the altar of Everyday Low Prices. That's how Wal-Mart can get away with ravaging American wages, benefits and the jobs themselves. That's how Wal-Mart can go on hollowing out America's downtowns and with taxpayer subsidies, to boot.

Wal-Mart is not the only big-box discounter turning the American countryside into a crudscape and its working people into paupers. But the monster leads the pack in terms of size and its holy crusade to cut costs. With $245 billion in revenues last year, Wal-Mart is the world's largest company. Sales at the Bentonville, Ark.-based giant are bigger than the combined total of Home Depot, Target, Sears and Kroger.

Business Week described the everyday low prices slogan as the core value of a cult masquerading as a company. All those yellow smiley faces and front-door greeters are part of a bigger strategy: to get rich off America's workers while undercutting them at every turn. What am I talking about? Here are the particulars:

* Wal-Mart likes to call its sales clerks associates, but serfs would be more like it. The company paid its salespeople an average $8.23 an hour in 2001. At that wage, a full-time worker made only $13,861 a year. The poverty level for a family of three was $14,630. Only 38 percent of Wal-Mart's workers have health coverage. It should surprise no one that nearly half of Wal-Mart's employees quit every year. (Before the recession, the annual turnover rate was 70 percent.)

* Wal-Mart is destroying factory jobs in America. Example: Levi Strauss was one of the last apparel makers to actually produce stuff in the United States. But the made-in-America label means zip to Wal- Mart, which scours the globe's sweatshops for the sweetest prices. Demands for the cheapest jeans have forced Levi Strauss to shut down about a dozen U.S. plants. A factory in San Antonio is about to become the latest casualty.

Wal-Mart lobbies furiously in Washington for free-trade deals that guarantee a flood of goods made by pennies-an-hour labor ($12 billion worth from China alone last year). Small wonder America's manufacturers call Wal-Mart the Beast from Bentonville.

* To Wal-Mart, unions are the devil and must be destroyed. Three years ago, meat cutters in Jacksonville, Texas, tried to establish the first Wal-Mart union. Eleven days after they joined the United Food and Commercial Workers, Wal-Mart closed all the meat-cutting departments at its stores and started buying pre-cut meat.

Wal-Mart is now on a rampage to devour the nation's supermarkets, and so threatens workers everywhere. Its Supercenter stores, which sell groceries, have already sent more than 20 national supermarket chains into bankruptcy. Wal-Mart has plans for 1,000 new Supercenters.

Terrified of a Wal-Mart invasion, California's three biggest supermarket chains have tried to lower their own costs by demanding concessions from their unionized employees. The result is a strike by 70,000 workers at supermarkets in southern California.

* Wal-Mart is paving over America and destroying our communities. Its ugly boxes, plopped down on the edge of town, vacuum up business from local shopkeepers. (So much for any notion of customer loyalty.)

A group named Sprawl-Busters was formed 10 years ago to block Wal- Mart from forcing itself onto Greenfield, Mass. Every day, five or six towns from across the country contact Sprawl-Busters for advice on stopping a Wal-Mart, according to the group's founder, Al Norman. It's not even about shopping, Norman says. It's about how we relate to the places we live in. These towns are being changed economically, physically and socially.

* Wal-Marts hurt surrounding communities. Iowa State University economist Kenneth Stone has studied the impact of Wal-Mart on rural Iowa. He found that some business districts benefited from a Wal- Mart but other towns within 20 miles suffered badly, with retail sales plummeting 25 percent after five years. Having lost their local merchants, the people living in surrounding areas find themselves driving long distances to the Wal-Mart.

The line of groups calling for a boycott of Wal-Mart and its Sam's Club subsidiary grows by the week. As a former Wal-Mart customer, your author appreciates the lure of a good price. But there are competing values. When we understand the real cost of these everyday low prices, they don't seem much of a bargain at all.

Froma Harrop is a Journal editorial writer and syndicated columnist. She may be reached by e-mail at: fharrop@projo.com.

Union Blues at Wal-Mart

By John Dicker, The Nation

June 28, 2002

"Got any nachos ready?"

That's what Joe Hendrix said to the folks at the Radio Grill, his employer's in-house snack bar. Hendrix was on his way to punch out from his shift in the meat-cutting department at the Wal-Mart Supercenter in Jacksonville, Texas; eight months earlier, in February 2000, he'd voted yes in the first successful election for union representation at a US Wal-Mart store. For failing to pay when placing his nacho order, he was fired.

Seventy-two-year-old Sidney Smith also voted yes; he got axed for eating a pre-weighed banana on the checkout line. Such were the excuses offered by management as union supporters were systematically routed from their jobs. But this was well after the real damage had been done, when Wal-Mart announced two weeks after the Jacksonville vote that it was switching to case-ready, or pre-cut, beef and would be eliminating meat-cutting operations in 180 stores. Wal-Mart claimed its decision had nothing to do with the organizing drive, but the union filed a complaint with the National Labor Relations Board. Although the board ruled in the union's favor, the timing of the news contained a chillingly clear message to Wal-Mart workers nationwide: This is what you can expect if you try to organize.

Wal-Mart's legendary ferocity in such situations has, until recently, kept unions from trying to make inroads in its million-strong work force. But after more than a decade of pussyfooting, the United Food and Commercial Workers union and the Teamsters are gearing up to take on Wal-Mart Stores, Inc., with the former taking the retail stores and the latter handling 100-plus distribution centers. For the UFCW, this undertaking is less the result of newfound militancy than it is about mere survival. Seventy percent of the union's 1.4 million members work for national groceries like Kroger and Safeway, as well as smaller, regional chains. With a strong presence in the top 100, mostly urban, markets, the big chains can hold steady in the face of Wal-Mart encroachment. The regional chains, however, are getting walloped. And with Wal-Mart circling on the fringes of larger markets, its lower wages and benefits will likely erode those enjoyed by UFCW members.

In its 40-year reign Wal-Mart has amassed a jaw-dropping trophy rack of titles – "world's largest retailer," "world's largest private employer" and the recently acquired "world's largest corporation," edging out ExxonMobil for the top spot in this year's Fortune 500. The chain accounts for 6.4 percent of the nation's retail sales. With K-Mart, until recently its closest rival, now in bankruptcy, the path is clear to ever greater domination.

The only Wal-Mart store to unionize successfully was in Ontario, Canada, abetted in no small measure by the province's once-progressive labor laws. But the fledgling union was broken by the company's flat-out refusal to recognize the contract. While a climber at Mount Everest base camp can point to the many individuals who have summited and lived, a Wal-Mart worker trying to join a union knows no such consolation. Two unions, neither a paragon of union democracy or member mobilization, face an employer that has been growing by 15 percent each year, recession and all: In the context of a labor movement that has not been weaker since the 1920s, with a legal system seemingly rigged against it, this is an Everest ascent with no Sherpas in sight.

Wal-Mart manifests itself in three main forms: The traditional Wal-Mart retail store, which peddles everything from panties to Pennzoil and averages about 90,000 square feet; SAM's Club, a warehouse club store where "members" pay an annual fee to receive greater discounts on dry goods and groceries; and Supercenters, the company's biggest growth vehicle, a combination retail and grocery store clocking in at 190,000 square feet. This year, Wal-Mart plans to open a new one every other day.

"Wal-Mart's strategy is very similar to Mao Zedong's," says retail analyst Burt Flickinger. "Conquer the countryside first and take the cities second." If this sounds alarmist, consider the Neighborhood Market. It's a prototype grocery store roughly the size of three 7-Elevens. In the past few years Wal-Mart has deployed them for greater market saturation in its urban strongholds like Oklahoma City and Dallas. While zoning laws and real estate costs impede the development of most forms of Wal-Mart in the larger metro areas, the trim Neighborhood Market might squeeze into places a Supercenter could never dream of occupying.

SAM Walton built his empire on a belief that rural America saw more business than anyone in the corporate world was recognizing. This vision – combined with a zealot's dedication to low overhead, undercutting the competition through lower profit margins and higher sales volumes, investment in technology and aggressive growth-blazed a trail for an imperial corporation that now operates in nine countries.

Walton has been dead for a decade, but he lives on as a deity, the customer-service superego of Wal-Martians nationwide. So entrenched is the myth of "Mr. Sam" as a benign patriarch that rather than contradict it, the UFCW plays along, with campaign messages about "restoring Sam's vision." Unfortunately, Walton's vision never included unions. As Wall Street Journal reporter Bob Ortega chronicles in his book In Sam We Trust, Walton was bent on maintaining low labor costs, paying workers subminimum wages when he could get away with it and showing no qualms about threatening store and warehouse closures to beat back union campaigns. The company's trumpeted profit-sharing plan and "open door policy" for addressing grievances were all born out of the pleading of Walton's unionbusting consigliere, John Tate. Tate believed that Walton could circumvent labor problems by convincing his workers that he was on their side. For Walton, this turned out to be a winning strategy – a full-time union-prevention program.

Sam drove a pickup truck, shot quail and probably spent more time studying KMart than KMart's own executives. He embodied a peculiarly American paradigm that endures at company headquarters in Bentonville, Arkansas, to this day. He was a self-made, rock-em-sock-em, capitalist cowboy in an industry devoted to peddling every fathomable consumer good, and yet he remained puritanically frugal in his personal and corporate expenditures.

Unlike the Gap or Starbucks, Wal-Mart is not selling brand lifestyle. Its aesthetics in architecture and advertising are decidedly no-frills, its corporate offices stark. Executives pay for their own coffee, and even CEO Lee Scott has been known to share a hotel room on business trips. Wal-Mart's subordination to the bottom line permeates all levels. For instance, to curtail frivolous energy consumption, lights, heat and air conditioning at all 3,289 US Wal-Marts are controlled from Bentonville. Not surprisingly, this ethos hits those at the bottom of the food chain the hardest.

Managers are under considerable pressure to keep profits up, and one of the few ways they can achieve this is by cutting operational costs, of which labor comprises about 50 percent. Former managers and employees attest to an unofficial policy of putting experienced "associates" – as the Wal-Martian wage slave is eloquently titled – out to pasture through firing for minor infractions or pushing them to quit by other means. Why pay $10.50 an hour when a new hire can be culled from the street for $7?

A perpetually churning work force offers the added benefit, from management's perspective, of keeping the union out. By its own admission, Wal-Mart burns through 70 percent of all new hires each year, a considerable number in a work force of over a million. As Bernie Hesse of UFCW Local 789 in the Twin Cities explains it, the paradox of retail organizing is "I'm working retail, this job sucks. If I don't like it I'll go get another job that pays $6.50 an hour." While many retail workers don't see their jobs as being worth a long, arduous battle for representation, they also cower at the real consequences of supporting a union: demotions, reduction in hours and "got any nachos ready"-style firings.

ALThough the union faces skepticism and fear among workers, it has discovered a few potent organizing issues – most notably, healthcare. Effective January 1, a full-time associate with two children and no spouse would pay $36 a week for basic coverage and $3.50 for dental, in addition to a $350 deductible for each individual on the plan. This tallies out to more than $3,000 a year for someone earning less than $16,000. Should it be any surprise that only 38 percent of Wal-Mart associates elect to have coverage? When the company announced a 30 percent hike in premiums this fall, it gleefully noted that associates had a "CHOICE to elect what will be done with 1/2 of the Wal-Mart contribution to our 401(k) account." One of these so-called choices was to "direct it toward paying health care rates." This change was illuminated in a video so slick that SAM's Club cashier Alan Peto said, "If I didn't know any better I really would have thought they had done me a big favor."

Just for shits and giggles, dial (501) 273-8300. That's Wal-Mart's twenty-four-hour "Union Hotline," designed for store managers to call on the first whiff of union activity. Your kind message will activate the beeper of an associate in Wal-Mart's "People Division." Assuming you are a store manager (and not a pinko prankster), your call will be promptly returned. If your associates are talking union, a flying column of unionbusters will be quickly dispatched to put out the fire.

Since the UFCW began talking to meat-cutters en masse in 1999, the People Division has increased from 12 employees to nearly 70. In terms of preparedness, though, Wal-Mart has always trumped the unions. Before any national campaign was afoot, Wal-Mart was publishing and distributing manuals like "A Manager's Toolbox To Remaining Unionfree," producing videos and running two-day workshops for store managers stressing their role as the "first line of defense" against a union campaign.

On paper Wal-Mart stays within the bounds of how an employer can legally respond to a union drive. "They're cosmetics," says unionbuster-turned-union-adviser Martin Levitt. "The company will wave them like a flag to show that they know the law, but once management and supervisors have been pulled into one-on-one meetings with the unionbusting forces, they are carefully programmed on how to break the law and told clearly that their very job depends on doing so."

While a store manager has likely been briefed on extralegal maneuvers, the dirty work is often delegated to nonsalaried department managers with no knowledge of labor law. Gretchen Adams, a co-manager at a Las Vegas Supercenter, was instructed by her district manager not to hire anyone with union experience, while Stan Fortune, a former department manager and security guard, was told to solicit grievances from union supporters, implementing raises and promotions to buy their loyalty. "I never knew I was breaking the law," he says. Wal-Mart spokeswoman Jessica Moser Eldred said the company follows all state, federal and local labor laws. "In no circumstance do we deviate from them."

Part of Wal-Mart's strategy is to deny contact between workers and the union. When it owns the land on which its store sits, it will invoke trespassing laws. "It got to the point where as soon as the organizers got out of their cars, the security guards would be in the parking lots telling them to leave," says Alan Peto.

In other cases, managers or security guards shadow organizers throughout the store, making it impossible for them to speak to workers. Organizers from the UFCW international staff are currently barred from all Wal-Marts under an injunction that forbids solicitation. The company has infuriated shoppers suspected of being union organizers by ejecting them; they've even booted Girl Scouts and Salvation Army bell ringers for fear that contradicting its no-solicitation policy will give the union an inroad.

Faced with the inevitable litany of unfair-labor-practice charges from the union in response to its illegal maneuverings, Wal-Mart can count on the glacial pace of the labor board to stall the campaign. If the board rules in the union's favor, the company suffers a slap on the wrist, posting a notice of company malfeasance in the break room. This is union organizing still haunted by the ghost of the 1947 Taft-Hartley Act.

The UFCW is now attempting to build a case before the NLRB arguing that Wal-Mart's violations are not the result of a few rogue store managers but part of a systematic policy of illegal intimidation, surveillance and terminations, all designed to keep workers from organizing. The union has filed forty complaints against Wal-Mart in twenty-four states, resulting in forty complaints issued by the NLRB against the company.

The UFCW hopes ultimately to attain remedies like "affirmative workplace access," a corrective ruling from the board that allows organizers to talk to workers in break rooms and to rebut management's captive-audience meetings, where workers are deluged with anti-union speeches and videos. Rulings for affirmative access are rare, and they typically take many years to attain. But they have been delivered with great success to UNITE at Fieldcrest Cannon and SEIU at Beverly Nursing Homes. Given a labor board stacked with Bush appointees and Wal-Mart's legal motto of WDWDW (What did we do wrong?), however, chances of an imminent victory are remote.

IN THE 14 years since Wal-Mart opened its first Supercenter, the UFCW has run a damage-control campaign bent on stemming the tide of expansion and sullying the company's image. The union has helped call attention to Wal-Mart's use of sweatshops and child labor overseas, as well as its bogus "Buy American" program, where the company wrapped itself in a "made in the USA" flag until it was revealed that most of its apparel was made in overseas sweatshops. The union also forged coalitions with antisprawl activists to stem Wal-Mart's growth.

All of these are noble pastimes, but without a strategy to organize workers, about as effective as pummeling the Taliban with passages from The Betty Friedan Reader. Until recently, it was hard to tell if the UFCW was boycotting Wal-Mart, organizing it or simply functioning as a thorn in its side. The mixed messages provide the People Division an opportunity to inoculate its associates with videos like "Wal-Mart Under Attack," which shows footage of UFCW rallies with members chanting "Wal-Mart: Not in My Neighborhood" and highlights various local efforts to get union members to sign pledges not to shop at Wal-Mart. When many associates openly identify with the company, the message that the union is against Wal-Mart packs a punch.

In the past year, however, the UFCW seems to have developed a more focused approach. Their line in the sand is Las Vegas, a city with a strong union presence in the service sector. While unionized groceries enjoy 90 percent of Vegas's market share, Wal-Mart is making headway with five Supercenters, five retail stores and four SAM's Clubs. Since March of last year, the union has been organizing in Las Vegas, with some activity in northeast Ohio and Texas. In Vegas, the UFCW hosts a radio show and maintains a Web site, which chronicles Wal-Mart's anti-union campaign and offers a needed arena for counterarguments and open communication among workers. (However, 12 percent of the website's hits come from Bentonville.)

This past November, workers at Las Vegas SAM's Club Store 6382 were set to vote in the third storewide election at a US Wal-Mart. But as the election approached, the company went into a hiring frenzy, disrupting the laboratory conditions required by the NLRB. Watching its support ebb as the company packed the unit with new hires-all of whom were subjected to anti-union videos and meetings-the union filed charges, which resulted in the board's decision to block the election; on March 28, the NLRB issued a complaint against the company, but the best the union is likely to get is another election with little to guarantee that Wal-Mart won't do the same thing again.

And what of the Teamsters? So far, their activity has been limited to two locals in California and Missouri. At a San Bernardino distribution center, a recent election was lost by a swing margin of 28 votes – an impressive result considering management was promising $3 raises in the week preceding the election and that the campaign was the work of a single organizer. Since Wal-Mart's distribution systems are models of efficiency and integral to the company's success, the Teamsters and UFCW might give Bentonville a run for its money if they coordinated their efforts, applying simultaneous pressure by engaging both truckers and retail workers, thus stretching the capacity of the People Division. But in light of Teamsters organizing director John Murphy's stated goal of transforming his department into "a desk and a telephone," and the union's overall stagnation under Jimmy Hoffa, it's hard to imagine they're going to attempt such a conquest anytime soon.

THE UFCW, for its part, has taken a largely top-down approach to the campaign, which has been guided by pressure tactics coming from union HQ in Washington-with some exceptions. "I get members asking me how it's going, how many people have signed cards, and I say what's the point? Why go through a regular election just to get knocked down?" says UFCW organizer Bernie Hesse. "I'm not trying to go store by store; I'm trying to build a social movement." Hesse's Local 789 has launched a campaign called "You Are Worth More" for retail workers in the Twin Cities. Rather than home in on one particular company, Hesse's local is planting roots in the community, establishing itself as a presence among a multiracial work force at metro-area Targets, KMarts and Wal-Marts.

There's no single war-winning strategy for bringing the union to Wal-Mart workers. Given the UFCW's history of bowing to hostile employers and suppressing its own dissidents, it remains to be seen whether the union is movement building or just circling wagons around its most endangered markets. At risk of excessive parade pissing, consider that even if SAM's Club 6382 wins an election, there are still 3,288 more to go. Wal-Mart is likely to be a decades-long struggle, fought by a largely female work force with no union experience. The struggle is now being waged by a vanguard of union lawyers. Ultimately they will have to take a back seat to shop-floor workers, member organizers and, most significant, the communities where workers live. When the lines between union and community collapse, an employer's traditional mode of attack – labeling the union an alien third party – disintegrates, and the campaign becomes less dependent on legal wrangling. Then, when Wal-Mart denies workers access to the union, wrecks an election or fires activist workers, the outrage does not come from a lone UFCW mouthpiece but from a movement.

Given this campaign's stakes – both real and symbolic – a movement is what Wal-Mart workers need. "If these retailers are going to be the jobs of the future, if we've really switched from a production to a service economy, than what is so revolutionary about insisting that they pay a living wage?" asks Bernie Hesse. Millions of associates and citizens may have to ask this question a million more times before a movement becomes something tangible, and not just a feel-good progressive mirage.

John Dicker is a freelance writer based in Brooklyn, New York.

Wal-Mart Wages Don't Support Wal-Mart Workers

By Stan Cox, AlterNet

June 10, 2003

On June 6, Wal-Mart's shareholders converged on Fayetteville, Arkansas for their annual meeting. According to Arkansas Business Online, "The famously colorful event often takes on the feeling of a high school pep rally, as shareholders and company executives perform the 'Wal-Mart cheer.'"

And why shouldn't they cheer? Their company chalked up a record $56.7 billion worth of sales in the first quarter of 2003.

Wal-Mart is the nation's biggest employer, the low-price champion, and a seller of just about everything. A healthy family with a roof over its head could supply virtually all of its other basic monthly needs with one stop at a Wal-Mart Supercenter like the one here in Salina, Kansas. To me, that raised a question: Can a family whose breadwinner works at Wal-Mart afford to supply its minimum needs by shopping there?

Last Sunday, my adult son and daughter joined me for a visit to the Wal-Mart Supercenter in Salina. We spent an hour and a half wandering among the hundreds of red, blue and yellow "Always Low Prices" signs. We checked many of those prices and then went home to do some calculating.

Our conclusion: A single parent employed full-time at Salina's Wal-Mart and raising two children aged 4 and 12 does not earn enough money to supply the family's basic needs by shopping at that same Wal-Mart.

According to the personnel manager at Salina's Supercenter, a cashier earns a starting hourly wage of $6.25. After Social Security and Medicare taxes, the paychecks for a month would total $1,016 for a full-time 176 hours. (That's 40 hours a week, which would put this cashier in a better financial position than the many employees who work 32 or fewer hours a week. Of course, hourly pay rises eventually, but the 2001 PBS report "Store Wars" found that most employees have left by the end of their first year.)

We calculated the amount that our hypothetical three-member family would spend each month if as many of its essential needs as possible were supplied by our local Supercenter. The bottom line: They would need an absolute minimum of $1,136 per month to cover housing, food, transportation, health care and miscellaneous expenses. Despite our best efforts, we exceeded our cashier's monthly income by $120. We couldn't have come even that close had our cashier's family not been eligible for a State of Kansas child-care allowance that covers all but $22 per month in child-care costs for such a family living on so low a wage.

