Union Blues at Wal-Mart

By John Dicker, The Nation. Posted 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.

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