Everything at Wal-Mart is cheaper - except its spin. The retail giant released two national television ads on the same day that two non-profits released a report concluding that the company's policies hurt both its own workers and the communities they live in.
Wal-Mart has been gearing up for some time; in 2005, they launched a media "war room," complete with presidential advisors including Michael K. Deaver (a Ronald Reagan spin-meister) and Leslie Dach (who worked for Bill Clinton). While their p.r. budget remains private, at more than $300 billion in revenues for 2006, they certainly have resources.
However, in the past, they haven't used them well.
Wal-Mart's standard public relations have been running into trouble for more than a year. Last October, a "traveling blog" featuring a couple extolling the virtues of Wal-Mart during a pilgrimage through its stores turned out to be a fake blog (or "flog"), produced by the retail giant's media corporation, the international Edelman firm. A few months before that, Ambassador Andrew Young, a Wal-Mart "diversity spokesman" stepped down over his remarks disparaging Jews, Koreans and Arabs.
The latest findings against Wal-Mart require a better line of defense. A new report by the Los Angeles Alliance for a New Economy and the Partnership for Working Families concludes that the retail giant plans to bring the same low-paying jobs to urban areas that it has for years offered to rural and suburban communities. (See www.laane.org) Among those most strongly affected by Wal-Mart's brand of downward mobility for its employees will be communities of color.
The report details how Wal-Mart achieves its rock-bottom prices by paying low wages and providing skimpy health benefit packages or no benefits at all. The report also explains how the bill for Wal-Mart's cost to taxpayers amounts to billions per year. The implications for this economic model on urban centers, where resources are already over-extended, are alarming.
Wal-Mart's commercials tout its creation of "thousands of jobs per year". But these jobs are not good jobs. And they are destroying the good jobs we still have in unionized grocery stores.
• Wal-Mart is increasing the number of part-time jobs at the store; families will not be able to survive on Wal-Mart wages.
• Wal-Mart's labor practices have made it the target of lawsuits charging gender discrimination, labor law violations, and racial discrimination, including the largest class-action workplace bias suit in U.S. history. Wal-Mart has also been cited for forcing employees to work unpaid hours, sometimes even locking them in stores overnight.
The ads also tout Wal-Mart's medical coverage. However, that too has been shown to be less than what Wal-Mart claims.
• Wal-Mart's insurance applies to only "eligible" workers, meaning many are shut out entirely from benefits.
• Though Wal-Mart advertises that its plan costs "less than a dollar a day," it often costs far more if employees want to use it. Co-payments on Wal-Mart's policy can be so high that some employees complain they are torn between paying for food and paying for healthcare.
Last, the advertisements extol Wal-Mart as "one of the largest corporate contributors to charity in America" and a "good citizen." But a closer look shows otherwise:
• Wal-Mart contributes only a tiny percentage of its sales--0.078 percent--to charity.
• Much of Wal-Mart's giving may be described as "cause related marketing," or gifts to benefit communities Wal-Mart wants to exploit to much greater financial advantage for itself.
What is promising is that a growing number of communities are getting wise to Wal-Mart's spin. In cities across the country, from Atlanta to Chicago to Turlock, CA, they are organizing to hold Wal-Mart accountable.
In Alameda County, Los Angeles, and the City of Inglewood, City Councils have passed superstore ordinances that require Wal-Mart and other large retailers to pay for an economic impact analysis and submit to a public hearing before they can open up their store.
When Wal-Mart's attempted to impose its low-road business model on New York City, the City Council overrode a mayoral veto to pass a "Health Care Security Act" aimed squarely at large, low road employers. The law would add 6,000 employees to the ranks of the insured and protect 21,000 workers currently covered by health insurance plans from unfair competition. Many businesses leaders, who want to continue to be able to provide health insurance to their employees, supported the law.
What did Wal-Mart do? It went to court. So while Wal-Mart is prettying up its image on television, the retailer is fighting tooth and nail to keep its status as a low road, low wage leader. Through its action, the message the company is really sending to urban communities of color is that "any job is a good job," that we should settle for low-paying jobs without a future.
A growing number of urban residents are taking to the streets, to the air waves, and to the halls of power with a reply. Mr. Scott, we need more than slick advertising. Wal-Mart needs to change its ways. Don't say it can't be done. If Costco can provide $16 per hour jobs, so can Wal-Mart. If large developers in Los Angeles, San Diego, and San Jose, can sit down with community groups, and negotiate agreements to provide real community benefits, so can Wal-Mart. It's a new year. Let's get started.