To determine needs, we used published studies on an "adequate but austere" budget for a family with one adult, one preschooler and one school-age child living in Salina. But we slashed some of the published budget items by as much as 38 percent, based on the "Always Low Prices" we found at the Supercenter. And we completely eliminated anything we could do without.

Take a look at the details of our budget and try to decide if you could find a way to cut it and make ends meet.

Living wage campaigns across the country have attempted to determine and advocate for a wage level that can provide a decent life for working families. Living wages are designed to sustain a family over time. Our goal was much more modest. All we asked of our Wal-Mart wage was to get our cashier's family to the end of the month in a central Kansas city of 50,000, assuming they were already settled in a rented apartment or mobile home and had a paid-for car, furniture and appliances. The Wal-Mart wage failed – even at Wal-Mart prices, even with the 10 percent employee discount, and even with employer-assisted health insurance.

Our monthly budget allowed for a USDA-recommended "low-cost food plan" on which we economized further by selecting the cheapest foods in each category. It made for an unappealing and not especially healthful diet. Gas, oil, and repairs for the car – which was used for little more than getting the cashier to work and home – all came from Wal-Mart.

Our cost-cutting left no room for "luxuries": no travel outside Salina County, no cable TV, no home telephone service, no movies, no newspaper or magazine subscriptions, no fees for community sports or classes, no saving at Wal-Mart's in-store bank in case the car had to be replaced, no eating out (except for one meal a month at the McDonald's located in the Supercenter). Most of what's available at the Supercenter was off-limits to us: videos, haircuts, Christmas presents, eye care, tanning sessions, family portraits, bats and balls, small appliances, furniture, bicycles, film and developing.

There is a fundamental and inevitable conflict between the interests of corporations, to whom wages are a cost, and most human beings, to whom wages are a means of survival. Nowhere in this society is that conflict better illustrated than at your local Wal-Mart. Most of its employees and most of its customers depend on their paychecks to pay the bills. But to keep its shareholders in the money, the company depends on hyper-consumption.

Wal-Mart could not survive in a town with good public transportation, where families all grow their own vegetables, cut one another's hair, sew their own clothes, and borrow and lend tools. Like all retailers, it has to move vast quantities of merchandise at an ever-increasing pace. It does it, as the sign in the store says, by "Daring to Save You Even More." And to drive prices to rock-bottom, they have to drive down the wages they pay.

Of course, the wages Wal-Mart pays in Kansas seem princely when compared with those paid by many of its suppliers around the world. Try going to your local Supercenter with the monthly paycheck of a Bangladeshi factory worker who makes shirts for Wal-Mart. You won't make it to the end of Aisle 1.

Here in America, the government implicitly recognizes the insufficiency of Wal-Mart wages. Our cashier's family would be eligible for an Earned Income Tax Credit (EITC) of $4,140 in 2002. That would close the gap between the cashier's wage and bare survival, and provide enough additional income to lift the family just above the poverty line.

EITC, food stamps, Medicaid and state programs like Kansas' childcare allowance are needed because corporations like Wal-Mart refuse to pay their employees a sufficient wage for the work they do. Wal-Mart would not be able to "Rollback" prices the way it does, or pile up its gargantuan profits, without this government subsidy.

In February, Fortune Magazine emphasized the unchallenged dominance of the world's largest corporation: "Wal-Mart in 2003 is, in short, a lot like America in 2003: a sole superpower with a down-home twang."

Well, if Wal-Mart represents both the future of employment and the future of marketing in America, a lot more down-home folks are going to be tumbling into that gap between Always Low Prices and Always Low Wages.

Stan Cox is a plant breeder/geneticist and writer living in Salina, Kansas.

Stores Follow Wal-Mart's Lead in Labor; Competitors Struggle to Match Savings From Non-Union Workforce

Greg Schneider and Dina ElBoghdady - Washington Post Staff Writers
November 6,  2003 - The Washington Post

As a young man, Roy Bukrim found a job that seemed better than working in dangerous coal mines like his relatives: He hired on at the Kroger supermarket, where 27 years later he's head night stocker and supports a wife, two kids and a mortgage.

But Bukrim, 48, figures he wouldn't have that career option today. Young people who take a job there now get minimum wage and no health benefits, then leave after a few months. Bukrim said the future that he saw in grocery work no longer exists. "We've been the generation where that's all changed."

To Bukrim and other workers -- as well as Kroger Co. executives -- the juggernaut driving that change is the store's most-feared competitor, Wal-Mart Stores Inc.

"All we've heard is Wal-Mart this and Wal-Mart that," said Kroger cashier Victoria Marano. "They want to be like Wal-Mart so they can compete."

Wal-Mart, the world's biggest retailer and the nation's biggest private employer, has become so powerful that its practices reverberate throughout the U.S. economy. About as many people work for Wal-Mart -- 1.3 million -- as are on active duty in the U.S. military. Its most recent annual sales -- $245 billion -- are greater than the gross domestic product of Switzerland. It's no wonder the company has more than 3,000 stores in the United States; on Oct. 29 alone Wal-Mart opened 39 stores, and it once opened 47 in a day.

Because it wields enormous buying power, Wal-Mart influences the makers of virtually all household products, dictating everything from pricing to packaging. What's more, Wal-Mart's mania for selling goods at rock-bottom prices has trained consumers to expect deep discounts everywhere they shop, forcing competing retailers to follow suit or fall behind.

The Oct. 23 arrest of 250 illegal aliens working for outside cleaning crews at 61 Wal-Mart stores nationwide underscores another aspect of Wal-Mart's low-price formula: a fervent effort to hold down labor costs. This week the retailer said it has received a "target letter" from a federal grand jury in Pennsylvania, signifying that Wal-Mart itself is under investigation for its role in using illegal workers.

Part of the reason the chain is able to offer a microwave oven for under $30 or a 24-can package of Sam's Choice cola for $3.64 or a gas-powered lawn mower for under $150, for instance, is because it contracts with outside janitorial services -- some of which have questionable hiring practices -- and relies heavily on lower-paid part-time workers, say unions and competitors.

Wal-Mart's vast, non-unionized work force earns a typical wage of about $7 to $8 an hour. Unionized workers at Kroger, by contrast, said they were making between $11 and $13 an hour, with full health benefits. About 62 percent of Wal-Mart workers are eligible for benefits, but less than half of the workforce participates. Critics say the low participation is because Wal-Mart requires steep employee contributions.

As other retailers follow Wal-Mart's lead, workers without technical training are feeling a tightening squeeze. Low-skilled manufacturing jobs are vanishing at historic rates -- West Virginia's coalfield employment, for instance, plummeted from 59,700 jobs in 1980 to 15,700 in 2000. Untrained people entering today's workforce the way Bukrim did three decades ago have dwindling odds of reaching the middle class.

"These are jobs that have historically yielded a middle-class lifestyle. But with a much more lean and mean approach to services, many of those jobs are going by the wayside," said Jared Bernstein, an economist with the Economic Policy Institute.

Nowhere is that shift more evident than at supermarkets, such as Kroger, which have seen Wal-Mart rocket to the top of their industry in only 10 years. Bukrim and 70,000 other unionized workers at the Kroger, Safeway and Albertsons chains in several states -- including West Virginia, California and Kentucky -- are now on strike or locked out in a conflict over wage and benefits changes their employers say are necessary to compete with Wal-Mart.

Some economists argue that the Wal-Martization of the American workforce is simply the free-market system functioning as it should. Gary Stibel, founder and principal of the New England Consulting Group, said Wal-Mart has saved consumers more than $20 billion through its discount pricing. Figuring in Wal-Mart's pressure on other retailers to lower prices, savings top $100 billion, he said.

"In this day and age, the United States needs more companies like Wal-Mart to create jobs, even if not at the highest pay," Stibel said. "The company that makes its mark by taking the cost of manufacturing products and services up will lose, and the country that promotes that will lose."

Wal-Mart morphed from a single store in Rogers, Ark., in 1962 into a retail powerhouse by mastering the art of low pricing in a way that has transformed its competitors, its suppliers and the industries it now dominates -- including groceries, toys and apparel.

Founder Sam Walton pioneered the "supercenter" retail phenomenon. His use of technology such as bar code price scanners and his reinvention of the supply chain, with stores reordering stock only as needed instead of keeping mountains of goods in warehouses, changed the way businesses interact with one another and their customers.

Walton's method of expanding his chain was unique, too. The company emerged from what one analyst called "one of the most backward areas of America" and spread through the rural South by hiring people who were accustomed to farm work. Wal-Mart inspired fervent loyalty from customers by putting its stores in regions other retailers had ignored.

But it also drew condemnation for squashing smaller businesses in its path. Small-town business districts tended to empty out when Wal-Mart hit. Some areas responded by drafting anti-Wal-Mart zoning ordinances that keep out retailers of a certain size.

Today, "Wal-Mart creates its own weather," said John A. Challenger, chief executive of Challenger, Gray & Christmas Inc., a Chicago outplacement firm that tracks retail jobs. "It sets the standards in many ways for retailers throughout the country, which benchmark against them."

Kmart Corp., which dwarfed Wal-Mart only 15 years ago, filed for bankruptcy protection in 2002 and eliminated 57,000 positions in part because it tried to compete with Wal-Mart on prices and failed. FAO Inc., the iconic toy seller, filed for protection from its creditors in part because it did not try to compete with Wal-Mart on prices. Both retailers have since emerged from bankruptcy proceedings. And since Wal-Mart began aggressively expanding into groceries in the past decade, some national supermarket chains have gone bankrupt.

Wal-Mart's pressure to hold down labor costs also helps fuel the national market for undocumented workers, immigrant advocates say, as employers take advantage of laborers who are too fearful of being deported to object to substandard wages and conditions. Rather than hire illegal immigrants themselves, big chains typically turn a task such as janitorial services over to a low-bidding national contractor, which in turn farms the work out to smaller subcontractors. The subcontractors range from established firms that rigorously check workers' immigration status to one-man, fly-by-night operations that knowingly employ illegal workers, labor experts say.

Undocumented workers learn of the companies through word of mouth, foreign-language newspaper advertisements and Web sites. It was a Russian hostel owner in Brooklyn, for example, who directed 24-year-old Russian immigrant Misha Firer to a small company that cleaned a Wal-Mart in Pennsylvania. For two months, the undocumented worker lived in a trailer park and buffed the store's floors from midnight to 8 a.m. for $6 an hour -- $1 of which was seized by his boss, Firer said.

Even though Wal-Mart's roots are outside of food retailing, it's within the food sector that the non-unionized retailer is most affecting labor relations in this country, said Ira Kalish, a global director at Deloitte Research.

"The impact in terms of wage pressures is really in the supermarket industry because that's the one part of retailing that's heavily unionized," Kalish said. "Most others are not. For [a fashion retailer such as] the Gap, for instance, the issue is not so much labor costs as supply-chain efficiency, sourcing and rent."

But for supermarkets, which operate on razor-thin profit margins, labor is perhaps the highest cost of doing business, said Michael J. Silverstein, a senior vice president at Boston Consulting Group.

"The less you pay [for labor], the lower your prices can be," Silverstein said. "The grocery store is a war zone, and the weak are going down fast -- and with them go a lot of jobs."

Wal-Mart's supercenters have labor costs roughly 20 to 30 percent lower than those of unionized supermarkets, according to a study from consulting firm Retail Forward. As a result, groceries at Wal-Mart cost about 15 percent less than the competition, the study said.

Retail Forward concluded that for every Wal-Mart Supercenter that opens in the next five years, two supermarkets will close their doors. That means the supermarket industry could lose 2,000 more stores over the next five years, or 400 a year.

"It's unlikely that any other U.S. food retailer will catch up to Wal-Mart, even through a mega-merger," the report said. By 2007, the chain should capture 35 percent of supermarket industry sales and double the number of its supercenters to 2,250.

Wal-Mart is applying the same heavy pressure on grocery suppliers that it exerts on makers of other consumer goods, leaving them beholden to the retailing giant for a significant part of their revenue. Wal-Mart made up 30 percent or more of U.S. sales for Clorox Co., Gillette Co., Mattel Inc., and Procter & Gamble Co. in fiscal 2002, according to Fitch Ratings.

For retailers, competing with Wal-Mart means not just holding down wages, but curbing health care costs, which are becoming an increasing burden on employers nationwide.

A report by the AFL-CIO, which has tried and failed to organize Wal-Mart workers, said the retailer insures only about 45 percent of its workforce. Wal-Mart workers must pay about one-third of the cost of their health care premiums, while employees at other large companies typically pay 16 to 25 percent, the report said.

The result is that many Wal-Mart workers transfer the health care burden either to their spouse's employer or to government agencies, the report said.

Some employees at Minneapolis-based Target Corp., a non-union company once known for its generous employee benefits, say they believe price competition with Wal-Mart caused their employer to cut benefits as well.

In April, Target rolled out a new health care plan for 2004 that offered generous benefits, but only for employees who averaged more than 32 hours of work each week. Some Target employees say the company then hired more workers and reduced existing workers' schedules so they no longer qualified for the plan.

Wal-Mart workers have complained of similar strategies designed to keep them from qualifying for health coverage.

Lawsuits representing thousands of current or former Wal-Mart employees and focusing on wage and overtime pay as well as sex discrimination are on file around the country, along with dozens of complaints to federal labor regulators.

Wal-Mart defends its practices, arguing that its employees have generous access to insurance and that worker contributions to health care -- $57 per two-week pay period for a family plan -- are in line with the rest of the industry. The company does not quibble with AFL-CIO's wage numbers or health coverage statistics, "but they're only telling half the story," said Mona Williams, Wal-Mart's chief spokeswoman.

Forty percent of the employees who Wal-Mart insures had no medical benefits prior to joining the company, she said. "These are people who would have fallen through the cracks or been on public health rolls," she said, adding that some 62 percent of Wal-Mart's workers are eligible for benefits.

As for wages, Wal-Mart's entry-level jobs "are not designed for someone who is the sole support for a family" but for those looking to advance, she said. About two-thirds of Wal-Mart's managers were once hourly workers for the chain. Employee turnover is 50 percent, better than the 70 percent industry average, Williams said.

Maybe that's why union attempts to organize Wal-Mart employees have failed, Williams said.

"What we need to ask our competitors is: Can they be more efficient? Can they live more frugally?" she said. "Is paying people $15 to $17 [to stock shelves] realistic?"

Some analysts agree, saying Wal-Mart's strategies and success would not be possible without willing workers and the backing of penny-pinching consumers.

"You can't stay non-union unless you're giving people something. On balance it has to work out for employees," said Bernard Sosnick, an analyst at Oppenheimer & Co.

Kroger employees on a picket line this week in Morgantown, many of whom said they were making between $11 and $13 an hour, said they would never work at Wal-Mart. But most said they shop there. In the parking lot of the nearest Wal-Mart Supercenter, on a hilly cow pasture 19 miles south of Morgantown, Vivian Mullins and her daughter, Jennifer, wheeled out a cartload of groceries and said they have sympathy for Kroger workers. But they love their Wal-Mart.

"I applied to work there just the other day," said Jennifer Mullins, 18, currently working in a restaurant. "A lot of my friends I went to school with work there. They think it's great."

Staff writers Kirstin Downey and Michael Barbaro contributed to this report.

"Nigger Dave"

That's what they called him at Wal-Mart. His managers didn't seem to care.

BY PETE KOTZ - CLEVELAND SCENE
October 15, 2003

Dave Thomas has found that justice is for those who can buy it.

The first time David Thomas was called a nigger, he'd spent just 45 days on the job. Two co-workers had taken to announcing that they hated "that nigger Dave" to anyone who would listen.

Thomas, an even-keeled and courteous man -- the kind who calls you "mister" -- had no idea what he'd done to piss the women off. "I didn't even know these people," he says. But everyone knew they were pissed. "They didn't care who heard it."

Two managers at the Elyria Wal-Mart called him into the office. "Did you hear anything?" they asked. He was told to write it all down. But as the weeks passed, the women continued to pronounce their hatred for "that nigger Dave."

"The first shift heard about it, the second shift heard about it," says Thomas. "People would come up to me and say, 'Are you hearing these things they're saying about you?'" When he asked managers if they were following up, they'd simply reply, "We're handling it in our own way."

But a few months later, it happened again. Thomas was working the overnight stocking shift when, for reasons no one can seem to explain, another woman called him a "black bitch."

"Almost the whole shift saw it," says coworker Denise Taylor. "There were like six or seven people there."

Thomas again went to his managers, who did nothing. So he called a Wal-Mart employee hotline. He went to store manager Keri Brown. He complained to the district supervisor.

"It was like talking to a piece of wood," he says. "That wood is not going to respond back to me. They would say, 'What do you want me to do?'" Brown, who now works at the Wooster store, won't discuss the matter. "Sorry, I can't talk to you about any of that."

But Thomas wasn't about to lie down. He launched a protest, simply refusing to come to work.

It was a militant move for a father of two who seems anything but rebellious. "David is the kind of person who will speak up for himself," says one co-worker, who asked not to be named for fear of retribution. "He never did it in a disrespectful way. He wouldn't call them out in front of anybody. He would pull them off to the side. He was a very hard worker; he wasn't a slacker."

Nor was he asking for much: just the courtesy of not being called nigger on the job.

Yet for all its achievements as the world's largest retailer, Wal-Mart remains a stunningly inept corporation. Judges have fined it so often for hiding and destroying records that it might aptly be called the Hillbilly Enron.

Particularly troubling is its labor history. It's been caught forcing employees to work off the clock. It's being sued by female employees who claim pervasive gender discrimination. (One was told by

her manager that "God made Adam first, so women would always be second to men.") And in California, a movement is afoot to require Wal-Mart to reimburse the state for public assistance.

Assemblywoman Sally Lieber says the company encourages employees to go on welfare to subsidize their poor wages and health benefits.

Wal-Mart's racial history is arguably worse. A jury found the company guilty of firing a white woman because she dated a black guy. The Alaska human rights commission found omnipresent racism at one store; workers would ask a black employee to "smile and show his teeth" to light trucks on the loading dock, among other insults.

Then there's the infamous Cleveland Heights incident. When $1,000 went missing in 1999, a manager conducted bathroom searches of 37 black employees. No white worker was questioned.

It's tempting to conclude that bad wages simply produce incompetent management. The average Wal-Mart employee earns about $11,700 a year (working 30-hour weeks, the company's threshold for full-time). That's $2,000 below the poverty line for a single mother with two kids. And management-recruitment fliers read more like punishment for a 4th-degree felony than they do career opportunities.

Enticements include uneven hours, forced overtime and transfers -- all for a few more cents an hour. It's a system designed to attract the children of a lesser Palm Pilot.

Yet Elyria supervisors were smart enough to fear their exposure with Thomas.

"If you leave your job for 28 days in a protest, any other job you'd be terminated," he notes. Instead, they called him at home, urging him to return, arguing there was no need to file a complaint. He went back to work.

Then it happened again. He was pushing a heavy pallet, when a co-worker walked in front of him. Thomas asked the guy to step around him instead. When they got to the front of the store, the co-worker said, "'Man, I can't stand that nigger Dave,' loud enough for everybody to hear, in front of customers," says Thomas.

Again he went to Brown. Then to district manager Ray Hartman, who said he would investigate.

A month went by. Nothing happened. Thomas called again. Hartman told him there never was an investigation, nor were any witnesses called. (Hartman could not be reached for comment.)

So Thomas went to the regional manager. "All she wanted to know after I told my story was, 'Dave, have you sought legal representation yet?'"

A month later he was fired. The official reason: too many absences. For all his troubles, conventional wisdom suggests that Thomas was sitting on a gold mine. He had been repeatedly called a nigger. There were many witnesses. Store managers had done nothing about it. Three of the four people who slurred him were still on the job. The fourth got fired only after he called a manager a spic, say employees.

Put it all in front of a jury, and you're looking at a monster payday.

But conventional wisdom would be wrong. Thomas is evidence. He filed a complaint with the federal Equal Employment Opportunity Commission, whose rules dictate that a problem must be "severe or pervasive" for it to act. Thomas's case would appear to meet that threshold -- especially since courtrooms across the land are littered with similar cases involving Wal-Mart. But after receiving a letter from the company explaining its side, EEOC case worker Brian Shelton dropped the matter. He never investigated, nor did he call any of Thomas's witnesses.

It's hard to say whether Thomas simply didn't explain his situation well enough, or whether Shelton, overworked and weary of hearing so many false cries of wolf, simply blew it off. EEOC district director Mike Fetzer won't discuss the case, though he admits the agency has "historically been underfunded . . .

Some people refer to it as a triage system."

None of which helps Thomas. He's tried to find a lawyer who will take up his cause, but he can't afford a retainer. Such is the fate of an unemployed man with two kids to feed. Like most people who encounter the law, he's found that justice is for those who can buy it.

These days, he spends his time at home, taking care of the kids. His wife has two jobs, but the best Thomas can get is occasional work resurfacing floors. "It's so hard up here in Lorain County, because everything is shutting down."

There is anger in his voice, but not the acidic tang one might expect. It's more a sense of incredulousness that a man can be screwed so blatantly, repeatedly, and no one will rise to his aid.

"I went to the proper authorities," he says. "Nothing happens. I went to the store manager. Nothing happens. I went to the EEOC. Nothing happens."

This is the true conventional wisdom.

Standing against bias
Stacy A. Teicher Staff writer of The Christian Science Monitor
October 27, 2003

Guess the era:

* A previously coed troupe that entertains fans at sporting events runs 
job ads seeking "males with athletic ability and talent."

