Wednesday, June 15, 2005

The War on Wal-Mart: Waking a Sleeping Giant?

By Nathan L. Gonzales

The battle between Wal-Mart and organized labor has received plenty of attention over the past couple of years, but the fight is about to reach a new level.

To date, most of the media attention has been on Wal-Mart's critics. The picture is of a mega-company on its heels because of a valiant grassroots effort, and the focus on Wal-Mart's new public relations efforts as defensive posturing. The only suggested outcome of the conflict seems to be the eventual conformity of Wal-Mart to the wishes of its detractors.

But what if Wal-Mart goes on the offensive? What if it organizes its 1.6 million employees and tens of millions of Americans who rely on its stores? What if Wal-Mart turns the fight away from health benefits and toward the jobs it provides and the low cost goods it offers? Or, are Wal-Mart critics, virtually all of whom are Democrats, looking to slay a giant or are they awakening a new political mammoth that could make Red states even redder?

Red & Blue America

The discrepancy between the number of Wal-Mart stores in Republican areas compared to Democratic areas is significant. In the 31 states won by George W. Bush in the 2004 election, there are 2,455 Wal-Mart entities, including 1,404 Supercenters, 691 Discount stores, and 360 Sam's Clubs. In the 19 states won by John Kerry, there are 1,131 Wal-Mart entities (272 Supercenters, 669 Discount stores, and 190 Sam's Clubs), overall less than half the stores in the Bush states.

There are over 355,000 Wal-Mart employees in the Blue states, one-third of the 931,979 employees in the Red states. Wal-Mart's critics may see these as potential voters to be gained, but they are also a potential backlash if they lose their jobs altogether.

A new documentary by Robert Greenwald entitled "Wal-Mart: The High Cost of Low Price," is in part supposed to be an effort to appeal to a Red state audience. Greenwald's resume includes "Outfoxed: Rupert Murdoch's War on Journalism" and "Uncovered: The Whole Truth About the Iraq War." "I think the economic issues that we're talking about absolutely are in sync with [social conservatives]," Greenwald told the New York Times.

But Greenwald's comments are more indicative of a portion of the Democratic Party that is out of sync with much of America where shopping at Wal-Mart is part of daily life. It's a similar conundrum described by Thomas Frank in his book What's the Matter With Kansas. Democrats and liberals often express frustration and disbelief that conservatives consistently "vote against their economic interest," not considering that people's economic interest also includes a desire for low prices.

"It's clear Wal-Mart is worried," said Chris Kofinis, a senior adviser at the UFCW told the Washington Post. "They realize public opinion is against them."

Regardless of how worried they really are, the folks at Wal-Mart are fighting back. "Taking an ad out in the New York Times doesn't hurt my feelings," joked one Wal-Mart supporter. Back in January, Wal-Mart did place ads of its own in 100 newspapers nationwide with the message, "Wal-Mart is working for everyone." And on Wal-Mart's Website, it gives a point-by-point repudiation of their critics' claims and even mentions critic group Wal-Mart Watch by name.

If current trends continue, Wal-Mart will expand its political contributions, to the detriment of the Democratic Party. Since its inception in 1982, Wal-Mart's PAC has given 80% of its money to Republican candidates and committees to the tune of $3.1 million compared to only $758,000 to the Democrats. Back in the 1998 election cycle, Wal-Mart Stores Inc. PAC for Responsible Government dished out only $181,750 in contributions. In 2000, it almost tripled that to $576,050. Wal-Mart doubled their total again with $1,280,500 in 2002 and chipped in $2,178,000 in the 2004 election cycle. At the current pace, Wal-Mart could top $4 million in contributions in this mid-term cycle.

But Wal-Mart's 2006 contribution list presents another dilemma for Democrats. While elements of the party are railing against the corporation, other Democrats are taking their money.

Sen. Hillary Clinton (D-NY), the current frontrunner for the 2008 presidential nomination, received a $5,000 check from Wal-Mart in February. Cong. Harold Ford (D-TN), a Democratic candidate for Senate and rising star within the party, also took a $5,000 contribution. And Cong. Bob Menendez (D-NJ), chairman of the House Democratic Caucus, received $5,000 from Wal-Mart in April. This year, Wal-Mart's giving has been nearly even between the two parties.

If Wal-Mart is so bad, why are Clinton, Ford and Menendez cashing their checks? And if Wal-Mart is so anti-worker, why is the firm's PAC contributing to liberals?

Larger Than Life

There is no doubt about Wal-Mart's size. The company is big and growing bigger.

