Turning Up the Heat on Wal-Mart
With its stock gone flat and bad publicity in virtually every news cycle Wal-Mart is feeling pretty defensive these days. Among recent company missteps are fines and monetary settlements for hiring illegal immigrants and allowing underage employees to operate heavy machinery.
According to a recent article by AlterNet reporter Kelly Hearn, a more complete list of Wal-Mart's myriad transgressions includes "union busting, labor law violations, shipping jobs overseas, artificially suppressing wages, financial improprieties by a top corporate officer and links to a powerful Chinese businessman allegedly involved in the weapons-trading arm of the People's Liberation Army."
In the face of a steady drumbeat of bad publicity, the company has recently started spinning its PR wheels to cover its tracks. First, Wal-Mart broke a long-held tradition and invited the media to its Bentonville, Arkansas headquarters. The company has set up a new Web site that emphasizes its "positive impact on business." It has also shown sudden support for journalism schools, minority scholarships, and even -- gasp -- funding for NPR programming.
But Wal-Mart should prepare to dig much deeper into its PR budget, because its image is about to get much more tarnished.
Brave New Film
Robert Greenwald, the Hollywood producer/director-turned documentary filmmaker (2004's Outfoxed; Uncovered, 2003), is now aiming his investigative lens at Wal-Mart's gargantuan global empire.
Greenwald's company, Brave New Films, is scheduled to release Wal-Mart: The High Cost of Low Price in November -- and there is a well-oiled engine of grassroots media organizing behind it. Greenwald says his team is reaching out to "allies from all political persuasions," including religious groups, students, family businesses and teachers, to make sure the coalition in support of the film reflects the widest points of view on Wal-Mart. Among the film's supporters are the United Church of Christ, the National Education Association and the Petroleum Marketers Association of America. Members of these groups plan to host house parties and public screenings of the documentary.
Greenwald has been investigating Wal-Mart for months, keeping the project under the radar until now. Despite the myth that Wal-Mart is the patriotic embodiment of small-town values in its efforts to provide low prices to consumers, Greenwald asserts the opposite.
"This is the largest corporation in the world, and it is running roughshod over family business and workers throughout the country," he says. "This is an issue that cuts across the traditional partisan divide. My film will reflect the diversity of people who are being subjected to the Wal-Mart steamroller, and the ways they are fighting back and winning."
The company generated $19 billion in surplus last year -- $9 billion in profit, and $10 billion to build new stores. Yet Wal-Mart's business model is totally dependent on low-wage workers and virtually all of its product manufacturing is globally outsourced.
Perhaps more insidious is that by building new stores as quickly as possible in as many communities as possible, and engaging in its trademark predatory pricing, Wal-Mart is rapidly destroying the small businesses that make up the fabric of rural and exurban life. And many of those businesses -- small newspapers, grocery stores, gas stations and more -- are hopping mad.
Big Box Headaches
Wal-Mart's success is, in large part, a product of public policy, writes Stacy Mitchell, a senior researcher with the New Rules Project. "Local and state governments have provided billions of dollars in tax breaks to fund big box development. Tax policies in many states allow national retailers to avoid paying much of their income tax, while local businesses must shoulder their full share. Wal-Mart and other chains have also benefited enomously ... from a host of policies that subsidize sprawl at the expense of older business districts."
According to Lisa Smithline, an organizer working with Brave New Films, a wide array of local and independent businesses are suffering from Wal-Mart's big foot.
The Independent Community Bankers of America (ICBA), which represents 5,000 community banks, is impacted by Wal-Mart in two significant ways. Says Smithline, "First the destruction of main street and community businesses, of which these bankers are a part, destroys their business base. Then the small businesses fold, the street becomes barren and the banks lose their foundation." Now, she says, Wal-Mart is aggressively trying to enter the banking business, which will result in competition these community bankers may not survive.
Smithline notes that while current laws protect community banks to some extent, "Wal-Mart has gained tremendous political capital over the past five years by hiring DC's top PR firms, law firms and lobbyists."
The National Association of Convenience Stores has a similar story of Wal-Mart's impact on industry. Wal-Mart's rapid expansion impacts sales, provides insurmountable pricing competition, and with Wal-Mart's recent move toward gasoline sales, a large portion of their business is threatened.
Wal-Mart's low prices also threaten members of the Petroleum Marketers Association of America, a federation of 44 state and regional trade associations representing approximately 8,000 independent petroleum marketers nationwide. As Wal-Mart moves into gasoline sales, the competition will wipe out many business owners.
According to Kelly Hearn's report, "For years, community papers have suffered as Wal-Mart, an infrequent newspaper advertiser, pushes out traditional department stores, the bread and butter of local papers. Department stores accounted for 5.5 percent of non-auto retail sales in 1990, but only 3.3 percent by 2002, according to the Newspaper Association of America. What's more, many retailers went from offering occasional advertised sales to mimicking Wal-Mart's 'everyday low prices' model."
Smithline summarizes, "The issues aren't right or left -- they cross all the usual barriers, uniting communities that simply ask Wal-Mart to respect their residents and businesses. From gasoline retailers who ask Wal-Mart to play fair without using predatory pricing practices, to family business owners who ask for cities to provide the same tax incentives and a fair playing field. Workers, teachers, mothers, students, independent newspapers, manufacturers, and members of every faith tradition have united in an unprecedented and creative campaign to offer Wal-Mart the opportunity to negotiate a fair place in their communities."
There are alternatives to the Wal-Mart low-wage model. Costco, for example, has 449 warehouses internationally, $47 billion in revenue and 113,000 employees, and uses a high wage model. And, depressingly, it has been attacked by Wall Street for "caring too much about its customers and it employees."
As Nina Shapiro points out in Seattle Weekly, "Wal-Mart's business model relies on relentless cost-cutting. Wal-Mart's 1.2 million U.S. employees earn an average of $9.99 an hour, less than two thirds of Costco's average."
It has long been a goal of grassroots progressives to connect their issues with the populist roots of small businesses and rural inhabitants. But that objective has been elusive. Much to the consternation of progressives, working-class voters have given conservatives their votes and, in the minds of many, not voted their economic interests.
Thomas Frank dedicated a whole book to this phenomenon. In an interview in Start Making Sense: Turning the lessons of Election 2004 into Winning Progressive Politics, Frank explains, "Instead of it being blue collar against white collar or workers against the Fortune 500, it is average Americans -- or 'authentic Americans' -- versus an affected liberal elite."
Said Greenwald to the New York Times, "You may say: I don't care, I don't shop at Wal-Mart, why should it affect me? Well it will, because it'll affect wages, it'll affect health care, it'll affect where your tax dollars go. There are so many impacts it has on all of us as citizens."
Maybe, Wal-Mart will be the company and the cause that links the disparate elements of the old populist movement, with Greenwald's film being the rallying point. Time will tell.