* A female employee at a home-improvement store is assigned to a cash 
register, despite previous experience in a lumberyard that would 
qualify her for a sales-floor job (the springboard for promotions).

* A woman asks her boss why men in similar jobs earn more money. His 
reply: They have families to support.

If you said the 1960s or '70s, try again. All three incidents took 
place in the past 10 years. The first two resulted in payments to the 
affected women and agreements by the companies to try to eliminate 
discriminatory practices. The third stems from a lawsuit against 
Wal-Mart now working its way through the courts.

More than 100 women have submitted statements to the US District Court 
in San Francisco, charging discrimination in the form of unequal pay 
and barriers to promotion. If their request to classify this as a 
class-action suit is granted, the class would include 1.6 million women 
who have worked at Wal-Mart since 1998.

That would make it the largest employment class-action suit in United 
States history - one that would have "seismic impact," says Adam 
Forman, an attorney with Testa, Hurwitz, & Thibeault in Boston, which 
is not involved in the case.

The potential for a full battle in court ora gargantuan settlement has 
lawyers and employers alike watching from the edges of their seats. And 
the case could bring sex discrimination to the public's attention in a 
way not seen since Anita Hill's accusations against Clarence Thomas in 
1991 forced a national conversation on sexual harassment.

However the case is resolved, it raises the specter of gender 
stereotypes that many assume had disappeared long ago.

"We don't hear very much anymore of people willing to say women should 
be home with their children, or a man should make more because he's 
supporting [a family] ... but the notion of women not being interested 
[in certain jobs] is still quite pervasive," says Joyce K. Fletcher, a 
professor at Boston's Simmons School of Management and its Center for 
Gender in Organizations.

Those more subtle stereotypes "are so embedded in the culture that it 
just seems like common sense, it doesn't seem like bias," she says.

No one denies women's overall advancement in the past few decades. In 
1966, women constituted 31 percent of employees but only 9.3 percent of 
officials and managers at companies with more than 100 workers, 
according to the Equal Employment Opportunity Commission (EEOC). By 
2002, women accounted for 48 percent of employees and 36.4 percent of 
officials and managers.

But sex discrimination remains the second most common type of complaint 
to the EEOC (after race) - with about 25,000 filed each year, the vast 
majority from women.

One reason sex discrimination persists is that class-action lawsuits 
often end in monetary settlements, without much monitoring of the 
improvements a company is supposed to make afterward, says Michael 
Selmi, a law professor at George Washington University and author of a 
recent Texas Law Review article on key discrimination suits.

But firms can make significant changes if their leaders see value in 
eliminating exclusionary practices that are bad for business, he says. 
"There have to be rewards for diversifying the workforce, for having 
more women in management.... There has to be a commitment that it's the 
right thing to do."

Fair shake' sought

To the women suing Wal-Mart, promotions there have been anything but 
fair. Christine Kwapnoski had been working at Sam's Club (owned by 
Wal-Mart) for 15 years when she became one of the named plaintiffs in 
June 2001. "There have been a ton of guys promoted over me, time and 
time again," she says in a phone interview from her home in Concord, 
Calif. When she asked her manager why men with significantly less 
experience were earning higher pay and promotions, she says he told her 
that the men had families to support. It's a story echoed by other 
plaintiffs, and it especially stung Ms. Kwapnoski, who pays child 
support for a 14-year-old and a 10-year-old.

Within weeks of the lawsuit being filed, Wal-Mart promoted Kwapnoski, 
and this year she entered the management training program. But she 
hopes the lawsuit will help other women, too. "I don't want them to 
just promote women out of fear," she says. "We just want a fair shake. 
I've seen a lot of women managers who were really good who got run out 
of town ... and that's what I'd like to stop."

Women made up about 65 percent of the hourly staff at Wal-Mart, but 
only 33 percent of salaried management - and at each rung up the 
ladder, women's representation drops, according to a report submitted 
by the women's attorneys.

Wal-Mart offers a different analysis. "Wal-Mart does not tolerate 
discrimination against women or anyone else," says Sarah Clark, a 
company spokesman, in an e-mailed statement. "When you look at 
Wal-Mart's growth and the fact that we promote women at the same rate 
they apply for jobs - or better - you can see that Wal-Mart provides 
more opportunities for women than any other employer in the country."

Ms. Clark would not comment specifically on the lawsuit. But in court, 
Wal-Mart presented data to show that any alleged problems were related 
to individual stores and did not represent a companywide pattern.

Traditional roles

Some argue that the label "discrimination" can be slapped onto 
situations too quickly. "Sometimes women make less [money] not because 
of discrimination, but because they've taken time off to be with their 
kids.... Or a woman might decide she needs flex time and that might 
keep her out of a management position," says Charlotte Hays, senior 
editor at the Independent Women's Forum in Washington, D.C.

If companies want to retain more women and see them advance to top 
jobs, Ms. Fletcher says, they may need to examine how those jobs are 
defined. "Is it because it's the best way for getting that work done, 
or is it defined in the way that men have always done it, because of 
their particular life situation in our society?"

In 1973, Sears was charged with not hiring women and men on an equal 
basis for sales-commission jobs, which yielded higher pay. Sears argued 
that most women weren't interested in such jobs. With only statistics 
to go on and no "smoking gun" testimony from women, the case was 
finally resolved in favor of Sears in 1988.

A few years later, anecdotes did accompany statistics in a class-action 
suit against Home Depot's western division. About 70 percent of the 
sales-floor jobs were held by men, while 70 percent of cashiers were 
women - including the one who had worked in a lumberyard. While not 
admitting discrimination, Home Depot settled that and several smaller 
claims for $104 million in 1997. It also made some changes. Instead of 
managers steering people informally into jobs, openings are now posted 
companywide.

Company leaders should know by now to examine their policies and make 
sure there isn't room for decisions based on stereotypes, says Nancy 
Dowd, a law professor at the University of Florida in Gainesville. 
"Anytime there's a word-of-mouth, informal way that promotions occur, 
that's a huge red flag you've got to deal with.... It might be OK ... 
but you have to make sure the mentoring and opportunity structures are 
truly open and nondiscriminatory."

[Editor's note: The original version of this story included a chart of 
top five sex-discrimination class-action settlements.]

Supervisor defends big box limit 
By Peter Felsenfeld - CONTRA COSTA TIMES
October 28, 2003

WALNUT CREEK - Anti-tax advocates gave Contra Costa Supervisor John Gioia of Richmond a chilly reception Monday as he outlined a controversial measure to limit large retailers.

Foreshadowing what promises to be a bitter political fight this winter, members of the Contra Costa Taxpayers Association said supervisors have placed a sloppily worded referendum on the March 2 ballot to please their union supporters.

"I doubt the supervisors voted for this after a careful, objective analysis," said Henry Alker, president of the Black Diamond Coal Mining Company. "I suspect they are facing very strong pressure from the unions to protect union jobs."

Gioia defended the measure as an important planning tool and a vehicle to protect Contra Costa tax dollars. Supervisors approved it in June, but Wal-Mart soon collected enough signatures to force the board to rescind the ordinance or place it before voters.

The measure would prohibit so-called "big box" stores larger than 90,000 square feet from dedicating more than 5 percent of shelf space to nontaxable items such as groceries. It would only apply to retailers in the county's unincorporated areas. Martinez and Oakland have similar ordinances.

A coalition of labor and community groups says Contra Costa's ordinance helps protect small neighborhood merchants from the jaws of giant supercenters.

Though Wal-Mart is not mentioned in the measure, the retail chain contends it is the target. The store's workers are not unionized.

Gioia, addressing the taxpayer group at the Renaissance ClubSport Hotel, veered away from labor arguments, stressing instead the measure's land-use impacts.

The grocery section of Wal-Mart "does not generate substantial sales tax revenue, but studies show it does add car trips," Gioia said. "Why should taxpayers be stuck paying for road improvements and maintenance for trips these stores generate?"

Wal-Mart's arguments resonated with the county's top tax group. Stores like Wal-Mart make Contra Costa a more affordable place to live by offering discounted items, said association president Larry Lippow.

"Supervisors are placing restrictions on this enterprise when they should be encouraging it," he said.

Afterward, Gioia acknowledged that unions support the law. However, he said its impacts would benefit all Contra Costa residents.

"I agree with many of labor's issues on this, I don't deny it," Gioia said. "But they didn't pressure me."

Cleaner at Wal-Mart Tells of Few Breaks and Low Pay

By STEVEN GREENHOUSE 
25 October 2003 - The New York Times 

Every night for months, Victor Zavala Jr., who was arrested on Thursday in a 21-state immigration raid, said he showed up at the Wal-Mart store in New Jersey to clean floors.

As the store's regular employees left at 11 p.m., Mr. Zavala said, they often asked him whether he ever got a night off.

Mr. Zavala, identified by federal agents as an illegal immigrant from Mexico, told the Wal-Mart workers that he and four others employed by a cleaning contractor worked at the Wal-Mart in Old Bridge every night of the year, except Christmas and New Year's Eve.

Now Mr. Zavala feels cheated, saying he worked as hard as he could pursuing the American dream, only to face an immigration hearing that could lead to deportation for himself, his wife, Eunice, and their three children, 10, 7 and 5 years old. He was one of 250 janitors employed by Wal-Mart contractors who were arrested at 60 Wal-Mart stores before dawn on Thursday.

''My family's not happy about this,'' said Mr. Zavala, who said he paid a ''coyote'' $2,000 to smuggle him into the United States three years ago. ''My children do not want to leave and go back to Mexico.''

A federal law enforcement official who spoke on condition of anonymity said yesterday that several current and former cleaning contractors for Wal-Mart, the nation's biggest retailer, were cooperating with the government in its investigation. On Thursday, federal officials acknowledged that they had wiretaps and recordings of conversations and meetings among Wal-Mart executives and contractors.

Federal officials said that as part of the Thursday raid, they searched the office of a middle-level manager at Wal-Mart's headquarters in Bentonville, Ark. The officials said the government believed that Wal-Mart executives knew the cleaning contractors were using illegal immigrants.

Federal officials noted that 102 illegal immigrants working for Wal-Mart cleaning contractors had been arrested in 1998 and 2001 and that 13 Wal-Mart cleaning contractors had pleaded guilty after those arrests. Those pleas remain under court seal.

Wal-Mart said yesterday that it had begun an internal investigation and would dismiss anyone in its work force who did not have proper immigration papers. Wal-Mart also told its officials to preserve any documents that might be relevant to the federal inquiry, which is being conducted by the Department of Homeland Security's division of Immigration and Customs Enforcement.

Wal-Mart officials said that the raid surprised them, and that they had no idea the company's cleaning contractors used illegal immigrants.

They acknowledged yesterday that 10 immigrants arrested on Thursday in Arizona and Kentucky were employed directly by Wal-Mart. Company officials said they had brought these workers in-house after certain stores phased out the use of the contractors for whom the immigrants had worked.

Wal-Mart officials also said the company required its contractors to hire legal workers only.

''We have seen no evidence thus far that anyone in Wal-Mart is involved in any scheme involving illegal workers,'' Tom Williams, a company spokesman, said.

Government officials and Walmart executives declined yesterday to name the cleaning contractors whose employees were arrested.

''These arrests are part of the Immigration and Customs Enforcement mission and part of our continuing commitment to investigate companies that are hiring individuals who are not authorized to work in the United States,'' said Garrison Courtney, a spokesman for the immigration agency.

Federal officials said yesterday that the leading nation of origin for the janitors caught in Thursday's raids was Mexico, with 90. The Czech Republic was second with 35, followed by Mongolia with 22, Brazil with 20. Uzbekistan, Poland, Russia, Georgia and Lithuania each had about a dozen.

Mr. Zavala, the janitor in Old Bridge, N.J., said he got his job shortly after arriving in the United States, when a neighbor asked whether he wanted work cleaning buildings. Mr. Zavala, 28, said he did not know the name of his boss.

Mr. Zavala said he believed that the Wal-Mart managers knew the janitors were illegal immigrants.

''Deep in their minds, of course the store managers knew it,'' he said. ''The other guys from the crew didn't speak one word of English. Of course they knew it, but if you asked them, they'll say 'we thought they were citizens or residents.' ''

Mr. Zavala said the contractor that he and Eunice, his wife, worked for paid them $400 a week each for working 56 hours. That would come to $6.25 an hour if time and a half overtime is included for all hours worked in excess of 40.

''We don't know nothing about days off,'' said Mr. Zavala, whose hometown is Mexico City. ''We don't know nothing about nights off, we don't know health insurance, we don't know life insurance, and we don't know anything about 401(k) plans.''

He said that when he was arrested and taken to a detention center in Newark, immigration officials mocked him for taking a job that paid so little in a state where rents and living expenses are so high. He said that in his 16 months as a cleaner at Wal-Mart, he was given only two nights off.

He said he did not think that the contractor withheld taxes from his pay, raising questions about whether the contractor was making the required contributions for Social Security and unemployment insurance.

Misha Firer, an illegal immigrant from Russia, said he worked for three months last year as a cleaner at Wal-Marts in Ephrata, Pa., and Glens Falls, N.Y., working 90 consecutive days without having a day off.

Mr. Firer said that he earned $6 an hour, working the midnight-to-8 a.m. shift, washing, waxing and buffing floors. He said the chemicals were so strong that some workers had nose bleeds, sore eyes and skin irritations.

''Nobody wanted to take the job,'' he said. ''It was a night job and it paid very little.''

Wal-Mart Raids by U.S. Aimed at Illegal Immigrants 
By STEVEN GREENHOUSE
Published: October 24, 2003

Federal agents raided 60 Wal-Mart stores across the nation yesterday and said they arrested more than 250 illegal immigrants who worked as janitors for outside contractors used by Wal-Mart, the world's largest retailer.

As part of the 21-state raid, the largest immigration crackdown in years, federal agents also searched the office of an executive at Wal-Mart's headquarters in Bentonville, Ark., and removed boxes of documents, company and government officials said.

One federal official, who spoke on condition of anonymity, said that a grand jury was investigating the matter and that the government believed that Wal-Mart officials knew about the widespread use of illegal immigrants. The official said the government had used wiretaps in the investigation and had recordings of conversations among Wal-mart executives and contractors.

Wal-Mart officials were quick to acknowledge the raids and said that the arrested workers were employed by contractors and that Wal-Mart required those contractors to employ only legal workers.

Tom Williams, a Wal-Mart spokesman, said the raid and the allegations that illegal immigrants were used in its stores came as a surprise.

"We've seen no evidence from the Immigration Service that anyone in Wal-Mart was involved in any scheme involving illegal workers," Mr. Williams said.

He said he believed that the manager whose office was raided worked in Wal-Mart's building services division.

The workers who were arrested were finishing the night shift before dawn, said Garrison Courtney, a spokesman for the division of Immigration and Customs Enforcement. Most are from Eastern Europe or Latin America.

Mr. Courtney said federal officials had originally sought to arrest 300 of the janitorial workers when the raids began around 4 a.m. yesterday, but were able to arrest slightly more than 250. The employees now face deportation.

Immigration experts said the arrests of so many illegal immigrants at Wal-Marts across the country demonstrated that these workers have come to play a significant role in the American economy. They often take the low-end, low-paying jobs shunned by not just American workers, but also legal immigrants.

Yesterday's arrests came after a five-year period that saw federal immigration authorities greatly scale back the number of company raids. Particularly since the Sept. 11 terrorist attacks in New York and Washington, federal officials have focused their immigration arrests on facilities, like airports, that might be terrorist targets.

"This is the biggest raid in a few years," Mr. Courtney said. "This is the result of almost a four-year investigation. We're a law enforcement agency, and we're going to enforce the laws."

Federal law enforcement officials said the investigation grew out of earlier raids in 1998 and 2001 when about 100 illegal immigrants were arrested working at Wal-Mart stores in New York, Pennsylvania, Ohio and Missouri. These officials said that after those arrests, 13 Wal-Mart cleaning contractors pleaded guilty to knowingly employing illegal immigrants.

Mona Williams, Wal-Mart's vice president for communications, said: "These federal officials are referring to third-party suppliers that we entrusted to hire legal workers. For them to say that it strains credibility that we're surprised about what happened today, those other actions happened years ago."

Mr. Courtney said that if federal officials found substantial evidence that the cleaning contractors or Wal-Mart officials knowingly employed illegal immigrants, they could face criminal charges, including fines up to $10,000 per illegal worker. He said he did not know the name of Wal-Mart's cleaning contractors or of the Wal-Mart executive whose office was searched.

In a statement, Immigration and Customs Enforcement said, "The investigation is ongoing," and said the arrests were part of "ongoing efforts to ensure that U.S. companies do not employ individuals who are unauthorized to work in the United States."

Wal-Mart officials said the company used about 100 contractors to clean about 1,000 of its American stores. They said they did not know whether one contractor or many employed the arrested workers.

Wal-Mart is not the first company to face immigration issues. A three-year-old lawsuit against several California supermarkets asserts that the supermarkets and their cleaning subcontractors violated minimum wage and overtime laws in using illegal immigrants to clean their floors.

The Mexican American Legal Defense and Education Fund, which filed that lawsuit, asserted that some workers were paid less than the $5.15-an-hour minimum wage and that many were never paid overtime even after working 55-hour weeks.

The cleaning contractors involved in that case often asserted that those workers were independent contractors and not employees and thus were not covered by minimum wage or overtime laws.

Mr. Courtney said he did not know whether Wal-Mart's cleaning contractors had violated wage laws. He said the Department of Labor had not participated in the investigation.

Wal-Mart has 1.4 million employees worldwide and had $245 billion in revenues last year. Each week 138 million shoppers visit Wal-Mart's 4,750 stores.

In recent years, Wal-Mart has frequently been accused of skirting various federal employment laws.

Class-action suits have been filed in more than 30 states charging Wal-Mart supervisors with pressuring employees to work off the clock. In California, lawyers have filed a lawsuit accusing Wal-Mart of discriminating against female employees in its promotions. The lawyers have asked a federal judge in San Francisco to allow the lawsuit to proceed as a class action, potentially creating a class of 1.6 million current and former Wal-Mart employees.

Wal-Mart denies pressuring employees to work off the clock and asserts that it has an aggressive program to hire and promote women.

The raids yesterday were carried out in Alabama, Arkansas, Arizona, Connecticut, Delaware, Kentucky, Massachusetts, Maryland, Michigan, North Carolina, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia.

Immigration officials said their investigation focused on forms, known as I-9's, that employers are required to use to determine the eligibility of their workers.

Ms. Williams said the company was assessing the situation.

"We first learned about the raids when store managers at affected stores began calling us," she said.

Wal-Mart Knew of Illegal Workers
The Associated Press
LITTLE ROCK, Ark. Oct. 24, 2003

Wal-Mart had direct knowledge of immigration violations involving its cleaning contractors at stores across the country, federal law enforcement sources said. Federal agents raided Wal Mart's headquarters and 60 of its stores across the nation Thursday, arresting more than 300 illegal workers in an immigration crackdown at the world's biggest retailer.

The workers were members of cleaning crews hired by outside contractors, but federal law enforcement officials who spoke to The Associated Press on the condition of anonymity said Wal-Mart knew of the violations. They cited recordings of meetings and conversations among Wal-Mart executives, managers and contractors.

"We have seen no evidence of this from the INS, and, if that turns out to be true, we will cooperate fully with law enforcement officials," Wal-Mart spokeswoman Mona Williams said.

The workers were arrested as they finished their night shifts at Wal-Mart stores in 21 states. Agents also hauled away several boxes of documents from an executive's office at Wal-Mart headquarters in Bentonville.

An employer can face civil and criminal penalties for knowingly hiring illegal immigrants or failing to comply with certain employee recordkeeping regulations.

Wal-Mart Stores had sales last year of $244.5 billion. The company has about 1.1 million employees in the United States, and it uses more than 100 third-party contractors to clean more than 700 stores nationwide, Williams said.

"We require each of these contractors to use only legal workers," she said.

The law enforcement sources said the investigation grew out of earlier probes of Wal-Mart cleaning crew contractors in 1998 and 2001.

All the arrested workers were in the country illegally, said Garrison Courtney, a spokesman with Immigration and Customs Enforcement. They were detained at local immigration offices. Those who had no criminal record were released with instructions to appear before immigration judges.

Wal-Mart is not the first big company to be targeted in an immigration investigation. Six managers at Tyson Foods, based one town away from Wal-Mart in Springdale, were charged in an immigrant-smuggling case in 2001.

One defendant shot himself to death a few months after being charged, and two managers entered guilty pleas early in the case. A jury acquitted the poultry company and three other managers.

Ulysses A. Yannas, an analyst with the investment firm Buckman, Buckman and Reid, said it is too much to expect Wal-Mart to keep track of all of its vendors' workers. But he said the investigation could present a problem for the company.

"It is a question of what else it might bring out. These are long, drawn-out processes," Yannas said.

Top Wal-Mart officials learned of Thursday's sweep when store managers began calling headquarters for guidance in dealing with the raids.

Courtney said agents searched the office of one of Wal-Mart's executives. Williams, the spokeswoman, said they spent several hours in the office of a "mid-level manager" at Wal-Mart's headquarters and carried away several boxes of paperwork.

She said she did not know if any other Wal-Mart administrative offices were searched.

The arrests were made at stores in Alabama, Arkansas, Arizona, Connecticut, Delaware, Kentucky, Massachusetts, Maryland, Michigan, North Carolina, New Hampshire, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia.

Suzanne Gamboa in Washington, D.C., contributed to this story.