The top five states with the most Wal-Mart stores in the country include Texas (364), Florida (206), California (183), Illinois (150), and Ohio (141). The Wal-Mart affect is something to consider for both parties, especially with battleground states like Florida and Ohio with a large number of stores. Battleground states like Pennsylvania (130 stores), Michigan (95) Wisconsin (85), Colorado (69), Minnesota (61), and Iowa (60) aren't too far behind. Vermont has the least number of Wal-Mart stores (4) of any state in the country, followed by Delaware (8), and Rhode Island and Hawaii with nine each.

But it remains to be seen whether being big automatically makes Wal-Mart the bad guy.

Wal-Mart has been the #1 Fortune 500 company, determined by total revenue, for four years running with 5,000 stores, over $288 billion in sales, and 1.6 million employees. In its Pulitzer Prize winning series, the Los Angeles Times explains that Wal-Mart's sales are twice that of General Electric and almost eight times that of Microsoft Corp. Wal-Mart is America's largest seller of toys, furniture, jewelry, dog food, and groceries. Four percent of the growth in the U.S. economy's productivity from 1995 to 1999 was due to Wal-Mart alone. This is obviously a company with longevity and loyal consumers.

People who normally shop and Bloomingdale's, Nordstrom's or Banana Republic may think the store simply sells cheap t-shirts, candy bars, and lawn furniture, but that's far from the truth. A Wal-Mart Supercenter is a 24-hour smorgasbord of clothes, groceries and general household items often accompanied by a bank, a photo lab, a tire center, a McDonalds, and even a nail salon. Wal-Mart's detractors would be appalled to know that the company is also into pumping gas. That's right, Sam's Club members can receive up to a nickel off the price of a gallon of gas.

A recent Christian Science Monitor header screamed, "Is shopping at Wal-Mart immoral?" The sub-headline in the Monitor explained, "Big discounters help the poor make ends meet, but they create more poverty when they pay low wages and force local stores to close." That sums up the liberal conventional wisdom surrounding Wal-Mart's presence in communities, but it isn't entirely accurate. Other groups involved also have dogs in the fight and are protecting their own self-interest.

The United Food and Commercial Workers Union (UFCW) is a chief Wal-Mart critic. But it feels threatened because Wal-Mart's Supercenters are taking up more and more of the grocery industry, decreasing the number of workers that are members of the union. In late March, 21 Democratic House members and the UFCW called on ABC News to drop Wal-Mart as a sponsor of the Good Morning America series "Only in America." ABC ultimately kept the sponsorship, and of the 21 congressional Democrats who protested, only five came from states won by President Bush last November.

Ellen Moran, who is heading up the AFL-CIO effort against Wal-Mart, is seeking to craft a political machine that includes union members and utilizes mailings and phone banks to convince both labor households and the general public about Wal-Mart's practices.

But not all normally Democratic constituencies, or targeted constituencies, are treating Wal-Mart as the enemy. African Americans, for example, seem very favorably disposed toward the company.

The Service Employees International Union (SEIU) sent a letter to the Congressional Black Caucus saying the group was giving Wal-Mart "an opportunity to fashion a false image as a friend of African Americans and of working people generally." Cong. Albert Wynn (D-MD), chairman of the CBC's PAC, told Roll Call that the caucus cannot brush aside the interests of businesses like Wal-Mart that employ thousands of black Americans and help fuel the economy in minority communities. Therein lies the Democrats' problem. While one constituency is hurt by Wal-Mart (organized labor) another benefits (the African-American community).

Now Democratic outreach, led by DNC Chairman Howard Dean, is veering into middle America where more and more people rely on Wal-Mart as a daily way of life. So here is the Democrats' dilemma: What if forcing Wal-Mart to change its practices could result in higher prices or even job layoffs, hurting the community around it and potentially angering the people who depend on it. And what if those people vote?

It will be difficult for Democrats to attract Red state voters by attacking a Red state institution.

The War on Wal-Mart

Two of the newer watchdog groups seeking to dethrone the retail giant are and The latter group is a joint project of The Center for Community & Corporate Ethics (a 501c(3) organization) and Five Stones, Inc., which takes its name from the story of David and Goliath. In I Samuel 17:40, David chose five smooth stones from a nearby stream as he prepared to battle the giant.

