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The Politics of Bonuses & Free Choice

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Wal-Mart Payouts Vs. Employee Free Choice

By Al Norman

This week, Wal-Mart President and CEO Mike Duke told the Arkansas Morning News, "We have a lot to be thankful for this year."

Compared to the rest of Wall Street, Wal-Mart's stock drop of 1.5% over the past year must seem like up to President Duke. The corporation was feeling so thankful, it told its 1.4 million workers they would be receiving an average of $667 as a 'bonus' payment. That computes to $933.6 million in one-time payments.

Duke told the media he was a "humbled and honored" CEO, "but never more so than today, because this is the time when I get to say thank you for all that you have accomplished over the past year."

The Wal-Mart bonuses became the Yang to AIG's Yin: The Good Bonus to balance out the Bad Bonus. In the depths of a recession, here was Uber Employer Wal-Mart remembering the needs of its toiling masses.

Wal-Mart's current free cash flow has everything to do with the prolonged recession, and little to do with its associates, who continue to work for modest wages with unpredictable hours. For example, Wal-Mart's average hourly 'associate' in its home state Arkansas makes $10.81 per hour. A 28 hour per week 'full-time' worker would gross $15,800 a year -- before taxes. That's not a wage to be thankful for. Of the total package of 'gifts' to its workers, Wal-Mart included "millions of dollars in merchandise discounts," which is nothing more than a gift back to itself. The annual employee bonuses are a political device that generate headlines for Wal-Mart, but generate no on-going expense to the company's bottom line, because bonuses are not built into the workers' base salaries.

Wal-Mart also chose to pay its shareholders $4.2 billion in dividends for fiscal year 2010. The company boasted that it has increased its shareholder dividend every year since it began declaring dividends in March of 1974. This dividend increase helped no one more generously than the Walton family, who own a controlling interest in the company.

Wal-Mart's focus on its workers was called a "shower of gratitude" by the media, but it was more valuable as a shower of attention in the headlines, at a time when the giant retailer is facing two major employer-related flashpoints: one in court, and one in Congress. While AIG could be crucified for paying bonuses, Wal-Mart could assume the role of Good Employer by paying its people a more-than-deserved bonus. If there is ever a time when Wal-Mart needs to be the Good Employer, it is now.

Two years ago today, Wal-Mart also passed out bonus checks to its workers, as part of "Associate Celebration Day." That bonus in 2007 totaled $529.8 million to 813,759 hourly workers. That pencils out to $651 in bonus pay per worker -- almost exactly what the company paid out this week. All Wal-Mart hourly full-time and part-time store associates are eligible for what the corporation calls its annual "My$hare" bonuses, which are allocated based on store performance. In 2007, Wal-Mart said its employee bonuses were part of its "Associates Out In Front" program, which aims to make Wal-Mart a better place to work by fostering communication with associates and focusing on new ways to reward performance and service.

But the company has a larger, "Wal-Mart Out in Front," program, and the 2009 employee bonuses were a key strategic distraction from the frenetic efforts of the corporation to 1. win the Congressional battle over the Employee Free Choice Act and 2. derail the enormous class action gender discrimination case known as Dukes v. Wal-Mart. Wal-Mart needs to stay out in front of both of these battles, or it will have little to be thankful for in the future.

On the litigation front, oral arguments begin this coming week in the Dukes case, in which a class of 1.6 million women workers at Wal-Mart have claimed that systematic gender discrimination ran rampant at the corporation. Wal-Mart has repeatedly warned its shareholders that if the Dukes class action case proceeds to trial, the outcome could have a "material" impact on the corporate bottom line. Inside the same week that Wal-Mart announced its bonuses, the Obama Administration announced it was filing a court brief, through the Equal Employment Opportunities Commission, opposing Wal-Mart's efforts to have the class action suit de-certified. If the class action suit dies, women workers would have to pursue their rights individually through the courts -- a financial Mission Impossible.

"If Wal-Mart's argument were accepted," the Obama EEOC wrote, "it could effectively preclude a claim for punitive damages in most, if not all, Title VII pattern-or-practice cases, including those brought by the Commission. It would be nonsensical to prevent victims of particularly egregious discrimination from proceeding collectively." The Bush Administration would never have suggested that Wal-Mart was an egregious discriminator.

The Equal Employment Opportunities Commission has been missing-in-action from this Dukes case since it was filed in June of 2001. The Bush Administration never lifted a finger to help these millions of current and former Wal-Mart workers. This has been described as "neutrality" towards the workers by the Bush Administration, but it could also be described as "hostility" towards their effort, since the outcome of this case directly affects the future role and success of the federal EEOC in protecting workers from discrimination.

Secondly, the Wal-Mart trumpeting of employee bonuses was most directly aimed at the growing crisis facing the retailer over the Employee Free Choice Act. A major media splash on worker bonuses clearly was designed to convince some U.S. Senators that Wal-Mart isn't such a Bad Employer after all, and that the company is willing to share some of its enormous wealth with the workers who make it all possible. For years, critics have charged that profits at Wal-Mart rise too quickly to the top, and that the company has built its empire on the sweat of its underpaid workers.

A 2006 study by the Economic Policy Institute concluded that "Wal-Mart could raise wages and benefits significantly without raising prices, yet still earn a healthy profit." The study found that in 2005, Wal-Mart could have maintained a profit margin almost 50% greater than Costco, while raising the wages and benefits of its 'associates' by more than $2,000 without raising prices a penny."

Wal-Mart's My$hare bonuses are not a substitute for a decent, living wage, and a quality health plan that does more than leave employees with enormous deductibles to pay. A $667 bonus is not likely to deflect the political impetus behind the Employee Free Choice Act. Wal-Mart will continue to spend millions to stop EFCA, and its year-end bonuses will not help it buy victory in Congress.

At Wal-Mart, "Associate Celebration Day" needs to happen all year round. When EFCA passes, and Wal-Mart workers win the Dukes case, there will be celebrating in every Wal-Mart aisle across America.

Al Norman is the founder of Sprawl-Busters. He has been fighting big box retailers in communities across America for more than 15 years. His website is http://www.sprawl-busters.com