COURT SAYS SOME CLAIMS CAN GO FORWARD CHALLENGING POLICIES PURCHASED BY WAL-MART
October 6, 2003 - DAILY LABOR REPORT

TEXT: Several claims in a class action brought by widows of former Wal-Mart Stores Inc. employees challenging a program in which Wal-Mart purchased corporate-owned life insurance policies (COLIs) on the lives of more than a thousand employees survived dismissal by the U.S. District Court for the District of New Hampshire Sept. 30 (Rice v. Wal-Mart Stores Inc., D.N.H., No. 02-390-B, 9/30/03).

According to the court, Wal-Mart used the names and confidential medical information of employees in purchasing COLIs without the employees' knowledge or consent.

Vicki Rice and Patricia Keenan brought the action on behalf of a class of New Hampshire citizens whose lives were insured by COLI policies purchased by Wal-Mart and issued by AIG Life Insurance Co. or Hartford Life Insurance Co. The plaintiffs are seeking to recover any life insurance benefits that were paid to Wal-Mart under the program, any premiums paid to the insurer, and any damages that class members suffered as a result of Wal-Mart's use of their names and confidential medical information.

Chief Judge Paul Barbadoro dismissed several of the widows' claims, while allowing other claims to proceed.

Dismissed Claims.

The court dismissed the widows' claim that they were entitled to a declaratory judgment that Wal-Mart lacked an insurable interest in the lives of any class member who was insured in the COLI program. Because the class members were not insurers, they had no ability to raise this challenge, the court found.

The court also dismissed the breach of contract claim, where the widows alleged that Wal-Mart breached the implied duty of good faith inherent in the employer relationship when it used employees' information to purchase COLI policies. The widows did not allege that the COLI policies interfered with Wal-Mart's duty to pay the employees salary or benefits, the court said. "Although Wal-Mart's COLI program may have exposed it to liability on a tort theory, it did not violate Wal-Mart's contractual duties to its employees," the court said.

In addition, the court dismissed a commercial appropriation claim, saying Wal-Mart did not exploit the employees' reputations or prestige when it purchased COLI policies in their names.

Surviving Claims.

The court allowed to proceed the widows' claim of intrusion upon seclusion. This claim requires that the intrusion relate to something private, and Wal-Mart needed to realize that its conduct was offensive, the court said. Rejecting Wal-Mart's argument that the employees voluntarily gave them the information, the court said this did not permit Wal-Mart "to use that information however it desires without potentially intruding upon the privacy rights of its employees."

The breach of fiduciary duty claim also was allowed to proceed. The widows claimed that Wal-Mart breached its fiduciary duty to employees by taking advantage of personal and confidential medical information to purchase COLI policies. The widows' allegations that Wal-Mart abused its relationship by misusing the employees' information and that Wal-Mart profited by this breach of fiduciary duty was enough to sustain this claim, the court said.

The court also allowed the unjust enrichment claim to proceed, because the widows alleged that Wal-Mart was liable in that it took the benefit from the employees without their knowledge or consent.

David P. Slawsky of Upton & Hatfield in Concord, N.H., represented the widows. William D. Pandolph of Sulloway & Hollis in Concord, N.H., and Jeffrey W. Moss of Zevnik Horton in Boston represented Wal-Mart.

Oakland City Council approves ban on 'big-box' grocery stores
By Terence Chea 
October 22, 2003 - ASSOCIATED PRESS

SAN FRANCISCO Oakland has become the latest California community to ban Wal-Mart "Supercenters" that sell discount groceries alongside other bargain goods.

The Oakland City Council voted 7 to 1 Tuesday night to approve a measure to limit the size of "big-box" grocery stores allowed in the city. The ordinance bars discount retail stores with full-service supermarkets that exceed 100,000 square feet, or about 2.5 acres.

The measure targets Wal-Mart Supercenters gigantic shopping centers that average 187,000 square feet, about twice the size of the typical Wal-Mart store. Since introducing the concept in 1998, Wal-Mart Stores Inc. has opened 1,258 Supercenters in 43 states, but none in California.

Starting next year, Wal-Mart plans to open 40 Supercenters in California over the next four years, but the Bentonville, Ark.-based retailer is running into resistance from communities worried about their impact on traffic, open space, jobs and local business.

"Supercenters are going into communities and doing damage to local economies," said Council President Ignacio De La Fuente, who sponsored the Oakland measure with Councilmember Jane Brunner.

"They say they bring jobs and sales tax, but they put local stores out of business," De La Fuente said Tuesday night. "The reality is they drain the life out of our neighborhood commercial areas."

Opponents say Wal-Mart doesn't provides adequate health insurance coverage for its employees, straining local health care services. Labor leaders worry that nonunion Supercenters will pressure traditional supermarkets to lower wages or fire well-paid workers to stay competitive.

Wal-Mart spokeswoman Amy Hill insisted that Wal-Mart helps communities by offering lower grocery prices. She also said that the company offers all employees competitive wages and benefits.

While Wal-Mart found the ban disappointing, Hill said the decision "is not curbing our plans for the state."

"In some respects I think it's unfortunate that the city council or board of supervisors is trying to protect some special interest groups, to the detriment of consumers," Hill said.

Contra Costa County, with nearly one million people east of San Francisco, has passed a similar ban on Supercenters, but Wal-Mart hopes to overturn the measure with a referendum in March. Officials in California's largest city, Los Angeles, are discussing a measure that would block or discourage big-box grocery stores.

The Oakland ordinance does not affect smaller big-box grocery stores, such as Costco and Sam's Club, or large retail stores that don't sell groceries.

Council members said the measure is narrowly focused, and that the city isn't trying to turn away other big-box retailers. The council will vote again on Nov. 4 to confirm passage of the Oakland ordinance.

"It's the largest California city where an ordinance like this has passed," said Daniel Beagle, spokesman for the United Food and Commercial Workers Local 870, which represents grocery store employees in Alameda County. "It's sending a message to Wal-Mart that Oakland doesn't want that kind of predatory competition."

Up Against The Wal-Mart
Jonathan Tasini is the national director of American Rights At Work.

What country has $245 billion in revenues, a population of 1.4 million, is one of the worst abusers of workers' rights and is committed to ruining the economy of the United States? Don't think too hard because this is a trick question—I'm not really describing a country but the economic power and behavior of Wal-Mart.

What made me think of Wal-Mart was the strike by 70,000 grocery clerks in Southern California, now in its second week. From San Luis Obispo in central California all the way down to San Diego, the three largest California supermarket chains—Ralphs, Vons and Albertson—locked out the clerks for demanding wage freezes, cuts in health care and a lower starting pay for new hires. The supermarket chains cite Wal-Mart's five-year plan to open 40 super-centers in California as the main reason they are seeking to effectively drive yet another group of workers out of the middle-class. I don't entirely buy the supermarkets' line—companies are forever citing some economic external threat to justify battering workers, while leaving corporate perks quite generous, thank you.

But, there is a point here—Wal-Mart is a blight on the country. As an employer, it is virulently anti-union, relishes high-turnover as a tactic to keep workers from exercising their democratic rights on the job and it employs more than 70 people full-time to break union organizing efforts. The National Labor Relations Board—no friend of workers—filed more than 40 complaints against Wal-Mart from 1998 to 2002, charging the company with illegally firing workers, intimidating union supporters and threatening workers that they would lose bonuses if they unionized.

It faces the largest sex discrimination case in history with perhaps 700,000 plaintiffs who could be owed billions of dollars. According to a recent article by Steven Greenhouse of The New York Times, Wal-Mart imported $12 billion of goods from China, accounting for a staggering one-tenth of American imports from that country. You can see the evidence in small ways—the company's health plan will not cover child vaccinations.

It's a company that takes a chunk out of people, not once but twice in a vicious economic cycle. Workers shop at Wal-Mart for obvious reasons—low prices. Those low prices encourage the trade of goods from countries where workers labor in slave-like conditions (i.e., Wal-Mart keeps buying up more cheap goods). But the low prices also drag down wages in the United States because, as the Southern California grocery strike shows, companies jump onto the bandwagon and demand that workers agree to wage and benefit cuts for real or fictitious competitive pressures.

So, yes, some of our shopping habits end up cutting our own economic throats. But, we should not blame people who shop at Wal-Mart anymore than we should blame workers who work for a company that pollutes the environment. Workers flock to Wal-Mart because they are squeezed every day to stretch a meager paycheck.

But, the point of this rant is not just to flail away at Wal-Mart. It is to say it doesn't have to be that way. As David Morris, a creative thinker on the economy and society (and vice-president of the Institute for Local Self Reliance), points out, people wear different hats in society: wage earners, consumers, citizens and taxpayers. "The hat we need to wear when it comes to Wal-Mart is our citizen hat," he says. "Wal-Mart is as anti-union as any nation around the world but we allow Wal-Mart to set-up around the country and force other employers to cut wages. We should establish rules that do not allow Wal-Mart to compete like that."

Whoa. Rules against union-busting? Rules against firing workers, suppressing wages and widespread discrimination, all passed into law for the common good? Indeed, we have, as a nation, passed trade laws that set some labor standards by which other nations must abide in order to trade with the United States (that those labor standards are often not enforced and are inadequate is another story). Why should the same standards of respect for the right to organize unions that we demand of China not hold true for corporations doing business in the United States?

Finally, there is a powerful alliance to be made here. Labor unions, for obvious reasons, want to halt Wal-Mart's appalling persecution of its workers. Environmentalists are alarmed at Wal-Mart's role in quickening the pace of suburban sprawl. Small businesses are a natural ally because they feel the heavy Wal-Mart boot crashing down on their necks, driving them into bankruptcy throughout the nation. That coalition work has already begun. It should thrive and grow.

Wal-Mart's benefits come under fire 
By Janet Adamy,  CONTRA COSTA TIMES
October 19, 2003

When Pamela Robasciotti was a cosmetics department manager at Wal-Mart, she had to borrow money from her boyfriend or parents to pay for the $25 inhalers she uses to control asthma attacks.

On a wage of $9.27 per hour, every expense stretched her pocketbook. But the prescription cost seemed particularly unfair. Robasciotti already paid about $130 per month for Blue Cross HMO health care coverage.

"They take $130 a month out ... plus the pay wasn't really good," said Robasciotti, a 45-year-old Gilroy resident who worked in the town's Wal-Mart for more than six years. "I just got tired of it."

Robasciotti illustrates Wal-Mart Stores Inc.'s tough approach to benefits, an approach that has its employees paying more for health-care than most workers across the country, including their peers at other large retailers. It's a key part of the Wal-Mart cost-cutting model that has helped the retailer grow into the largest company -- and employer -- in the world.

But Wal-Mart's health insurance strategy is acquiring a growing number of critics. A San Jose assemblywoman claims health benefits are so unaffordable that workers instead sign up for government health care at the urging of the retailer. And perhaps the most visable opponents are the 70,000 striking Southern California grocery workers, who blame the retail giant for forcing their traditional grocery employers to phase out one of the best health benefits packages in the retail industry.

A new law could drastically change Wal-Mart's strategy in California. The retailer will have to pay for a greater chunk of health care premiums under the sweeping health insurance expansion bill that Gov. Gray Davis signed earlier this month. The cost could prompt Wal-Mart to scale back its ambitious growth plans in the Golden State, curb hiring at existing stores or automate jobs, industry observers say.

"Wal-Mart picks its battles strategically," said Gary Giblen, director of research at C.L. King & Associates, a New York investment research firm. "They're going to focus less on an area where they're competing less advantageously."

Research shows that Wal-Mart spends less money on health care coverage than retailers and non-competitors. Wal-Mart spent an average of $3,500 per worker for health benefits in 2002. That's compared with $5,646 per worker for all employers and $4,834 per worker in the wholesale and retail industries, according to Mercer Human Resource Consulting.

Nearly 80 percent of Wal-Mart workers in California have coverage through an HMO. On average, they pay $106 per month for the insurance premium.

That relatively high cost becomes even more expensive considering that Wal-Mart's hourly wage is at the low end of the industry. Wal-Mart will not give exact wage figures, but workers at Bay Area stores say the starting salary ranges from about $8 to $8.25 per hour, although it can go higher if a worker has special skills or experience. By comparison, the lowest paying job at Safeway, Albertson's and other unionized traditional grocer chains starts at $8.39, and Costco starts workers at about $10 per hour. Most importantly, workers at those stores move up the pay scale more quickly than Wal-Mart employees.

Wal-Mart officials say it's unfair to compare Safeway Inc. and Albertson's Inc. store workers to Wal-Mart workers ("associates" in Wal-Mart's parlance) because the retail giant isn't a direct competitor with the traditional grocers. But the only significant difference in the work forces is that Safeway and Albertson's workers are members of the United Food and Commercial Workers, which gives them more leverage to maintain their pay and benefits.

Unionized California grocery stores cover the entire cost of health care premiums for all store workers. These employees pay a $10 co-pay to see a doctor. Branded prescriptions cost them $6; generics cost $3. On top of the $106-per-month premium fee that the average Wal-Mart worker contributes, they also pay $15 for doctor visits, $5 for generic drugs and as much as $25 for branded prescriptions. Wal-Mart has been successful in keeping unions out of all its stores.

At Costco, which is partially unionized, workers pay for 8 percent of their total health care costs, while Wal-Mart store workers chip in about one-third of the cost. A new full-time Costco worker can sign up for benefits in half the time that a comparable Wal-Mart worker can. For part-time workers, Costco employees get their benefits in one-fourth the time.

Wal-Mart does offer health insurance with a monthly premium as low as $26 per month for an individual plan. But under that coverage, the worker pays up to $1,000 per year before the plan starts paying for part of any medical charges.

"Our argument is that our coverage is intentionally planned for those kinds of catastrophic issues," said Bob McAdam, Wal-Mart's vice president of government relations.

Wal-Mart officials say that although their health benefits package may not be as good as some competitors, they do offer a profit-sharing plan, a company-funded 401(k) and ample opportunities for advancement.

More than half of store workers in California subscribe to Wal-Mart's health benefits. McAdam said 40 percent get benefits from other sources including parents or spouses.

But Assemblywoman Sally Lieber, D-San Jose, has a different theory on how those workers are getting their health costs covered. In July, Lieber unveiled Wal-Mart employee hand-outs telling workers how to use an employment verification service when applying for social services like Medicaid, food stamps and temporary assistance to needy families. Lieber called it proof that the retailer is asking the state and federal government to make up for what she calls "poverty" level wages and thin benefits.

"We have been in the worst budget crisis that California has faced since the Great Depression," Lieber said. "In that context, we can't keep large, wealthy corporations on the dole."

The pages in the worker information hand-out explain how to use the Work Number, an employment verification service. If a worker wants to rent an apartment or borrow money, the landlord or lender uses the service to check that the person indeed works at Wal-Mart.

Wal-Mart spells out that workers can use the same service to apply for government assistance. One part of the handout details how a social service caseworker can verify an employee's income and work status to determine whether they'd qualify for assistance.

Lieber said she is working on legislation that would require Wal-Mart to reimburse the state for allegedly providing health care and public assistance to its workers. But so far, there's no evidence this is actually happening.

Lieber has not documented any cases of Wal-Mart workers leaning on social services because of insufficient pay or health benefits. In nearly a dozen Times interviews with current and former Northern California Wal-Mart store workers, only one provided examples of workers using a social service. But that alleged use of food stamps could not be proven.

And whether telling workers how to apply for social services constitutes encouragement is a matter of interpretation. Wal-Mart's McAdam called Lieber's allegation categorically false.

"The fact that it contains that particular reference does not mean we are encouraging them to do that," McAdam said.

Regardless of whether Lieber's allegations have merit, industry experts say it's clear that Wal-Mart workers are squeezed by the pay and cost of health benefits. Former Lafayette resident Martin Levitt consulted with Wal-Mart in the 1970s to help it prevent unions from forming. He later switched sides and now serves as a labor adviser in Las Vegas.

Health insurance is "not a provided benefit," Levitt said. "It's so expensive that the vast majority of Wal-Mart and Sam's Club employees can't afford it." When faced with criticism of its policies, the retailer justified them by saying it was providing jobs, Levitt said.

Wal-Mart's hard-line stance on benefits costs are a key part of its financial success. Industry experts say that labor costs account for two-thirds of a grocer's overall costs. Mark Husson, a food and drug analyst for Merrill Lynch Global Securities, called Wal-Mart's low worker costs its main competitive advantage.

"Wal-Mart is soon going to be the lowest common denominator in the food business, and everyone has to move towards that level," Husson said.

That's already starting to happen. Two years ago, Northern California members of the United Food and Commercial Workers saw their doctor visit and branded prescription drug co-pays double when they renewed their contract with Safeway and Albertson's. UFCW grocery workers went on strike in Southern California because three major grocery chains wanted to shift $1 billion in health-care costs to workers, according to the union. Safeway, Albertson's and Kroger Co. want workers to start paying $5 to $15 per week for insurance that was once free for them.

Many companies are starting to pass health-care costs onto workers because of the soaring price of health insurance. But California grocers are clearly shifting the costs in reaction to Wal-Mart. The retail giant has plans to open 40 supercenters selling fresh groceries in California over the next several years.

The new health-care law could take away part of Wal-Mart's labor cost advantage. SB2 would expand health care to more than 1 million working Californians by requiring companies with 50 workers or more to offer insurance or pay into a state fund that provides it.

Although the bill was aimed at small companies, it impacts Wal-Mart because it requires employers to pay for 80 percent of health-care costs. Right now, Wal-Mart covers about two-thirds of those costs. The measure also requires Wal-Mart to cut about 90 days off its benefits qualifying period for full-time workers and about one year and nine months off for part-time workers.

Wal-Mart said it could not estimate how much the changes would cost the company in California, where it employs 53,000 workers. But industry experts say that they could be significant enough to shift the company's California strategy.

"It could make a big difference in the degree that they expand in California," said Giblen, the supermarket analyst. The retailer could try to get around the cost by hiring fewer workers, having existing employees work more hours, and using machines instead of people for some jobs, he said.

The California Chamber of Commerce lobbied fiercely against the bill, arguing it would kill jobs in the Golden State.

"It imposes a new multibillion-dollar mandate for doing business in the state of California," said Richard Costigan, vice president of governmental relations for the chamber. "It imposes something on Wal-Mart and any other company that's not required in the 49 other states."

But Wal-Mart's McAdam said the law won't deter its interest in growing in California. It's also unclear whether Wal-Mart would be subjected to the measure. Opponents of the law are investigating whether federal laws would exempt Wal-Mart from the mandate because it operates across the country and insures itself. The law doesn't take effect until 2006.

Although politicians have put Wal-Mart's health benefits in the spotlight, local workers say the insurance is not a big topic of conversation at their stores. Plenty of workers say they consider the health costs fair and the coverage ample.

One sales associates said she thinks the $50 per month she pays for her PacifiCare health plan is completely reasonable. After six years working in an East Bay Wal-Mart store, the worker earns $11.25 per hour. The worker did not wish to be identified because Wal-Mart employees are not allowed to speak with the media without corporate authorization.

She said she was not aware of workers opting out of benefits because they're too expensive or leaning on social services.

"Why are people saying that they're outrageous? Because they're not," the worker said. "They're really not."

Robasciotti, the former Wal-Mart employee, now has a measure of comparison. Two years ago she left her Wal-Mart management job to work in a Safeway deli department in Morgan Hill. She moved up to become a manager at the in-store Starbucks, earns $13.50 and pays nothing for her benefits. Now Robasciotti is trying to encourage Wal-Mart workers to form a union of their own.

"It's just changed everything," said Robasciotti. "My dad tells me, 'You should have done this seven years ago.'"

Two supervisors leading charge against 'big box'

County leaders hitting pavement to take their case for opposing large-scale supermarkets to residents 
By Inga Miller, STAFF WRITER 
Monday, October 13, 2003 -

They make odd footsloggers for a campaign against Wal-Mart.

But two Contra Costa County Supervisors will hit the streets to tell residents why large-scale supermarkets can be bad. They plan to hold debates, press conferences and even walk door to door to ask residents to vote down an initiative sponsored by Wal-Mart Stores Inc., the world's largest retailer, aimed at ending restrictions on so called "big-box" retail in unincorporated parts of the county.

"I anticipate (Supervisor) John Gioia and I will be the spokespeople for the ordinance," said Supervisor Chairman Mark DeSaulnier of Concord, who co-sponsored the ordinance with Gioia in June that limits the amount of nontaxable goods that can be sold in stores more than 90,000 square feet.

"I'm out there on many issues, but this is the first time I can recall in recent memory when there has been a referendum on a county ordinance," said Gioia of Richmond.

"This is a referendum by Wal-Mart on a law we passed. So I think it makes sense that if I voted for a law, I should be out there talking to the public about why."

Campaign to continue into March

The two supervisors will raise money and speak publicly about the county's position, DeSaulnier said, up until the March 2 vote. It won't be an easy campaign.

"It's my understanding that if we prevail, we are the first in the country that took this on and won. But first we have to do that," he said.

"They are known for using hardball tactics. I get the distinct impression that this is not just about Contra Costa for them -- this is sending a message to all local jurisdictions saying they don't want to see this happen anywhere else."

If so, Wal-Mart picked an experienced foe.

DeSaulnier was on the Concord City Council in 1992 when Wal-Mart proposed a discount store in that city.

The council deadlocked 2-2, so DeSaulnier called on Wal-Mart to pay for an economic study showing the revenue it would generate for the city. After the study, the council voted unanimously against Wal-Mart.

"It (the study) said that we would most likely net $50,000 per year, but that we wouldn't realize that for 20 years because Wal-Mart would refuse to pay for utility undergrounding and they considered curbs and gutters off-site improvements, which they also refused to pay," DeSaulnier said. "Wal-Mart is very good at this, they get as much as they can from local government, and unfortunately, local government is not always sophisticated enough to understand."

Wal-Mart spokesman Amy Hill said she was not familiar with the study, noting that it dated back 11 years.