The goal of Wal-Mart Watch is to coordinate Wal-Mart's critics. The Center's board of directors is a list of Democratic officials including Service Employees International Union President Andrew Stern, Judy Lichtman, founder of the National Partnership for Women and Families, Common Cause President and CEO Chellie Pingree, Sierra Club Executive Director Carl Pope, and Roger Wilkins of George Mason University. Pollster and strategist Ed Goeas of the Tarrance Group is the lone Republican. Former Democratic Senatorial Campaign Committee executive director Andy Grossman is also the executive director for Wal-Mart Watch.

According to their Website, "the goal of goal isn't to slay the giant, however. It is to build alliances with the many sectors adversely affected by Wal-Mart's irresponsible business practices and utter disregard for the consequences and costs of 'Always Low Prices.'" One Wal-Mart critic confirmed that sentiment stating that the goal is to make Wal-Mart a "better corporation." For Wal-Mart's critics, a "better corporation" does not mean simply unionization of its workers, but a package of higher wages, access to better health care plans, and being friendlier to the environment with its manufacturing practices. And according to a recent Business Week article, critics charge that Wal-Mart is "less courteous" than a decade ago.

But who is David and who is Goliath in the retail battle? In the Biblical narrative, Goliath instigated the fight, emerging from the Philistine camp daily to patronize and challenge the Israelite army. Finally, after 40 days, David confronted Goliath because no one else would. Today, Wal-Mart's critics grasp the David profile simply because of Wal-Mart's size, but they also seem to be the ones picking the fight.

The Maryland Battlefield

Maryland has played host to the most recent Wal-Mart battle. The state Legislature passed the Fair Share Health Care Bill, also known as the Wal-Mart Bill because it is the only known company that would be affected.

The bill requires for-profit companies larger than 10,000 employees to spend eight percent of their payroll on health care benefits or to the state's health program for the poor, according to the Washington Post. Gov. Bob Ehrlich (R) vetoed the bill on May 19, but it appears the Democratic-controlled Legislature will have enough votes to override the veto early next year. Giant, the dominant grocery chain in Maryland and a Wal-Mart competitor, supported the legislation.

"Governor Ehrlich should be ashamed for literally standing with big corporate interests rather than Maryland's working families," said AFL-CIO president John J. Sweeney.

But for Wal-Mart supporters, the issue is not about Wal-Mart's alleged stinginess with health care benefits. Ehrlich made his veto announcement in Somerset County, which has one of the highest unemployment rates in the state, where a planned Wal-Mart distribution center is now in peril.

Now Wal-Mart is an issue in the 2006 race for governor. Wal-Mart hosted a fundraiser for Ehrlich, while both of his would-be opponents, Baltimore Mayor Martin O'Malley and Montgomery County Executive Doug Duncan, publicly blasted the governor for his veto. Wal-Mart Watch championed the legislators while harping on Gov. Ehrlich. With Wal-Mart legislation potentially on the horizon in Pennsylvania and New Jersey, this may be just the beginning of Wal-Mart as a political issue.

But in the aftermath of the 2004 election, it's clear that Democrats need to make inroads with Americans in the middle of the country. It's these people that more often than their coastal counterparts rely on Wal-Mart for either shopping or employment. Can Democrats afford to be labeled as the party against Wal-Mart?

Waking a Sleeping Giant

"Wal-Mart is slow to the dance," explained one GOP operative in Arkansas, home of Wal-Mart's headquarters, about the company's political operation. But now, Wal-Mart is ramping up its efforts.

The end result could be a tremendous political force in the future. "Many of our competitors, lets face it, would like to continue to be rewarded for operating in ways that are less efficient," Wal-Mart chief executive H. Lee Scott Jr. told the Post, adding that criticism of the company's wages and benefits neglects to account for the fact that its low prices help working families.

With all of the coverage of the anti-Wal-Mart campaign so far, it's surprising that nobody has mentioned the potential for a backlash. Wal-Mart's opponents maintain they simply want to make Wal-Mart a "better corporation" and not get rid of it, but it's foolish to believe that the efforts will not affect Wal-Mart financially and consequently have an affect on its employees, shoppers, and communities.

The war on Wal-Mart could create a problem for Democratic strategists, who are trying to reposition their party to appeal to Red state voters. "That's their problem," responded one Wal-Mart critic about the potential backlash. For some people, it's truly about a cause and not a party.

The lines are clearly drawn in the race for governor in Maryland, a Democratic-leaning state, where railing against Wal-Mart is probably a smart position. But when the political fight moves into toss-up or Republican-leaning states, the Democrats' positioning will get much more complicated.

In the story of David and Goliath, David sought to slay Goliath, not make him a better citizen. And David not only killed the Giant but chopped off his head. Wal-Mart's critics better be ready to finish what they've started.