Wal-Mart: Class Boundaries and the Ethics of Success

Two new polemic DVDs about Wal-Mart, the largest single private employer in the U.S, with 1.3 million employees, highlight more than the good/evil about America’s lowest priced goods, very successful, discount chain. They also highlight the growing rift between the haves and have-nots in America – and the hypocrisy of many political strategists.

First, a little about the films.

Robert Greenwald's movie, "Wal-Mart: the High Cost of Low Price," recently became available on DVD and can be ordered online. Its main premises are that Wal-Mart squashes competition, provides a less than living wage, and has hurt American manufacturing jobs since most of their merchandise is now imported from China - unlike in the early days when stores had a banner "made in America."

Greenwald’s movie seems slightly like a Michael Moore film, without the obsessive antagonism that permeates Moore’s films. It does, though, feature “whistle-blowers who describe Wal-Mart managers cheating workers out of overtime pay and encouraging them to seek state-sponsored health care when they cannot afford the company's insurance.”

Concurrently, Wal-Mart is promoting "Why Wal-Mart Works: And Why That Drives Some People Crazy,” by Rob Galloway who says he wasn't paid by Wal-Mart to do the film. The premise in this one is that Wal-Mart saves average family $1250 per year - and that it provides great entry level jobs - and no one forces anyone to work there.

To deal with the potential fallout from the Greenwald film, in addition to promoting Galloway’s film, Wal-Mart has created a type of “war room,” staffed by former political strategists – and it is here where the rift becomes apparent.

Five of the political strategists hired to confer with the war room staff come from 2004 presidential Democratic political campaigns; two come from 2004 Republican campaigns.

Yet what these strategists are doing is helping promote business practices that their candidates’ political platforms disavowed. For instance, healthcare insurance was an issue for many Democratic candidates. Yet Wal-Mart has been in the news because the deductible on its insurance is so high, many employees can’t afford it, so they turn to state or federal assistance. A UC Berkeley study found that “Wal-Mart workers in California rely on the state for about $32 million annually in health-related services, and $54 million a year in other assistance such as subsidized school lunches, food stamps and subsidized housing.”

On the other side, the Republicans were pushing for a “war on poverty.” Yet according to a 2004 research report from the University of Pennsylvania “the presence of Wal-Mart unequivocally raised family poverty rates in US counties during the 1990s relative to places that had no such stores.” It is presumed that such increased poverty rates have not changed.

And that too is part of the rift. Minimally skilled and lesser educated tend to be characteristics of the typical Wal-Mart associate. They also tend to be the characteristics of the typical Wal-Mart shopper, although Wal-Mart is hoping to change that by focusing on high-end merchandise that it offers online because, according to their marketing vp, “affluent shoppers prefer Wal-Mart online because of the bigger offer of high-end luxury goods, and some exclusively online sold merchandise.”

Yet it is primarily the affluent and educated that decry Wal-Mart’s policies. And it is primarily the poorer or the more isolated shopper that frequents the store.

I had a friend who lived in South Dakota for a while. Several of the little retail shops (furniture, clothing, hardware) that lined the main street closed over a period of weeks after a new super Wal-Mart came to town. Yet the townspeople didn’t seem to mind – they appreciated a wider variety of products they could now find – and even people from neighboring Minnesota would come and shop for the day. And as one of the associates said to my friend, “I’m glad to work here. Our farm is struggling, really struggling, and this helps pay the bills.”

However, as Daniel Gross wrote in Slate, “After all, Wal-Mart is a mere pass-through for its customers—one that takes a slim margin for the trouble. At Wal-Mart, the customer is king, everyone else be damned: competitors, employees, and the domestic manufacturing base. Everything Wal-Mart does—particularly its low prices—is done in the name of slavish devotion to consumer demand. And every day, millions of Americans ratify Wal-Mart's strategy by shopping there. Stores don't kill economies, consumers do.”

So we’re left with a choice. We can sit back and hope Wal-Mart changes its ways and becomes more employee friendly or we can choose not to shop there and instead perhaps check out Buy Blue, a site that researches how well retailers meet “a triple bottom line: people, planet and profit.” Or, we could take a national look at American labor and decide what is acceptable and then legislate to ensure that all workers were protected.

And that’s what corporate social responsibility is all about. And as the founder of a company known for its commitment to employees and social good, I can vouch for the fact that doing so can actually add to the bottom line.

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Written in collaboration with Jennifer Hicks