Supervisor, contractors butt heads

Already, Gioia has butted heads with contractors in Wal-Mart's campaign. In July, he stood next to paid signature collectors outside stores and asked people to rescind their approval by filling out slips of paper.

He said at one point, a signature contractor put a clipboard in front of his face, barring him from talking to a shopper. Another time he was almost forced from the premises by a store manager, he said.

The campaigners, he reported, made untrue comments about the county's ordinance, like that it would ban any grocery sales at discount stores -- and that it would apply all over the county.

"I was out there and they made a lot of misrepresentations," he said.

Rather, the county will still allow retailers to sell a small amount of groceries in big-box stores. In an outlet of 90,000 square feet, a retailer could sell the goods on 4,500 square feet. Nontaxable goods could be sold on 9,000 square feet in a store twice that size. And the ban only applies in unincorporated areas.

The rationale is that otherwise, the merchants aren't generating enough tax revenue to pay for roads and pipelines needed to support the location. Big-box stores tend to sit on the outskirts of communities, DeSaulnier said, where those services aren't up to par.

"Budgetary-wise, we are looking for businesses to provide revenue rather than add to our net loss," he said, adding he pays taxes as a restaurant owner in Concord. "As small retailers, we actually end up subsidizing these large businesses that then put the smaller business out of business."

Wal-Mart, Driving Workers and Supermarkets Crazy 
By STEVEN GREENHOUSE, New York Times
October 19, 2003 

n February Wal-Mart will open its first grocery supercenter in California, offering everything from tires to prime meats, and that could be a blessing for middle-class consumers. The reason is simple: Wal-Mart's prices are 14 percent lower than its competitors', according to a study by the investment bank UBS Warburg.

But not everyone is rejoicing about Wal-Mart's five-year plan to open 40 supercenters in California, stores combining general merchandise and groceries that are expected to gobble up $3.2 billion in sales. California's three largest supermarket chains, Ralphs, Vons and Albertsons, are scared, and so are tens of thousands of supermarket workers whose union contracts have put them solidly in the middle class. The three grocers' fears of fierce competition from Wal-Mart and their related drive to cut costs are widely seen as the main reason behind the week-old strike by 70,000 workers at 859 supermarkets in Southern California.

Wal-Mart has already helped push more than two dozen national supermarket chains into bankruptcy over the past decade. That list includes names like Grand Union; Bruno's, once Alabama's largest supermarket chain; and Homeland Stores, formerly Oklahoma's largest. And unionized supermarket workers fear that Wal-Mart's invasion will oust them from the middle class by pulling down their wages and benefits, which, taken together, are more than 50 percent higher than those of Wal-Mart workers. At Wal-Mart, the average wage is about $8.50 an hour, compared with $13 at unionized supermarkets.

"Wal-Mart's superstores are going to have a devastating impact on California's supermarkets," said Burt Flickinger III, a retailing consultant, noting that union wages and prices are higher in California than in most of the country.

Eager to stay competitive against Wal-Mart, Albertsons, Vons (owned by Safeway) and Ralphs (owned by Kroger) have demanded a two-year wage freeze for current workers, a lower pay scale for new hires and greater employee contributions for health coverage. Those employees now pay no health insurance premiums, while Wal-Mart employees often must pay premiums of $200 a month and deductibles of up to $1,000 a year, if they qualify.

With Wal-Mart in mind, supermarkets have engaged in tough bargaining across the country. That has led to a 12-day-old strike by 10,000 supermarket workers in Missouri and a six-day-old strike by 3,000 workers at 44 Krogers in West Virginia, Kentucky and Ohio.

It is hard to underestimate the power of Wal-Mart. It has 1.4 million employees and had $245 billion in revenues last year, equaling 2.5 percent of the gross domestic product. Each week 138 million shoppers visit Wal-Mart's 4,750 stores. Last year, 82 percent of American households bought at least one item there.

Wal-Mart sells 32 percent of the nation's disposable diapers, and it is the largest customer for Walt Disney and Procter & Gamble. It has singlehandedly persuaded music companies to issue sanitized versions of CD's. Its 1,397 supercenters account for 19 percent of the nation's grocery sales, making it the largest grocery retailer. With Wal-Mart planning 1,000 more supercenters in the next five years, Retail Forward, a consulting firm, estimates that Wal-Mart's grocery and drug sales will double to $162 billion, giving it 35 percent of the domestic food market and 25 percent of the drug market.

When Wal-Mart goes like gangbusters into an area, as it plans to do in California, competitors often feel panic. In Dallas, its share of the grocery market has soared to 16.4 percent from 8.5 percent in the past two years, according to TradeDimensions International.

"We have been in business for 68 years, and in that period of time, we have seen dozens of competitors come and go," said Jack Brown, president of Stater Brothers, a supermarket chain in the Orange County and San Diego areas. "However, Southern California has never seen as big a competitive threat as the Wal-Mart supercenter."

Many factors explain Wal-Mart's ability to charge low prices, including economies of scale, the pressures it puts on suppliers and its embrace of imports — it imported $12 billion in goods from China last year, one-tenth of American imports from China.

Another big factor is Wal-Mart's relatively low wages. Its sales clerks average about $8.50 an hour, or about $14,000 a year, while the poverty line for a family of three is $15,060. In California, the unionized stockers and clerks average $17.90 an hour after two years on the job. Mr. Flickinger said wages and benefits for Wal-Mart's full-time workers average $10 to $14 per hour less than for unionized supermarket workers.

"The strike out here involves workers who enjoy decent wages, vacations and health benefits," said Kent Wong, director of the Center for Labor Research and Education at the University of California at Los Angeles. "These things were taken for granted, they made them part of the middle class, but now these workers are threatened with having these things taken away."

A big savings for Wal-Mart comes in health care, where Wal-Mart pays 30 percent less for coverage for each insured worker than the industry average. An estimated 40 percent of employees are not covered by its health plan because many cannot afford the premiums or have not worked at Wal-Mart long enough to qualify.

"What this means is, if I'm a Wal-Mart employee and I hurt my hand and go to the emergency room, who's going to pay for it? The taxpayer is," said Mr. Brown, the supermarket executive. "Wal-Mart's fringe benefits are being paid by taxpayers."

Wal-Mart officials say that their expansion will be a boon for California consumers and that their wages and benefits are competitive. Why else, they ask, would 600,000 workers take jobs at Wal-Mart each year?

Greg Denier, chief spokesman for the United Food and Commercial Workers, said the fear of Wal-Mart's supercenters is the main cause for the California strike, but he argued that the supermarkets have exaggerated the threat as a strategy to squeeze their workers.

"They keep saying they have to do this because Wal-Mart is bringing supercenters to California," he said, "but it's part of a national program to ratchet down wages and benefits."

Yet Wall Street analysts and retailing consultants say the California supermarkets, like others across the country, risk being stomped by Wal-Mart.

DEMOCRATIC: WAL-MART UBER ALLES

BY MATTHEW GRIM

American Demographics, Oct 1, 2003

Star Trek II: The Wrath of Khan introduced the Genesis Device, a mechanism conceived to "terraform" lifeless planets. In the wrong hands, if used on those where life already existed, it posed world-shaking destructive power. Here on Earth, a certain Bentonville, Ark., retailer wields a similar transmutative power. Although the evil Khan doesn't have hold of it, many see it as just as dangerous a double-edged sword hanging over our economy.

Wal-Mart is America's favorite store and, among detractors, its most reviled corporation. It is the new downtown, staffed with smiling faces and stocked with items at the best prices. Critics, meanwhile, allege it's a labor nightmare, bilking workers of due overtime pay, firing employees for discussing unionization, discriminating against female staffers and paving over America's small business foundations. Wal-Mart creates 1 in every 20 new jobs in the U.S. and opens a new outlet about every 42 hours, and, by one estimate, sees organized citizen opposition to 1 in 3 proposed new stores. A $244 billion business employing 1.3 million people, operating 3,000-plus stores in the U.S. and a thousand abroad, now accounting for $1 in every $5 spent on groceries, named by Fortune the corporate community's "most admired" company early this year — the Earth has never seen an entity of such leviathan proportions that it can reshape our economic landscape at will.

The company has undertaken its first market research program, presumably to come to grips with proliferating pockets of resistance, which have fought hundreds of proposed stores nationwide. Testimonial TV spots have addressed some of the points on its detractors' litany, including one featuring a female district manager discussing how being part of the Wal-Mart family helps her take care of her own — seemingly an answer to a pending class-action gender discrimination suit filed in California. Wal-Mart declined to comment for this story, but the company is hard-pressed to address the real crux of the anti-Wal-Mart movement. That is, the business practices that have made it so admired are unraveling the fabric of an already ravaged economy.

It may seem like much ado about something seemingly innocuous: a general merchandise store, whose popularity is decided by 138 million American shoppers, not to mention city fathers eager to rezone Wal-Mart into their outskirts. Then there's Al Norman, founder of Sprawl-Busters, based in Greenfield, Mass., who has tracked nearly 200 municipalities that have successfully fended off mega retail development. Since spearheading a fight to keep Wal-Mart out of Greenfield, he has seen a snowballing effect, as many as three to four calls a day, of grass roots groups seeking his counsel.

"Most municipal administrators are lay people, they just think that getting a Wal-Mart is sort of a retail equivalent of shaking hands with Elvis," Norman says. "They can't distinguish between industrial development, which by-and-large is added value, versus retail development, which adds no value. The developer comes to town and pays for all studies to convince the town that they're from Lake Woebegon. But independent impact studies would completely turn development in this country on its head."

A growing body of economic impact research contradicts the developers' rosy win-win scenarios. Kenneth Stone, an economics professor at Iowa State University, has tallied 53 types of businesses with which Wal-Mart competes, and has tracked a startling swath of destruction.

Stone pioneered research on the Wal-Mart factor in Iowa cities with populations of 5,000 to 40,000, tracking sales from as early as 1983, and more recently examined the Supercenter onslaught in Mississipi. In his 1997 study, "Impact of the Wal-Mart Phenomenon on Rural Communites," Stone found that between 1983 and 1996, the average Iowan spent 42 percent more in "department stores," (qualified as "primarily" mass merchants) than in 1983. In men's clothing stores alone, consumer spending eroded by 59 percent in the same period, resulting in the shuttering of 60 percent of these businesses. And, though host communities did see some general growth in transactions overall in the years after Wal-Mart's arrival, 10 years later, host towns lost an average of 4 percent of total sales, some towns of less than 5,000 losing half their retail trade. And, due to the magnet effect of Wal-Mart, sales transactions in neighboring towns declined 15 percent.

"Obviously there's a zero-sum game involved here," says Stone. "If you plop down a 200,000 square foot Supercenter someplace like Ankeny, Iowa (population 27,000), and are expecting your average $75- to $80 million a year in sales, that money doesn't come out of thin air. It comes from somewhere else."

Wal-Mart proponents invariably cite the "democracy of the marketplace," that a company that serves customers better deserves their business more. The logic might work were all things equal, but they're not. One hitch often glossed over is that many municipal administrations are so gung-ho for "economic development" that they defer local taxes and disproportionately subsidize new projects as opposed to reinvesting in existing businesses and infrastructure, according to an exhaustive analysis of "mega retail" chains by Edward Shils, professor emeritus at the University of Pennsylvania's Wharton School.

"Many of the development packages provide that a new 'Big Box' will be able to retain all sales taxes collected for a given number of years in order to help finance the construction and debt costs of the new facility," Shils stated in a 1997 report. "When this happens the local government and the school districts which depend on sales and real estate tax revenues find themselves in desperate financial condition since the small retailers which have been displaced are not providing revenues and sales tax to the schools and property and real estate taxes to the community."

Not only are the profits winging off to Bentonville, but the labor that earns them isn't even building up a healthy tax base for the local community. Various economic impact studies obtained for this story have found that, for every Wal-Mart hire in a new town, it destroys about 1.5 jobs at competing businesses. Further, per its standing policy that a "full-time" job is a 28-hour work-week, the median income of a Wal-Mart employee stands at around $12,000 a year, less than half the national median, according to the National Labor Committee.

Even should workers seek redress, Wal-Mart wields so much clout that the company can simply change the rules of the game. More than 200 major corporations, at the retailer's bidding, have opened offices in Bentonville to better "service the account." Recently, when meat cutters at its Jacksonville, Texas, Supercenter voted to join the national union, the company — whose view of labor mirrors that of JP Morgan — went to meat vendor IBP and demanded "case-ready" meat, i.e. cut and packaged before shipping, thus circumventing meat cutters across all of its Supercenters.

For Wall Street, all this reads as "efficiency," something its denizens slaver over. At Main Street level, however, a Genesis effect is happening, wherein for all the gee-whiz buzz over big boxes, commerce is bulldozed until cities are transmuted into mere colonies of mega corporations. Consumers might live a few cents cheaper in the short run, but as Stone wrote after his first study in 1988, "The money a Wal-Mart drains from the community won't come back; it isn't in the hands of local people who might invest it back in the community. Then you lose a sense of community loyalty, that small town atmosphere, and you are in danger of becoming a bedroom community. You don't have business and civic leaders; you have transient managers."

If Wal-Mart's labor policies seem regressive, the longer-term worst-case scenario may be even more anachronistic: communities whose fortunes are dangerously dependent on a single corporate entity, owing our souls, as it were, to the "company store."

Why Can?t Any AFL-CIO Union Organize Even One of Wal-Mart?s 4,750 Stores?

By Harry Kelber
LaborTalk for October 8, 2003

After years of trying, the one million-member United Food and Commercial Workers, an AFL-CIO affiliate, has been unable to unionize a single one of Wal-Mart's 4,750 supermarkets, despite a heavy investment of money and resources in its organizing campaign.

The best that the union?s large staff of organizers has been able to achieve is its only ?historic? breakthrough back in Feb. 17, 2000, when the meat cutters in the delicatessen department of a Wal-Mart supermarket in Jacksonville, Tex. voted 7 to 3 in favor of the UFCW in a National Labor Relations Board election. The union was unable to capitalize on this toehold victory to organize the entire store.

The UFCW can't blame its organizing failures on the grounds that the nearly one million people who work for Wal-Mart (the world's largest employer) are so happy with their pay, benefits and working conditions that they don't need a union.

The average pay for Wal-Mart employees (they're called ?associates?) is $8.23 an hour or $13,861 a year. That's well below the federal poverty line of $14,630 a year for a family of three.

Wal-Marts health-insurance plan is considerably below par, compared with those in the retail industry. It requires a six-month waiting period for new hourly employees. Its deductibles are as high as $1,000, triple the norm. It raised premiums 50% during the past two years. It does not cover retirees.

In truth, Wal-Mart employees are very unhappy at the variety of abuses they've taken from the company, and they've done something about it. Not by joining the union, but by instituting class action suits ? and winning many of them.

Two years ago, the giant retailer had to shell out $50 million to 69,000 workers in its Colorado stores, whose class-action suit cited overwhelming evidence of an enormous amount of off-the clockwork by employees. Wal-Mart also paid $485,000 to 10 former Hispanic employees in a discrimination suit.

Family members of deceased Wal-Mart employees are suing the company because it took out about 350,000 insurance policies on the lives of its workers, made payable to the company.

On Sept. 24, a California federal judge began considering a plaintiff's petition to include all women who worked at Wal-Mart since late 1998 (a total of 1.6 million women) in a class-action suit that charged that Wal-Mart systematically denied women equal pay and opportunities for promotion. This sex discrimination case could rank as the largest class-action suit ever.

The UFCW might have won the trust of Wal-Mart employees if it had led them in their law suits, but apparently it didn't get directly involved. Even though unionized store employees average about 30% or more in wages and benefits than those at Wal-Mart, UFCW organizers haven't been able to persuade a majority of workers at even one store to join the union.

The abysmal failure at Wal-Mart highlights the fact that AFL-CIO unions in the private sector won't try to unionize scores of corporations with a work force of 30,000 or more. (Remember that General Motors, Ford, Chrysler, General Electric, Westinghouse, U.S. Steel and Bethlehem were organized sixty years ago.) If AFL-CIO unions can?t organize the big companies, how are they to grow?

Since 1992, a total of 13,000 supermarkets, many of them unionized, have shut down, unable to compete with Wal-Mart's price-slashing of consumer goods. Its labor costs are 20% less than those in union food markets.

All the training programs, conferences, strategy sessions, seminars and tons of literature on union organizing haven't made much of a difference. And even if every union is persuaded to spend 30% of its budget on organizing, it won't lead to significant gains in union membership.

As long as the AFL-CIO's horrendous record at Wal-Mart remains unchallenged, workers at other large companies will think twice about joining a union.

What will those union leaders who want to give top priority to organizing have to say about Wal-Mart?

Our weekly ?LaborTalk? and ?Labor and the War? column can be viewed at our Web site www.laboreducator.org. Union members should check www.rankandfileaflcio.org news and information about the AFL-CIO reform movement.

Supervisors look ahead to March

Urban-limit line and Wal-Mart 
By Inga Miller, STAFF WRITER 
Wednesday, October 08, 2003 -MARTINEZ 

Contra Costa County Supervisors were busy with election matters Tuesday -- the election next March.

The board decided to start scheduling community meetings within the next few weeks to discuss putting a measure on the March 2 ballot that would shift control of the county's urban-limit line directly to voters.

As currently drafted by supervisors, the measure would call for an election any time a proposal is made to change the urban-limit line more than 10 acres, presumably to allow development. Smaller movements of the line still would be decided by supervisors.

"We need to get the message out there," said Supervisor Federal Glover, Pittsburg, who proposed the ballot measure.

At the community meetings, residents and local officials in all parts of the county will have a chance to comment on the plan. An alternative presented to supervisors on Tuesday suggests seeking voter approval for changes of more than 25 acres, rather than 10 acres, to allow more leeway.

"We want to hear their opinion on that," said Supervisor Gayle Uilkema, Lafayette.

"We will have a majority of the board at each of the meetings, and that gives the cities the chance to know the whole board is at the meeting and is able to act on their concerns."

Supervisors also opted in a 4-0 vote Tuesday to defend county restrictions on so called "big box" retail developments and put a referendum sponsored by Wal-Mart on the March 2 ballot.

Alternatively, the county legally would be forced to repeal the restrictions, which limit stores to 90,000 square feet when they sell nontaxable goods, such as groceries, on 5 percent or more of their floor space.

"It's important for us to be able to collect tax revenue from these projects that impact our roads," said Supervisor John Gioia, who pushed for the ordinance in June with board chairman Mark DeSaulnier, Concord..

The ban was challenged by Wal-Mart Inc. Opponents of the ban collected more than 40,000 signatures for a referendum, which qualified in July.

"Our option was either to repeal the ordinance or place it on the ballot. And I think it is good public policy to defend our ordinance when we passed it," Gioia said.

The decision was supported by Supervisors Millie Greenberg, Danville, and Glover.

Uilkema, who owns stock in Wal-Mart, abstained from the vote.

The campaign against the referendum "is going to be an incredibly difficult (one)" said DeSaulnier, "but I do think it is the right thing to do."

Wal-Mart aims to roll back ban

Voters will have opportunity to repeal or support ordinance 
By Inga Miller, STAFF WRITER 
Monday, October 13, 2003 -

MARTINEZ -- By popular consensus, another grocery store may be coming to your neighborhood -- a superstore.

Come March 2, Contra Costa County voters will be among the first in the country to decide whether to allow super centers, overturning a county ordinance that prevents the giant discount markets in unincorporated areas.

Sprawling across three to six times the floor space of typical grocery stores, Wal-Mart Stores Inc.'s brand of Supercenters will arrive in California next year. They are the discount giant's answer to grocery shopping melded with their range of other wares from shirts to towels and toys.

County supervisors passed an ordinance in June that bans Wal-Mart and other so-called big-box retail stores exceeding 90,000 square feet from selling groceries and other nontaxable goods on more than 5 percent of their floor space. An initiative to overturn the ban, sponsored by Wal-Mart, was placed on the ballot Oct. 7 .

If it fails, observers say the vote could bolster similar big-box restrictions being debated in Oakland and elsewhere in California.

"I would say it would be an interesting message if a fairly affluent county like Contra Costa sent Wal-Mart packing, because I think it is a place that represents their customer base," said retail location strategist Larry Kosmont, president of Kosmont Co's, Los Angeles.

Kosmont said the election's result could forecast the future of stores across the state that pack vegetables and cereal alongside the regular line of discount merchandise. Its defeat could make Wal-Mart rethink its Supercenter entrance into California.

Supercenters already speckle 43 other states. A Wal-Mart announcement earlier this year outlining plans to open 40 of the markets in California over the next four years sparked debate about the place of giant chain stores in several Bay Area communities. The first Supercenter is on schedule to open this spring in La Quinta in Riverside County.

Contra Costa County officials point to the typical locations of the stores and like businesses on the outskirts of towns. Because customers drive from farther away, roads get more use. And those that specialize in food generate less tax revenue per square foot than stores selling solely taxable goods.

So the centers don't pan out financially, Contra Costa supervisors say.

If voters reject the supervisors' ban, Wal-Mart, Kosmont said, might see it as a green light from consumers.

Wal-Mart is gearing up to for a fierce campaign. Super center opponents -- from local officials wary of building at the county's urban periphery to labor union opponents of Wal-Mart -- are mounting a challenge.

"Depending on how the vote plays out, I think it could have a very significant effect on how Wal-Mart decides it's going to roll out the rest of these stores," Kosmont said. "If voters uphold the ban on super centers, Wal-Mart may have to reconsider what their strategy is. And I think that is what their opponents are hoping for."

Groups from the United Food & Commercial Workers Union to the Greenbelt Alliance and the National Organization for Women have taken positions supporting Contra Costa's ordinance.

Pinole Mayor Maria Alegria said some groups will meet as early as this week to organize against what they call the sprawling nature of super centers that reduce wages and tax bases, snuff out downtowns and clog traffic. Alegria is executive director of FaithWorks, an alliance between union and religious groups.

Since 1988, Wal-Mart Supercenters have been popping up across the country, and now number 1,300. Only about three dozen cities and counties have ordinances limiting the size and scope of the stores -- and few, if any, have actually gone to the ballot box, said Al Norman. He operates a Web site, sprawl-busters.com, that tracks the fight against Wal-Mart across the country.

"I call them the Great American Dust Machine. They grind through the middle class of any community and help destroy the backbone of any small town. Once the small merchants are gone, they don't come back. And those merchants are the only thing that keeps Wal-Mart's prices competitive," said Norman, who has helped a number of anti-big-box campaigns across the country during the past decade.

The bans that are in place amount to corporate protection for major grocery chains, counters Amy Hill, Wal-Mart's public affairs manager for the Western Region.

"I believe special interest groups, particularly the food workers union, has a larger agenda to prevent Wal-Mart stores from bringing Supercenters to California, and Contra Costa is part of their plan to prevent our growth," she said.

"I think that our customers really appreciate the one-stop shopping where they can purchase a myriad of items right under one roof. They can combine what would take a day's worth of driving from errand to errand."

If so, it's at the cost of reducing wages for local residents, said Mike Daley, conservation director for the Sierra Club's Bay Area chapter.

"Livable wages are very much an environmental issue because if you can't afford to live 20 miles from where you work, then that becomes a transportation issue. You have people who work in the Bay Area and live in Fairfield and Vacaville," Daley said.

That view is shared by the United Food Workers Union Local 1179 in Contra Costa County, said President Barbara Carpenter. But she said the union was far from "behind the whole thing."

Daley cited a 1999 study by the Orange County Business Council that estimated Southern California alone could take a $2.8 billion yearly hit if super centers made an aggressive entrance into the market there. The loss stemmed from lower wages paid at discount companies such as Wal-Mart, and fewer benefits.

"When people are making low wages and don't have health benefits, that creates a burden on our already strained health care system," Pinole's Alegria said. "You get employers that don't provide benefits and then their employees rely on the public health system."

Wal-Mart maintains it was never contacted for wage information and Hill said the Orange County study -- conducted by the University of California -- was biased toward labor.

Because a pending lawsuit by six California women accuses Wal-Mart of wage and promotion discrimination, the National Organization for Women can't support Supercenters, California area Executive Director Helen Grieco said.

"I think you will hear a lot of people talk about more global issues -- health care for employees, for example. For me, as a former planning commissioner and land use official, this is a land use decision and a transportation decision and I think it is a good ordinance," said Supervisor Chairman Mark DeSaulnier, one of the ban's sponsors. "I think big corporations can make money under this ordinance. They are right now and they will continue to."

Contra Costa's code passed in a 3-0 vote by supervisors on June 3. In unincorporated parts of the county, it puts a 90,000-square-foot limit on all retail stores where 5 percent or more floor space displays groceries or other nontaxable goods such as pharmaceuticals. The average large grocery store is about45,000 square feet.

The ban doesn't apply to membership clubs such as Costco, which county planners say don't generate as much traffic. But it effectually rules out a Wal-Mart Supercenter.

"It is a direct attack on our business. We have to preserve customer choice," said Hill of Wal-Mart. So the company will appeal to its customers -- the voters, Hill said. "We don't have a specific campaign in place yet, but I think it will encompass many of the traditional campaign strategies, including direct mail."

Within a week of the ban's passage, Wal-Mart started the drive to overturn it. Wal-Mart spent $100,000 gathering signatures for the referendum.

"Wal-Mart always wants to say that this is about Wal-Mart. And I want to make clear this is not about Wal-Mart. This is about the county controlling land use in the unincorporated areas," said the ban's other sponsor, Supervisor John Gioia of Richmond.

"In this case, we want to make sure we recover tax revenue from large-scale retail stores that impose traffic and burden our roads. You don't get tax revenue from a supermarket. And from looking at where these are located, big-box retail stores tend to be built on the outskirts of a city. We are talking about larger traffic volume and increased traffic on our roads."

Wal-Mart hasn't proposed a Supercenter in Contra Costa County. But if it did, opponents speculate it would probably be in the unincorporated outskirts, like Supercenters in some other communities. The company needs about 15 acres to build one.

"In some areas, we tend to build where there is residential growth. Nine times out of 10, the residents come first and we are just bringing our stores to that growth," Hill said. "In a place like Contra Costa, where land is scarce, we look for infill."

An incoming Wal-Mart at the Hilltop Mall in Richmond couldn't be expanded into a Supercenter. And it is unclear, Hill said, whether Wal-Mart would ever create Supercenters at the existing stores in Pittsburg, Martinez and Antioch.

The Martinez City Council enacted restrictions a year ago similar to the county ordinance, so an expansion there is unlikely.

There is talk in Pinole too, about a possible ban, Alegria said.

Since 1998, local laws restricting the size of big-box retail have popped up in different parts of the state. There was discussion in Tracy about possible restrictions at one point, but a grass-roots effort never took off. Wal-Mart is considering bringing a Supercenter to that city.

The California Legislature passed a ban similar to Contra Costa's in 1999. But it was vetoed by Gov. Gray Davis after heavy lobbying from both labor unions and Wal-Mart.

Two local bans have also been rescinded. In Calexico at the Mexican border, and in Inglewood in Los Angeles County, city councils opted to repeal their bans rather than face Wal-Mart at the ballot box.

Where communities defend them, restrictions appear to survive legal challenges. An Arizona Superior Court upheld limits in Tucson on retail outlets100,000 square feet or larger selling nontaxable goods on more than 10,000 square feet.

"I think this ruling is very important to Contra Costa because the judge ruled that an ordinance very similar to Contra Costa's was constitutional," Norman said. The judge ruled Wal-Mart didn't have a standing in the case because it hadn't filed an application yet. "So to some degree, the court left the door open for a challenge in the future."

Wal-Mart isn't planning to get to that point in Contra Costa, Hill said.

"We do not believe we will not succeed. We believe the voters will vote to repeal this ordinance, and I think that will send a message to other communities in Contra Costa that people don't support ordinances like these," she said.

"It's kind of an un-American principle in a way to have a legitimate business comply with zoning and get booted out," retail strategist Kosmont said. "I guess the constituents will have to decide whether it is more un-American to take away land use than it is to provide low-paying jobs."

Wal-Mart's legal tactics raise hackles 
Chip Johnson 
Friday October 10, 2003 
©2003 San Francisco Chronicle

When Wal-Mart Corp. announced its plan to build 40 super-center stores in California, most people thought that meant the company would build in communities that want and need the mammoth facilities.

It didn't.

The nation's largest retail chain didn't grow to 4,200 stores by being nice about it.

In Wal-Mart's push to expand its presence in the Western United States, it's becoming clearer that the company's business proposals aren't proposals at all. It's more like them making an offer the other guy can't refuse.

In Nevada, Southern California, and now in Contra Costa County, the corporate leaders from Bentonville, Ark., have used the company's considerable financial resources to overturn political decisions whenever the system hasn't worked in its favor.

And the Bay Area could be the next battlefield in the Wal-Mart Wars.

The discount retail company has gathered the 27,000 signatures needed to place a referendum on the March 2004 ballot to challenge a county land use ordinance passed last June.

The law, which applies to unincorporated parts of the county, bans construction of big-box stores that devote more than 5 percent of their floor space to non-taxable grocery items.

"It's about us saying that in unincorporated areas we want to make sure we're recovering adequate sales taxes," said Contra Costa County Supervisor John Gioia of Richmond. Such stores often don't generate adequate tax revenues for the noise, air pollution and traffic congestion they create, he added.

It also presents a problem for the company's long-range goals because the core concept of a super-center is to combine a Wal-Mart discount store with a full-service grocery.

For the record, Wal-Mart officials say they gathered signatures because county officials simply ignored the democratic process.

"We felt the board of supervisors did not act with the will of the people, " said Amy Hill, a Wal-Mart spokeswoman from Reno.

The county law was approved in a political "vacuum" and Wal-Mart "owed it to our customers" to challenge the law, she added.

Fair-minded citizens in a few other California cities and Clark County, Nev., also are recent recipients of the retail empire's libertarian beliefs.

In all those cities, Wal-Mart also launched petition drives that either overturned local laws at the ballot box or pressured local officials to repeal them.

In Calexico, a Southern California city of about 27,000, Wal-Mart spent $140,000 to push through a referendum it had placed on the ballot. The referendum passed by a margin of nearly 2 to 1.

In Reedley, where the company wanted to build a 103,000-square-foot super- center, it entered the political fray over a local annexation and rezoning debate. It became a moot point when both measures lost.

Elected officials in Clark County, Nev., also repealed land-use policies under pressure of a referendum vote brought by the company.

Wal-Mart sees the fact some cities have yielded to the company's arguments as proof that the opposition was a thinly veiled cover for political pressure from special-interest groups such as labor unions.

"If union grocery workers have a problem with us, that's fine, but to ban competition is inappropriate," Hill said.

Not all California cities have reacted so negatively to being courted by Wal-Mart, and the company is making in-roads in nearly half a dozen cities across the state.

The state's first super-center store is scheduled to open early next year in the Southern California golf resort city of La Quinta, and that's just a start.

Proposals for the construction of super-center stores, which can be as large as 200,000 square feet, also have been approved in Palm Springs, Palm Desert and Chico, Hill said. Super-store proposals are also moving through the development process in Redding and Gilroy.

Closer to home, store officials have had discussions with Richmond city officials about taking over the abandoned Macy's store at Hilltop Mall.

There are plenty of California cities that would probably welcome a Wal- Mart superstore, but using corporate muscle to wedge them into already overcrowded urban areas is not going to earn them a community service award.

There is nothing wrong with creating new markets -- it's trying to manipulate local politics with corporate pressure that turns me off.

That's not the kind of corporate involvement most communities are looking for.

"What it really comes down to is do you want county planning decisions made by your elected representatives or corporate executives from Bentonville, Ark.?" Gioia asked.

I know the answer.

E-mail Chip Johnson at chjohnson@sfchronicle.com.

©2003 San Francisco Chronicle

 Supervisors look ahead to March

Urban-limit line and Wal-Mart 
By Inga Miller, STAFF WRITER 
Wednesday, October 08, 2003
 MARTINEZ -- Contra Costa County Supervisors were busy with election matters Tuesday -- the election next March.

The board decided to start scheduling community meetings within the next few weeks to discuss putting a measure on the March 2 ballot that would shift control of the county's urban-limit line directly to voters.

As currently drafted by supervisors, the measure would call for an election any time a proposal is made to change the urban-limit line more than 10 acres, presumably to allow development. Smaller movements of the line still would be decided by supervisors.

"We need to get the message out there," said Supervisor Federal Glover, Pittsburg, who proposed the ballot measure.

At the community meetings, residents and local officials in all parts of the county will have a chance to comment on the plan. An alternative presented to supervisors on Tuesday suggests seeking voter approval for changes of more than 25 acres, rather than 10 acres, to allow more leeway.

"We want to hear their opinion on that," said Supervisor Gayle Uilkema, Lafayette.

"We will have a majority of the board at each of the meetings, and that gives the cities the chance to know the whole board is at the meeting and is able to act on their concerns."

Supervisors also opted in a 4-0 vote Tuesday to defend county restrictions on so called "big box" retail developments and put a referendum sponsored by Wal-Mart on the March 2 ballot.

Alternatively, the county legally would be forced to repeal the restrictions, which limit stores to 90,000 square feet when they sell nontaxable goods, such as groceries, on 5 percent or more of their floor space.

"It's important for us to be able to collect tax revenue from these projects that impact our roads," said Supervisor John Gioia, who pushed for the ordinance in June with board chairman Mark DeSaulnier, Concord..

The ban was challenged by Wal-Mart Inc. Opponents of the ban collected more than 40,000 signatures for a referendum, which qualified in July.

"Our option was either to repeal the ordinance or place it on the ballot. And I think it is good public policy to defend our ordinance when we passed it," Gioia said.

The decision was supported by Supervisors Millie Greenberg, Danville, and Glover.

Uilkema, who owns stock in Wal-Mart, abstained from the vote.

The campaign against the referendum "is going to be an incredibly difficult (one)" said DeSaulnier, "but I do think it is the right thing to do."

Wal-Mart drifted into trade unions dispute in China
2003-10-07 16:01 
Xinhua

Wal-Mart, world's No.1 retailer, has become the target of the All-China Federation of Trade Unions (ACFTU), for refusing to establish trade unions in its branches in China.

Before the opening of the Chinese Trade Unions 14th National Congress on Sept. 22, the ACFTU officially urged Wal-Mart to establish trade unions.

"For companies depriving the rights of employees to establish trade unions, we reserve the right of resorting to lawsuits," the ACFTU announced.

Wal-Mart's China headquarters responded the next day that "it had constituted a series of regulations under Chinese laws, especially those that relate to trade unions, offering effective channels to resolve complaints from employees."

"All the legal rights of employees, involving wage rises, promotion, and vacations, have been written in contracts and the company's employee manual," said a Wal-Mart spokesman, reported in the 21st Century Business Herald, a well-known national business newspaper.

According to the ACFTU, participation in trade unions is a basic right of employees in all enterprises in China, enshrined in law, which can not be removed by any organization or individual.

Wal-Mart said that according to Chinese law, a trade union could only be installed at the free request of employees, and since there have been no requests yet, there is no necessity to establish a union.

But the ACFTU contended that although employees of foreign- funded enterprises wish to have local trade unions of their own, they can not afford to raise the issue with their employer for fear of losing their jobs or other benefits.

"And the competition for jobs is so fierce today," a union activist said.

The disagreement also derives from legal differences. A Wal- Mart spokesman explained that there are no trade unions in its branches in other parts of the world either.

But according to Chinese law, a trade union is usually required to be installed at every company of a certain scale. In the United States, workers can establish their own trade unions for the protection of their rights, without organizational affiliations with their specific employers.

Since November 2000 all efforts by the ACFTU to urge Wal-Mart to establish trade unions have been in vain.

"We have contacted Wal-Mart several times," said Feng Lijun, an ACFTU official, "but no progress has been made so far."

Xu Xicheng, vice chairman

Here Comes the Neighborhood
by John Unrein, Baking Buyer
September 1, 2003

When Sam Walton ran for student body president at the University of Missouri in the 1930s, he learned a crucial lesson called the 10-foot rule: Greet anyone within 10 feet with a smile and speak to them directly, preferably by name.

This neighborly attitude made Walton billions.

Now, as Wal-Mart gains familiarity and clout in the food business, the world's largest retailer is ready to cozy up to even more bakery customers through its Neighborhood Markets. These stores are roughly one-quarter the size of a Wal-Mart Supercenter and carry dozens of bakery items such as donuts for 50 cents apiece, loaf cakes for $1.49 and hot French bread for less than a buck. Yet little baking is done at store level.

Most baked goods are shipped from a nearby Supercenter, and analysts say Wal-Mart is wise to recognize these two concepts fit well together. Both are supported by regional distribution centers that keep Wal-Mart stores efficiently stocked.

"Wal-Mart is a stellar brand, and they have proven through the test of time that most everything they do turns to gold," says Ira Blumenthal, a retail analyst and president of Co-opportunities Inc. in Atlanta, GA. "It's only a matter of time until they build strong credibility in food categories, as well."

There are now 53 Neighborhood Markets in eight states. Wal-Mart plans to add 20 to 25 locations during its current fiscal year.

By comparison, Wal-Mart operates 1,356 Supercenters. This discount store-supermarket hybrid was introduced in 1988, and within a decade Wal-Mart had emerged as one of the nation's largest grocers. Today, it's No. 1.

Analysts predict Neighborhood Markets will solidify Wal-Mart's dominant position in the supermarket sector by grabbing new customers in urban areas. New locations are going up in fast-growing markets such as Dallas-Fort Worth, TX, Orlando, FL, and Salt Lake City, UT.

"To get into metros, this is their answer," says Dick Spezzano, a retail analyst and a former perishables executive at Vons supermarkets in Southern California. "You can't get 15-acre blocks in big cities. But there are opportunities in metros to put down 30,000- to 40,000-square-foot stores. The challenge is the Krogers and the Safeways of the world are looking for the same spots, and they'll pay more for location."

Neighborhood Markets, which debuted in 1998, range in size from 42,000 to 55,000 square feet and carry fresh perishables, general merchandise and dry grocery items. Neighborhood Markets typically employ 80 to 100 and offer about 28,000 items.

"Neighborhood Markets are generally opened in areas with existing Supercenters," says Karen Burk, a Wal-Mart spokesperson. "This allows shoppers who want to make a quick trip to the grocery store a convenient, more intimate format. For longer grocery trips, customers can enjoy the nearby Supercenter. Both formats offer a different kind of convenience for our customers."

What Neighborhood Markets lack in production at store level, they more than make up for in merchandising. Bakery departments feature a sparkling clean, upscale look with wooden tables-with extras like mobile heating display units for stocking French bread on the sales floor. Customers just open the door and select what they need.

"The more square feet you have with stuff to sell, the better off you are," Blumenthal says. "The more space you have devoted to baking and production, that's not selling feet."

Another unique feature of the Neighborhood is the "Grab-n-Go" section, where shoppers can buy a donut or cinnamon roll on the honor system by dropping two quarters in the box. Or they can pour their own coffee or soft drinks and pick up a newspaper here. The self-serve price is noted above each product. Not all Neighborhood Markets offer the Grab-n-Go section. Most new locations offer this feature.

"It has been popular in those communities where it is available," Burk says. "Whether it's one-stop shopping at our Supercenters or the Grab-n-Go at our Neighborhood Markets, convenience is definitely a focus for serving our customers."

Some analysts say Wal-Mart has tweaked the merchandising of Neighborhood Markets so much in five years that they've rubbed the original paint off the shelves. One challenge has been to open more aisle space.

"From the stores I've seen, they've got perishables squeezed. You've got to have 6- and 8-foot aisles, so people feel comfortable shopping," Spezzano says. "You want to slow down the shopping trip to expose more products to them. When you squeeze down bakery and produce, that's 70% impulse. Tight aisles and tight displays in the first Neighborhood Market stores worked against them."

But new locations have a more open feel. Plus, bakery selections are on the rise because perishables departments in smaller stores play an even more important role to the gross-profit bottom line. Some inside Wal-Mart are in favor of larger Neighborhood Markets in the future so the stores can boast wider selection.

In July, a new 48,600-square-foot Neighborhood Market opened in Fort Worth, TX.

"They tweak and tweak and tweak. The store gets better each time," Spezzano adds. "It shows you how strong they are. Once they latch on to something, they roll it out."

Blumenthal agrees that it's not a question of if Wal-Mart will expand its Neighborhood Market concept across the country, as it did with Supercenters during the '90s, but when.

"Being relatively slow to get into something is their pattern," he says. "Look at McDonald's. They had two restaurants for eight to 10 years. To me, this is the Wal-Mart way. Wal-Mart knows no other way than winning. They are perhaps the world's leading marketer. They plan well. They research well. Most importantly, they execute well."

Voters may decide on big-box stores
Ballot-box showdown could decide fate of supercenters 

By Inga Miller, STAFF WRITER Tri-Valley Herald
Sunday, October 05, 2003 - MARTINEZ

Setting the groundwork for a ballot-box showdown between Wal-Mart and Contra Costa County, the Board of Supervisors is expected to pick a date Tuesday for an election on its controversial ban on big-box retailers.

The ordinance limits the size of grocery stores and other outlets selling non-taxable goods. Wal-Mart says it is anti-business; the Supervisors defending it say it will keep roadways clear and the county's tax base up.

"I think it's important to go ahead with the initiative process and to try and overcome Wal-Mart's opposition to our ordinance," said Board of Supervisors Chairman Mark DeSaulnier.

If upheld by courts, the county ban will apply to retailers in the unincorporated areas, he said. It limits all retail outlets that sell groceries or other non-taxable goods on 5 percent or more of the floor space at 90,000 square feet .

Thus, the law doesn't specifically target Wal-Mart.

Wal-Mart Inc., though, was the only retailer to challenge the ban when supervisors passed it June 3.

"We believe it is very anti-competitive and anti-consumer," said Amy Hill, Wal-Mart's community affairs manager for Northern California.

In a move that stalled the ban from taking effect, an attorney for Wal-Mart presented more than 40,000 signatures July 2 for a referendum. It qualified for the ballot July 29 with about 30,700 validated signatures, or 4,000 more than required.

The issue could go to the ballot March 2, under a proposal that will be presented Tuesday by DeSaulnier and Supervisor John Gioia of Richmond.

Also, the supervisors simply could decide to repeal the ordinance. Both options are allowable under elections law, according to a county staff report.

"While we certainly would prefer the Board of Supervisors to repeal the ordinance based on the 40,000 signatures we gathered in Contra Costa, we are realistic enough to realize the political pressures," Hill said. "And we fully expect this to be sent to an election."

Supervisor Federal Glover of Pitts-burg also voted for the ban, which passed in a 3-0 vote. Supervisor Gayle Uilkema of Lafayette recused herself because she owns stock in Wal-Mart.

Wal-Mart's supercenters slowly have been moving across the country since 1988, only recently arriving in California. The first is set to open in La

Quinta next year, followed by stores in Bakersfield, Redding, Chico and Hanford.

Only a few dozen communities have restrictions banning them, including the city of Martinez. Citing the amount of traffic the centers could generate to out-of-town sites and the lack of a tax-base from groceries, the county followed suit. Oakland and Fremont also are debating bans.

"There are some communities that limit all stores over a certain size. What Wal-Mart seems to want to do, though, is to make zoning decisions for Contra Costa County from Bentonville, Ark." where they are based, Gioia said.

"Should our zoning decisions be made by local officials in Martinez or in Bentonville by the world's largest corporation?" he asked.

The Board of Supervisors meets at 9:30 a.m. Tuesday in the McBrien Administration Building, 651 Pine St., Martinez.

Wal-Mart CEO: Profitability Driving Supercenter Growth

By JAMES COVERT

Of DOW JONES NEWSWIRES 
September 30, 2003

NEW YORK -- Wal-Mart Stores Inc.'s (WMT) store growth next year will continue to be driven by its supercenter format - simply because that is the company's most profitable format, the top executive said.

Wal-Mart said late Monday it plans to open 220 to 230 supercenters in 2004. Relocations and expansions of existing discount stores will account for about 140 of the new supercenters, with the remainder built at new locations. Those openings will dwarf the numbers of new discount stores, slated at 50 to 55. Sam's Clubs will open 35 to 40 locations, including about 20 relocations. Wal-Mart's developing Neighborhood Market format will see only 25 to 30 openings.

"We are satisfied with the returns on the Neighborhood Markets," Wal-Mart President and Chief Executive H. Lee Scott said at the company's annual meeting with analysts at its headquarters in Bentonville, Ark. "But we have a higher - much higher - return on the supercenters, and we are going to spend our efforts in that area."

By the end of this year, supercenters will outnumber Wal-Mart's regular discount stores for the first time, Scott said. Next year, they will outnumber discount stores by at least 100, with more than 1,700 stores.

Wal-Mart executives in the past had forecast limits on the growth of the supercenter format, figuring a given area could support only a limited number of the giant stores, which add full-line grocery stores to the general merchandise offerings of regular discount stores.

Supercenter cannibalization, or competition between stores of a single company, has hurt the company's recent comparable sales by more than a percentage point, and that figure will continue to creep higher as the number of supercenters grows. But Wal-Mart is growing more skilled at locating its stores to reduce customer overlap, for example by using point-of-sale data to determine where a store's customers live.

What's more, "cannibalization improves the customer experience," increasing the convenience of locations, and resulting in shelves that are better stocked at both stores, Scott said. He added that as stores mature, the effect of cannibalization tends to wane.

"We can put more supercenters closer together than we had ever dreamed of in our life," Scott said.

As of August 31, Wal-Mart operated 1,494 discount stores, 1,386 supercenters, 532 Sam's Clubs and 56 Neighborhood Markets in the U.S.

-By James Covert, Dow Jones Newswire

Playboy Focuses on Wal-Mart, Which Doesn't Sell the Magazine

By CONSTANCE L. HAYS 
29 September 2003 
The New York Times Late Edition - Final 2 English 
(c) 2003 New York Times Company

The November issue of Playboy takes on Wal-Mart Stores Inc., the world's largest retailer. But no one who shops for magazines exclusively at Wal-Mart is likely to see the article, because Playboy is among the titles it does not sell.

The article, ''God and Satan in Bentonville,'' in the November issue of Playboy, on newsstands Monday, addresses the conservative, no-frills culture at Wal-Mart after a tour of Bentonville, Ark., where it is based.

''Wal-Mart has never been able to square its professed Main Street values -- the greeters at the store doors, the flag-waving patriotism -- with the uncomfortable fact that it's bad news for Main Street wherever it goes,'' Dan Baum writes in the article. Mr. Baum reports that an independent bookstore in town on the verge of shutting down is owned by a daughter-in-law of Sam Walton, the founder of Wal-Mart.

Its ability to filter content for its customers is among the points the article addresses, with such observations as, ''The First Amendment prevents censorship by the government, but Wal-Mart is now so huge that its perfectly legal corporate policies can hinder freedom of choice.''

One evangelist interviewed said he moved to Bentonville ''to fight Satan,'' and explained: ''Satan is a mimicker. God is here, so Satan is here. Wal-Mart started out good, selling things cheap to people who didn't have a lot of money. But that's how Satan works.'' He added, ''The reason the religious right is here in Bentonville is that it's holding off Wal-Mart.''

The retailer cooperated with Mr. Baum by answering his questions and questions from his editors, a spokesman, Tom Williams, said. ''We try to respond to all queries that come to us,'' Mr. Williams said.

Playboy's Web site, Playboy.com, is inviting women who work for Wal-Mart to pose nude for a feature called ''Women of Wal-Mart.''

At Wal-Mart, ''we don't care for it at all,'' Mr. Williams said. ''We think Playboy is exploiting our name to sell the magazine.'' Has anyone signed up yet? Mr. Williams said he did not know. But he added, ''We are confident a lot of the associates are going to see right through it.''

Denver Post:  Should Denver subsidize Wal-Mart?

Susan Barnes-Gelt 
Wednesday, September 24, 2003

The world's biggest corporation wants at least $12 million from Denver taxpayers to replace 20 small shops with a Super Wal-Mart. And tomorrow the Denver Urb! an Renewal Authority will approve the use of its most powerful tool - eminent domain - to evict two Asian supermarkets, Denver's best dim sum restaurant, a barber shop, beauty school, martial arts center and several other small, locally owned businesses.

This co-called "friendly" condemnation means DURA will relieve Wal-Mart and one of the current landowners of the cost and aggravation of negotiating with a collection of immigrant business owners. The threat of condemnation also means all three property owners will get federal income-tax breaks when it's time to pay taxes on their gains.

The multimillion-dollar tax subsidy will close the gap between what the owners are asking for their 20-acre parcel of "slum and blight" and what Wal-Mart is willing to pay. Ordinarily, the negotiation between a willing buyer and seller reflects market value. But Wal-Mart says it won't pay the asking price. The landowners are holding out for top dollar, and DURA is willing to inflate the market.

A dozen years ago, DURA identified this property as "slum and blight" and created an urban renewal district. A few years later, immigrant business owners saw something else: the opportunity to start a business, work hard and achieve the American dream. It's urban renewal without capital letters or a government handout.

Prodded by neighbors anxious for a supermarket and tired of slow revitalization, DURA and the city are ready to meet Wal-Mart's demand for aid.

Mayor John Hickenlooper's campaign message was persuasive: Denver is open for business, especially small business. Though his admini- stration inherited this dilemma, the welfare-for-Wal-Mart scheme raises questions he must answer.

How many jobs will be lost? University of California at Irvine economist Dr. Marlon Boarnet found that for every 100 jobs a Wal-Mart creates, 150 existing jobs in the community are destroyed.

What will the promised 400 jobs pay? Will compensation exceed the $11,900 to $16,202 annual salary the typical Wal-Mart worker earns?

Company spokesman Tom Williams says fewer than half of Wal-Mart's employees are covered by the company's health-care plan. This lack of coverage is further explained by another company spokeswoman, Christi Gallagher: "Our plan is a catastrophic plan. ... There's no cap on major illness or major medical expanses."

Sounds catastrophic all right - both for the employees and Denver Health's emergency room.

Right now, nearly 500 abandoned Wal-Marts litter the landscape nationwide. Like all big-box retailers, Wal-Mart remodels, expands and moves frequently. What happens when the subsidy is paid off and Wal-Mart wants a bigger store? Will the company sign an agreement guaranteeing its participation in the redevelopment of the store? Or will Denver have another decade of blight on West Alameda Avenue and Zuni Street?

The company hasn't submitted a site plan to the city. However, the last plan the neighbors saw places the store at the rear of the property, violating every rule and regulation in Denver's urban design playbook. In return for a handsome handout and shielding the company from existing tenants, shouldn't Wal-Mart abide by the rules and regulations the city requires of developers?

Condemnation and tax subsidy are potent tools demanding substantial public benefit. Their use should translate to long-term, quality revitalization, good jobs with good pay, synergy for neighboring businesses and increased city revenue. When the heavy club of government is used to transfer property from one private owner to another, the public benefits must be transparent and compelling.

A final question for Denver: Are 400 low-paying jobs, cheap goods and a grocery store worth evicting 20 shop owners, undermining local businesses and absorbing the hidden costs of public health and social services? And, 12 or 15 years from now, what will we do with a big vacant box in the middle of a parking lot?

The sales receipts from Wal-Mart go to Bentonville, Ark. The Siu family, owners of the best dim sum restaurant in Denver, banks up the street.

Denver native and civic activist Susan Barnes-Gelt (bs13@qwest.net) served eight years on the Denver City Council and was an aide to former Denver Mayor Federico Pena. Her column appears on alternate Wednesdays.

Is Wal-Mart Too Powerful?
Low prices are great. But Wal-Mart's dominance creates problems -- for suppliers, workers, communities, and even American culture

COVER STORY Business Week
October 6, 2003

In business, there is big, and there is Wal-Mart. With $245 billion in revenues in 2002, Wal-Mart Stores (WMT ) Inc. is the world's largest company. It is three times the size of the No. 2 retailer, France's Carrefour. Every week, 138 million shoppers visit Wal-Mart's 4,750 stores; last year, 82% of American households made at least one purchase at Wal-Mart. "There's nothing like Wal-Mart," says Ira Kalish, global director of Deloitte Research. "They are so much bigger than any retailer has ever been that it's not possible to compare."

At Wal-Mart, "everyday low prices" is more than a slogan; it is the fundamental tenet of a cult masquerading as a company. Over the years, Wal-Mart has relentlessly wrung tens of billions of dollars in cost efficiencies out of the retail supply chain, passing the larger part of the savings along to shoppers as bargain prices. New England Consulting estimates that Wal-Mart saved its U.S. customers $20 billion last year alone. Factor in the price cuts other retailers must make to compete, and the total annual savings approach $100 billion. It's no wonder that economists refer to a broad "Wal-Mart effect" that has suppressed inflation and rippled productivity gains through the economy year after year.

However, Wal-Mart's seemingly simple and virtuous business model is fraught with complications and perverse consequences. To cite a particularly noteworthy one, this staunchly anti-union company, America's largest private employer, is widely blamed for the sorry state of retail wages in America. On average, Wal-Mart sales clerks -- "associates" in company parlance -- pulled in $8.23 an hour, or $13,861 a year, in 2001, according to documents filed in a lawsuit pending against the company. At the time, the federal poverty line for a family of three was $14,630. Wal-Mart insists that it pays competitively, citing a privately commissioned survey that found that it "meets or exceeds" the total remuneration paid by rival retailers in 50 U.S. markets. "This is a good place to work," says Coleman H. Peterson, executive vice-president for personnel, citing an employee turnover rate that has fallen below 45% from 70% in 1999.

Critics counter that this is evidence not of improving morale but of a lack of employment alternatives in a slow-growth economy. "It's a ticking time bomb," says an executive at one big Wal-Mart supplier. "At some point, do the people stand up and revolt?" Indeed, the company now faces a revolt of sorts in the form of nearly 40 lawsuits charging it with forcing employees to work overtime without pay and a sex-discrimination case that could rank as the largest civil rights class action ever. On Sept. 24, a federal judge in California began considering a plaintiff's petition to include all women who have worked at Wal-Mart since late 1998 -- 1.6 million all told -- in a suit alleging that Wal-Mart systematically denies women equal pay and opportunities for promotion. Wal-Mart is vigorously contesting all of these suits.

Wal-Mart might well be both America's most admired and most hated company. "The world has never known a company with such ambition, capability, and momentum," marvels a Boston Consulting Group report. On Wall Street, Wal-Mart trades at a premium to most every other retailer. But the more size and power that "the Beast of Bentonville" amasses, the greater the backlash it is stirring among competing retailers, vendors, organized labor, community activists, and cultural and political progressives. America has a long history of controversial retailers, notes James E. Hoopes, a history professor at Babson College. "What's new about Wal-Mart is the flak it's drawn from outside the world of its competition," he says. "It's become a social phenomenon that people resent and fear."

Wal-Mart's marketplace clout is hard to overstate. In household staples such as toothpaste, shampoo, and paper towels, the company commands about 30% of the U.S. market, and analysts predict that its share of many such goods could hit 50% before decade's end. Wal-Mart also is Hollywood's biggest outlet, accounting for 15% to 20% of all sales of CDs, videos, and DVDs. The mega-retailer did not add magazines to its mix until the mid-1990s, but it now makes 15% of all single-copy sales in the U.S. In books, too, Wal-Mart has quickly become a force. "They pile up best-sellers like toothpaste," says Stephen Riggio, chief executive of Barnes & Noble (BKS ) Inc., the world's largest bookseller.

Wal-Mart controls a large and rapidly increasing share of the business done by most every major U.S. consumer-products company: 28% of Dial (DL ) total sales, 24% of Del Monte Foods (DLM )', 23% of Clorox', 23% of Revlon (REV )'s, and on down the list. Suppliers' growing dependence on Wal-Mart is "a huge issue" not only for manufacturers but also for the U.S. economy, says Tom Rubel, CEO of consultant Retail Forward Inc. "If [Wal-Mart] ever stumbles, we've got a potential national security problem on our hands. They touch almost everything....If they ever really went into a tailspin, the dislocation would be significant and traumatic."

Even so, Wal-Mart appears to be in no imminent danger of running afoul of federal antitrust statutes. The Robinson-Patman Act of 1936 was passed in large part to protect mom-and-pop grocers from the Great Atlantic & Pacific Tea Co., the Wal-Mart of its day. But contemporary antitrust interpretations eschew such David-and-Goliath populism. Giants like Wal-Mart have wide latitude to do as they wish to rivals and suppliers so long as they deliver lower prices to consumers. "When Wal-Mart comes in and people desert downtown because they like the selection and the low prices, it's hard for people in the antitrust community to say we should not let them do that," says New York University law professor Harry First.

CEO H. Lee Scott Jr. and other Wal-Mart executives are aware of the rising hostility the company faces and are trying to smooth its rough edges in dealing with the outside world. But they have no intention of tampering with its shopper-centric business model. "We don't turn a deaf ear to any criticism. We're most sensitive to what the customer has to say, though," says Vice-Chairman Thomas M. Coughlin. "Your customers will tell you when you're wrong."

Wal-Mart cites customer preferences as the reason it does not stock CDs or DVDs with parental warning stickers and why it occasionally yanks items from its shelves. In May, it removed the racy "lad" magazines Maxim, Stuff, and FHM. A month later, it began obscuring the covers of Glamour, Redbook, Marie Claire, and Cosmopolitan with binders. Why did Wal-Mart censor these publications and not Rolling Stone, which has featured a nearly naked Britney Spears and Christina Aguilera on two of its recent covers? "There's a lot of subjectivity," concedes Gary Severson, a Wal-Mart general merchandise manager. "There's a line between provocative and pornographic. I don't know exactly where it is."

Wal-Mart was the only one of the top 10 drug chains to refuse to stock Preven when Gynetics Inc. introduced the morning-after contraceptive in 1999. Roderick L. Mackenzie, Gynetics' founder and nonexecutive chairman, says senior Wal-Mart executives told his employees that they did not want their pharmacists grappling with the "moral dilemma" of abortion. Mackenzie was incensed but tried to hide it. "When you speak to God in Bentonville, you speak in hushed tones," says Mackenzie, who explained, to no avail, that Preven did not induce abortion but rather prevented pregnancy. Wal-Mart spokesman Jay Allen says "a number of factors were considered" in making the Preven decision, but he denies that opposition to abortion was one of them. "If anybody of any belief reads any moral decision [into] that, that's not right," he says.

CULTURAL GATEKEEPER There is no question that the company has the legal right to sell only what it chooses to sell, even in the case of First Amendment-protected material such as magazines. By most accounts, though, Wal-Mart's cultural gatekeeping has served to narrow the mainstream for entertainment offerings while imparting to it a rightward tilt. The big music companies have stopped grousing about Wal-Mart and are eagerly supplying the chain with the same sanitized versions of explicit CDs that they provide to radio stations. "You can't have 100% impact when you are taking an artist to a mainstream audience if you don't have the biggest player, Wal-Mart," says EMI Music North America Executive Vice-President Phil Quartararo.

This year alone, Wal-Mart hopes to open as many as 335 new stores in the U.S.: 55 discount stores, 210 supercenters, 45 Sam's Clubs (UBS ), and 25 Neighborhood markets. An additional 130 new stores are on the boards for foreign markets. Wal-Mart currently operates 1,309 stores in 10 countries, ranking as the largest retailer in Mexico and Canada. If the company can maintain its current 15% growth rate, it will double its revenues over the next five years and top $600 billion in 2011.

That's a very big if -- even for Wal-Mart. Vice-Chairman Coughlin's biggest worry is finding enough warm bodies to staff all those new stores. By Wal-Mart's own estimate, about 44% of its 1.4 million employees will leave in 2003, meaning the company will need to hire 616,000 workers just to stay even. In addition, from 2004 to 2008, the company wants to add 800,000 new positions, including 47,000 management slots. "That's what causes me the most sleepless nights," Coughlin says.

At the same time, Wal-Mart will have to cope with intensifying grassroots opposition. The company's hugely ambitious expansion plans hinge on continuing its move out of its stronghold in the rural South and Midwest into urban America. This year, the company opened what it describes as "one of its first truly urban stores" in Los Angeles, not far from Watts. Everyday low prices no doubt appeal to city dwellers no less than to their country cousins. But Wal-Mart's sense of itself as definitively American ("Wal-Mart is America," boasts one top executive) is likely to be severely tested by the metropolis' high land costs, restrictive zoning codes, and combative labor unions -- not to mention its greater economic and cultural diversity.

A ZERO-SUM GAME? Certainly, Wal-Mart will be hard pressed to continue censoring its product lines using the justification of customer preference. The market for profanity-laced hip-hop may be tiny in Bentonville, Ark., but it is big in Los Angeles. Overseas, the company does not presume to impose a small-town, Bible Belt moral agenda on shoppers. "We adopt local standards," says John B. Menzer, CEO of Wal-Mart's international division. Why, then, should Los Angeles be any different?

The fact is, Wal-Mart doesn't know for certain how the majority of its customers feel about Maxim, or any other magazine, for that matter. It appears that the company makes no scientific attempt to survey shoppers about entertainment content but responds in ad hoc fashion to complaints lodged by a relative handful of customers and by outside groups, which are usually but not always of the conservative persuasion.

On the other hand, the company seldom submits to community groups that oppose its plans to build new stores. The number of such challenges has increased steadily and is now running at about 100 a year. Wal-Mart's "biggest barrier to growth is....opposition at the local level," says Carl Steidtmann, Deloitte Research's retail economist. The Stop Wal-Mart movement has been bolstered of late by a series of academic studies that have debunked the notion that a new big-box store boosts employment and sales and property-tax receipts. "The net increases are minimal as the new big-box stores merely capture sales from existing business in the area," concludes a new study of Wal-Mart's impact in Mississippi. "I see it pretty much as a zero-sum game," says co-author Kenneth E. Stone, an economics professor at Iowa State University.

The most hotly contested battleground at the moment is Contra Costa County, near San Francisco. In June, county supervisors enacted an ordinance that prohibits any retail outlet larger than 90,000 square feet from devoting more than 5% of its floor space to food or other nontaxable goods. Wal-Mart promptly gathered enough signatures to force a referendum, scheduled for March. Complains County Supervisor John Gioia: "Local planning should be done by our locally elected board and not by a corporate office in Bentonville, Arkansas." Robert S. McAdam, Wal-Mart's vice-president for government relations, says corporate-sponsored referenda, which Wal-Mart has promoted elsewhere in California, are "a perfectly legitimate part of the process."

SUPERCENTER NATION Meanwhile, the United Food & Commercial Workers union is stepping up its long-standing attempts to organize Wal-Mart stores, with current campaigns in 45 locations. For UFCW locals that represent grocery workers, the issue is nothing less than survival. The Wal-Mart supercenter -- the principal vehicle of the company's expansion -- is a nonunion dagger aimed at the heart of the traditional American supermarket, nearly 13,000 of which have closed since 1992.

Patterned after the European hypermarket, the supercenter is a combination supermarket and general merchandise discounter built to colossal scale. Wal-Mart didn't introduce the supercenter to America, but it has amassed a 79% share of the category since it moved into food and drug retailing by opening its first such store in 1988. Today, Wal-Mart operates 1,386 supercenters and is the nation's largest grocer, with a 19% market share, and its third-largest pharmacy, with 16%.

Wal-Mart plans to open 1,000 more supercenters in the U.S. alone over the next five years. Retail Forward estimates that this supercenter blitzkrieg will boost Wal-Mart's grocery and related revenues to $162 billion from the current $82 billion, giving it control over 35% of U.S. food sales and 25% of drugstore sales. Market-share gains of such magnitude in a slow-growth business necessarily will come at the expense of established competitors -- especially the unionized ones, which pay their workers 30% more on average than Wal-Mart does, according to the UFCW. Retail Forward predicts that for every new supercenter that Wal-Mart opens, two supermarkets will close, or 2,000 all told.

To the low-price, low-cost operator go the spoils. Isn't that how capitalism is supposed to work? Certainly, the supercentering of America can be expected to result in huge savings at the cash register. On average, a Wal-Mart supercenter offers prices 14% below its rivals', according to a 2002 study by UBS Warburg.

However, those everyday low prices come at a cost. As the number of supermarkets shrinks, more shoppers will have to travel farther from home and will find their buying increasingly restricted to merchandise that Wal-Mart chooses to sell -- a growing percentage of which may be the retailer's private-label goods, which now account for nearly 20% of sales. Meanwhile, the failure of hundreds of stores will cost their owners dearly and put thousands out of work, only some of whom will find jobs at Wal-Mart, most likely at lower pay. "It will be a sad day in this country if we wake up one morning and all we find is a Wal-Mart on every corner," says Gary E. Hawkins, CEO of Green Hills, a family-owned supermarket in Syracuse, N.Y.

For suppliers, too, Wal-Mart's relentless pricing pressure is a mixed blessing. "If you are good with data, are sophisticated, and have scale, Wal-Mart should be one of your most profitable customers," says a retired consumer-products executive. Unlike many retailers, the company does not charge "slotting fees" for access to its shelves and is unusually generous in sharing sales data with manufacturers. In return, though, Wal-Mart not only dictates delivery schedules and inventory levels but also heavily influences product specifications. In the end, many suppliers have to choose between designing goods their way or the Wal-Mart way. "Wal-Mart really is about driving the cost of a product down," says James A. Wier, CEO of Simplicity Manufacturing, a lawn-mower maker that decided to stop selling to Wal-Mart last fall. "When you drive the cost of a product down, you really can't deliver the high-quality product like we have."

Critics also argue that Wal-Mart's intensifying global pursuit of low-cost goods is partly to blame for the accelerating loss of U.S. manufacturing jobs to China and other low-wage nations. "It's hard to tease out, but Wal-Mart is definitely part of the dynamic, and given its market share and power, probably a significant part," says Jared Bernstein, a labor economist at the liberal Economic Policy Institute. The $12 billion worth of Chinese goods Wal-Mart bought in 2002 represented 10% of all U.S. imports from China.

For obvious reasons, Wal-Mart has de-emphasized the "Made in America" campaign that founder Sam Walton started in the mid-1980s to great promotional effect. "Where we have the option to source domestically we do," says Ken Eaton, Wal-Mart's senior vice-president for global procurement. However, he adds, "there are certain businesses, particularly in the U.S., where you just can't buy domestically anymore to the scale and value we need." In recent years, Wal-Mart increasingly has sought additional cost advantages by bypassing middlemen and buying finished goods and raw materials from foreign manufacturers. By contracting directly with a handful of denim manufacturers in Southeast Asia, the company has driven down the retail price of the George brand jeans it sells in Britain and Germany to $7.85 from $26.67. Says Eaton: "The mind-set around here is, we're agents for our customers."

"THE WAL-MART PHENOMENON" Wal-Mart's philosophy doesn't cut any ice with Wilbur L. Ross Jr., a financier and steel tycoon who soon will close on the purchase of beleaguered textile manufacturer Burlington Industries Inc. Ross contends that Wal-Mart is costing Americans jobs "not only as a business strategy, but as a lobbying strategy" -- that is, by using its influence in Washington to oppose import tariffs and quotas and promote free-trade pacts with Third World countries, including the Southeast Asian countries that supply Wal-Mart with denim. "Everybody is now scurrying around trying to find the lowest price points," Ross complains. "It's the Wal-Mart phenomenon."

High on a wall inside Wal-Mart headquarters is a paper banner with a provocative question in big block letters: "Who's taking your customers?" Beneath it, "Wanted" poster style, hang photos of the CEOs of two dozen of America's largest retailers -- Target (TGT ) Kroger (KR ) Winn-Dixie Stores (WIN ) Walgreen (WAG ), and so on. None looks very happy, perhaps because they know that the only way to get off the wall is to fail utterly. Although Kmart (KMRT ) is reorganizing under the federal bankruptcy code, a photo of its CEO continues to hang in Wal-Mart's rogues' gallery and no doubt will remain there for as long as Kmart operates even a single store.

Growth will only add to the clout that the Bentonville colossus now wields. There might well come a time, though, when Wal-Mart's size poses as much of a threat to the company itself as it does to outsiders. "Their biggest danger is just managing size," observes a longtime supplier. Adds Babson College's Hoopes: "The history of the last 150 years in retailing would say that if you don't like Wal-Mart, be patient. There will be new models eventually that will do Wal-Mart in, and Wal-Mart won't see it coming." Right now, though, Wal-Mart's day of reckoning seems a very long way off.

By Anthony Bianco and Wendy Zellner With Diane Brady, Mike France, Tom Lowry, Nanette Byrnes, and Susan Zegel in New York; Michael Arndt, Robert Berner, and Ann Therese Palmer in Chicago; and bureau reports

Chicago Tribune:  Class action no bargain for Wal-Mart

1.5 million could be added to bias suit by women
By Greg Burns Tribune senior correspondent
September 24, 2003

As sex discrimination cases go, the pending lawsuit against Wal-Mart Stores Inc. is nothing unusual except in one respect: Size.

At a pivotal hearing in San Francisco Wednesday, a federal judge will consider arguments about whether the case, brought by a half-dozen individuals, should expand to encompass a staggering 1.5 million of the retail giant's current and former employees.

If U.S. District Judge Martin Jenkins certifies the case as a class action, all the women who worked for the nation's largest employer between the end of 1998 and the end of 2002 could be eligible for back wages. That would make it the biggest-ever class-action litigation involving civil rights, attorneys in the case say.

At issue is whether Wal-Mart, the world's largest private employer, systematically discriminated against women in its pay and promotion policies.

But the sheer scale of the litigation has become the overarching factor. Class-action status for such a large case would break new ground in a controversial arena of the law that critics consider out of control and proponents view as a vital check on corporate power.

Wal-Mart's status as a respected model for other large employers raises the stakes as well, especially with the rise of megacompanies whose practices directly affect hundreds of thousands at a time.

Among its defenses, Wal-Mart has said its adversaries are trying to hold it responsible for a long-established phenomenon in the American workplace: "The undisputed fact, present in virtually every major corporation, that the percentage of women at the lower level is higher than the percentage at the upper level," according to documents in the case.

In the hearing Wednesday, attorneys for the Bentonville, Ark.-based retailer are expected to argue that because its operations are so large and varied, the experiences of a few employees never could be entirely representative. The lawsuit would create conflicts by lumping together in a single class the company's bottom-rung cashiers, for instance, with its 544 women store managers who supervised them.

Since Wal-Mart has so many different departments under one roof, taking action against the entire company is akin to suing "all the shops" on main streets from Alaska to Florida, the company said.

But by pursuing a "too-big-to-sue" defense, "Wal-Mart is seeking a large-company exemption from civil rights law," countered Joseph Sellers, one of several attorneys bringing the discrimination case. "If Wal-Mart can get away with it because of its size and deep pockets, it's going to speak volumes."

The issue of class certification is the most significant hurdle, observers maintain.

Given the "astronomical" resources of Wal-Mart, its low-wage women employees have no practical means besides class-action litigation to enforce their rights, the plaintiffs said in court documents. Wal-Mart "knows that if it can defeat class certification, it will not be held accountable for its conduct."

Logistical nightmare

Yet proceeding with a vast class action would be unfair to Wal-Mart as well as a logistical nightmare for the legal system, countered corporate spokeswoman Sarah Clark. "No court has ever certified a class like this before," she said. "It's simply not possible for the experiences of so few to represent so many."

In practice, certification almost surely would compel Wal-Mart to settle, no matter the merits of its arguments, said Lester Brickman, a law professor at Yeshiva University and a critic of class-action practices.

Even if the company believed it had a strong case, the consequences of losing such massive litigation would be too great a risk to run, he said. The decision on whether to certify the class is "the whole ball game," he said. "There is either a home run or an out."

The case turns on a dispute over the statistical analysis of Wal-Mart's workforce, as defined by dueling expert witnesses. That, attorneys say, is a fairly common approach to sex-discrimination cases.

On the plaintiff's side, the numbers show that Wal-Mart pays women less than men in every part of the country where it operates and in nearly every job, from sales associate to district manager. And although women account for two-thirds of lower-paid hourly workers, they receive only one-third of all promotions into management.

The pay disparity generally rises in more senior posts, with the earnings of male regional vice presidents averaging $419,435 a year as of 2001, or 50 percent more than the $279,772 average for the relatively few women in those high-ranking jobs.

Even among cashiers, male employees earned $14,525 to $13,831 for women, who generally received higher performance ratings.

Until recently, Wal-Mart selected management trainees entirely through a "tap on the shoulder" system, allowing store managers discretion over who was considered, that plaintiffs brand as arbitrary and overly subjective.

As a result, the plaintiffs say, Wal-Mart has maintained a pervasive male-oriented culture typified by an annual retreat for senior management that revolves around a quail hunt.

Wal-Mart flatly disputes the allegation that it discriminates. "Wal-Mart is a great place for women," said spokeswoman Clark. "The plaintiffs have a huge burden of proof to meet."

Statistical analysis

Among the challenges is a competing statistical analysis by a Wal-Mart expert that focuses on how many women who apply for higher positions actually get the promotions. While the plaintiffs say the application process is flawed, "Women at Wal-Mart are more successful than men at securing the positions they seek," the expert concluded.

Of 41,000 applicants to the position of support manager, 46.1 percent were women, and 47.2 percent of those getting the promotions in the period covered by the lawsuit were women, according to Wal-Mart.

Similarly, promotions of women to higher-salaried positions such as store managers exceeded the rate at which women applied. And differences in pay become statistically insignificant when adjusted for factors such as the size and type of store, the company said in court documents.

Judge Jenkins is expected to hear several hours of argument Wednesday, but his ruling could be weeks or months away.

Some advocates for using class-action litigation to bring about change in the workplace see great potential in the case.

"Litigation is so difficult for individuals. In groups, they have more power," said Sheribel Rothenberg, a Chicago attorney who focuses on employment issues. "It's like this generation's unionization. Class actions serve some of the same functions."

But others say that partly because of its size, the case is unlikely to move ahead.

"The policies and data probably do vary by store," said John Beisner, a Washington attorney who specializes in defending against class actions. "It's probably fairly difficult to certify."

Copyright (c) 2003, Chicago Tribune

By Eric Swedlund 
24 September 2003
ARIZONA DAILY STAR

A Pima County judge Friday upheld Tucson's "big box" ordinance, rejecting Wal-Mart's claims that the ordinance was unconstitutional, violated open meeting laws and harmed the retailer.

Superior Court Judge Charles S. Sabalos ruled that "Wal-Mart does not have standing to complain about the legality or constitutionality" of the ordinance the City Council passed Sept. 27, 1999. It limits the size of grocery sections in stores larger than 100,000 square feet and requires such stores to get special approval of plans for dealing with noise, lights and traffic.

Wal-Mart filed suit in October 2000, arguing that new city regulations violated the state's Open Meeting Law because amendments the council made immediately before approving the ordinance were not publicized ahead of time, exceeded the city's power to set zoning regulations and did not serve a "legitimate governmental purpose." The suit said it was designed to protect grocery stores from competition.

In the ruling, Sabalos wrote that the ordinance serves government purpose in mitigating the effects of "economic and aesthetic blighting of residential areas when conveniently located grocery stores within the neighborhood shopping centers, often anchor stores, close their operations due to competition from Big Box establishments."

The judge agreed with all of the city's points, specifically that since Wal-Mart never applied for an exception to the regulations it could not prove harm or challenge the constitutionality of the ordinance, said City Attorney Michael House.

Wal-Mart set to pay ex-worker $150,000 to settle EEOC suit

BY ALEX DANIELS ARKANSAS DEMOCRAT-GAZETTE 
13 September 2003 
The Arkansas Democrat Gazette 41 

Wal-Mart Stores and the Equal Employment Opportunity Commission on Thursday settled a year-long suit filed in U.S. District Court for the Eastern District of Texas charging the company retaliated against a worker at a Texarkana store after she filed a sexual harassment complaint in 1999.

The Bentonville company agreed to pay $150,000 to former employee Marcia Mitchell. In addition, Wal-Mart said it would monitor Miller's former boss, Deshun White, the store's bakery manager.

In the suit, Mitchell accused White of subjecting her to a hostile work environment and barraging her with unwelcome comments and touches. When she complained, she was transferred out of the bakery to a job in the hardware department, according to the suit. That job, the suit said, involved heavy lifting.

The EEOC claimed that the transfer was retaliatory, made without proper investigation into Mitchell's complaint and effectively led to her discharge from the company.

Wal-Mart also agreed to post information throughout the store informing employees about Title VII of the Civil Rights Act of 1964, which protects workers from discrimination based on race, color, religion, sex or national origin. Wal-Mart also will provide training for its managers at the Texarkana store.

"We are pleased the company has taken this proactive step to ensure that harassment doesn't happen again, and if it does, they'll act accordingly," said Devika S. Dubey, senior trial attorney for the EEOC in Dallas.

Wal-Mart did not admit guilt in the case. Instead, the company opted to settle, calling the move, a "business decision," said Sarah Clark, a Wal-Mart spokesman.

"We found no evidence supporting allegations that Wal-Mart or any of its associates engaged in any wrongdoing," Clark said.

Clark declined to further describe the decision, saying it was in the best interests of the company's employees, customers and shareholders to settle the case.

She added that Mitchell was transferred out of the bakery department to accommodate her request to work only three days a week. Such a shift was available in the hardware department, Clark said.

Starting this year, Wal-Mart managers must take a two-hour training seminar on sexual harassment law, Clark said. All employees receive information on appropriate workplace behavior in handbooks, Clark said. In addition, all workers receive computer training that focuses on sexual harassment.

"They are required to take it," she said of the computer class.

Wal-Mart has more than 1.3 million employees internationally. The company would not comment on the number of EEOC complaints that have been filed against it. The EEOC does not release information on the number of charges made against a particular company.

In the retail sector nationwide, the commission received 8,272 charge filings in fiscal 2003, which ends Sept. 30. The filings reflect all charges filed by retail industry employees, not just sexual-discrimination complaints. In fiscal 2002, the commission received 9,737 charges. In Arkansas, the EEOC received 230 charges from retail employees so far this fiscal year, down from 310 last year.

In all sectors nationwide, the EEOC received 61,459 Title VII charges in 2002. Of those, 21.2 percent received "Merit Resolutions," a term the EEOC defines as having outcomes favorable to the charging parties or charges with meritorious allegations.

As a last resort, the EEOC said, charges result in litigation against a company. The company currently has two Title VII cases - one in Alabama and one in Kentucky - pending versus Wal-Mart.

San Marcos Wal-Mart story 

By John Berhman
UNION-TRIBUNE STAFF WRITER

September 12, 2003

SAN MARCOS – In a stunning reversal, Councilman Lee Thibadeau says he will
probably change his vote on a controversial Wal-Mart store approved for
southwest San Marcos.

That would mean a 3-2 vote for the project – which residents who live near
the site have been fighting for months – would almost certainly become a
3-2 vote rejecting it.

"I don't want to put the city through what I think will be a very nasty
campaign," Thibadeau said yesterday.

Thibadeau was referring to a well-organized initiative drive by a group
called Citizens for Responsible Growth in San Marcos, which opposes the
store. It submitted petitions Monday with about 4,400 signatures asking
that the council rescind its approval of the project. If the council
doesn't do that, it will have to put the issue on the March 2 ballot.

"I'd be thrilled if Mr. Thibadeau changed his vote," Laura Meyers, one of
the group's leaders, said yesterday. "It has been our goal all along. The
people don't want this (store)."

Peter Kanelos, a spokesman for Wal-Mart, said he would not speculate on
what the council might do when presented with the referendum – which the
Registrar of Voters has not yet verified has the required 2,421 valid
signatures – or what action Wal-Mart would take.

"What I would like to know is who paid for the collection of the
signatures," Kanelos said, suggesting the Teamsters Union and the grocery
clerks union may have done so.

Wal-Mart has consistently opposed unionization of its stores.

Meyers said most of the money came from contributions from residents and
about 50 signature gatherers were volunteers, while a dozen were paid.
Leonard Miller, also a member of the group, said the manner in which the
signature drive was financed would be disclosed in financial statements
required by the state.

The store would be built on 20 acres at the northeast corner of Rancho
Santa Fe Road and a future alignment of Melrose Drive, in the University
Commons development. University Commons had no plans for the store until
city officials asked that a 300-unit condominium project be eliminated to
make room for one. Wal-Mart had approached the city seeking a site for a
second store in San Marcos.

The council approved the store in August after a 5-2 vote against it by
the city Planning Commission.

Yesterday, Thibadeau said he was impressed with the opponents' efforts and
always had concerns about traffic and noise from the store.

"I give the Wal-Mart opponents credit," he said. "They exhausted the
legislative process, going to the city Planning Commission and the
council. And then going the referendum route.

"I want to do what is best for the whole community. But why put these
people and the city through this whole campaign process?"

But Thibadeau has another motive for not having the potentially divisive
Wal-Mart question on the March ballot.

The same ballot will also contain a measure, financed by San Diego Gas &
Electric, intended to slow or block the city's effort to find another
company to provide gas and electricity in new developments in San Marcos.
The city is planning on placing a competing measure regarding the energy
question on the March 2 ballot.

For more than two years, Thibadeau has been the most vocal supporter of
the city's dumping SDG&E for another company, along with Mayor Corky Smith
and Councilman Mike Preston. They are the same three who approved the
Wal-Mart.

"I think there is a more important battle that will be on that ballot,"
Thibadeau said yesterday, referring to the dueling city and SDG&E
measures.

Smith and Preston said though they will reconsider their Wal-Mart vote, as
the referendum would require, they remain supportive.

"I haven't made up my mind yet, but there are still some things that
bother me about this," Smith said. "I still feel that a lot of the people
who are against this don't even live in the city, and they want to come in
and tell us what to do."

Wal-Mart opponents, many of whom live in Carlsbad and unincorporated
areas, counter that getting an issue on the ballot required that they
collect signatures only in San Marcos and that the signatures came from
all over the city.

"I also don't like the idea that their two referendums put the entire
University Commons project in jeopardy," Smith added.

Wal-Mart opponents collected signatures for two measures. One would
prohibit a store on the proposed 20-acre site, the second would prohibit
one on any of University Commons' 416-acre property. Smith said the way
the second referendum is written, the entire 1,224-unit University Commons
project will be put on hold if it passes.

Preston said it "was pretty impressive" that store opponents collected so
many signatures in only 10 days, "but I also don't know if people knew
what they were signing. It was a couple of pretty lengthy documents. I
will rethink the issue though."

City Clerk Susie Vasquez said yesterday she probably will send the
signatures to the county Registrar of Voters next week. That office will
have 30 working days to verify signatures.

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Wal-Mart sued for labor abuses

]Wal-Mart Government Perks Raise Questions

Getting to Wal-Mart facts not easy task

Published in the Herald News 07/20/03
Ted Slowik 

It's hard to know who to believe in the war of words between Wal-Mart
and unions, who are making Joliet the latest battleground over efforts
to organize workers. Both sides spew so much propaganda, it's difficult
to tell who's telling the truth.

  United Food and Commercial Workers, the union that represents people
who work in supermarkets, wants you to think that Wal-Mart is a greedy
corporation that exploits workers by paying low wages and offering
meager benefits.

  "Behind the yellow smiley-face of the all-American Wal-Mart myth is a
company ... where workplace policies may mean workers need two jobs and
depend upon public support to get by," according to the UFCW's Web
site.

  The company denies that it is anti-union. Its official stance on
unions is stated on its corporate Web site.

  "At Wal-Mart, we respect the individual rights of our associates and
encourage them to express their ideas, comments and concerns. Because we
believe in maintaining an environment of open communications, we do not
believe there is a need for third-party representation," Wal-Mart says.

  Still, there are volumes of evidence about the company's steps to
promote their employees' independence whenever a union attempts an
organizing campaign. Tactics range from anti-union messages posted in
employee break rooms to firing workers who are active in organizing
efforts to shutting down departments or closing stores if an
unionization effort ever is successful, according to several complaints
UFCW has filed with the National Labor Relations Board.

  Wal-Mart counters that unions keep butting in where they are
unwanted. After unsuccessful organizing campaigns in Dubuque, Iowa, and
Las Vegas last year, Wal-Mart quoted a Sam's Club employee in a
company-issued press release.

  "They (the unions) are like vultures. They just keep circling and
circling even though we had 140 associates send them letters asking them
to bow out and leave us alone," the employee was quoted as saying.

  Both sides fight hard, which is why things could get very interesting
in Joliet by early 2005, when the new Wal-Mart is scheduled to open at
Illinois 59 and Theodore Street. While researching the topic, I found
news coverage of the Wal-Mart vs. union battle being waged in
California.

  The board of supervisors in Contra Costa County last month voted to
ban superstores, which are the combined discount/grocery stores that
Wal-Mart typically builds nowadays. In making its decision, the board
cited a study done by the San Diego County Taxpayers Association, a
nonprofit, nonpartisan organization.

  The study showed that poorly compensated workers at big-box stores
would cost taxpayers millions of dollars through the loss of jobs at
other stores and the need for government agencies to provide benefits to
the workers who have none.

  "Even increased sales and property tax revenues would not cover the
extra costs of necessary public services," the San Franciso Chronicle
reported.

  Wal-Mart maintains that many of its employees don't need insurance
from the company because they are students, senior citizens or others
who receive coverage elsewhere.

  In Contra Costa County, Wal-Mart collected more than 40,000
signatures and submitting them last week. If 65 percent of the
signatures are deemed valid, then a referendum will be held and voters
will decide whether the anti-superstore ordinance will stand.

  Even if you like shopping at Wal-Mart and don't particularly care for
unions, it's hard to deny that the company's employee policies create
significant social costs for taxpayers. Unions and community-action
groups will no doubt be driving this point home over the coming months
as Wal-Mart prepares to build a second store in Joliet.

Reporter Ted Slowik can be reached at (815) 729-6053 or via e-mail at
tslowik@scn1.com.

http://www.suburbanchicagonews.com/opinions/columnists/slowik/j19tedcol.htm
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WAL-MART'S EMPLOYMENT practices are a legitimate matter for public debate, as much as Wal-Mart may wish otherwise. That's why it's wrong in its attempt to bully St. Louis radio stations into dropping ads sponsored by a union critical of the retail colossus.

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