Maryland passed a law aimed directly at Wal-Mart, and unions and the
media have been hailing it as precedent-setting and
groundbreaking, as CBSs Russ Mitchell and Anthony Mason put it on
the January 14 Early Show. The law, which is now facing a legal
challenge from the Retail Industry Leaders Association, fashioned a
health-benefits mandate applying only to Wal-Mart in that state. It
forces the company to spend at least 8 percent of its payroll on
employee health care or pay the difference to Marylands Medicaid
program. The 400-member retailers group is calling the law
discriminatory, as it recognizes Wal-Mart isnt the only business
threatened by more government cost mandates.
Most media reports dont point out that Wal-Marts percentage of
workers on Medicaid is almost even with the national average. As
Washington Post columnist Sebastian Mallaby wrote on Nov. 28, 2005,
Wal-Mart has 5 percent of workers on Medicaid, which is a typical
level for large retail firms, while the national average for all
companies is 4 percent.
The union campaign to raise others costs is their own twisted
version of competition, as Washington Post writers Amy Joyce and
Matthew Mosk explained on January 14. Companies that provide higher
pay and benefits under union contracts are battling lower-cost
competitors here and abroad, they wrote. The companies are
attempting to level the playing field by cutting back on pay and
benefits, sometimes by filing for bankruptcy. Labor is trying the
opposite tack: making others pay more.
Wal-Marts detractors are led by WakeUp Wal-Mart and Wal-Mart Watch,
both union-related groups. While Wake Up Wal-Mart calls itself a
collection of grassroots leaders, community groups and activists,
the Web sites copyright betrays the reality, stating clearly
2005 United Food and Commercial Workers International Union. The
Washington Post reported that Wal-Mart Watch was originally funded
by the Service Employees International Union.
Cleaning out the Garage
Wal-Mart Watch garnered new headlines with its recent release of
communications from Wal-Mart CEO H. Lee Scotts Lees Garage Web
site. Scott answers questions posed by Wal-Mart employees who access
the intranet site.
In The New York Times February 17, Steven Greenhouse and Michael
Barbaro said Scott tries to strike a chummy, in the trenches
tone, but said his responses often serve to remind managers of the
gap between them and their chief executive, who earned more than $17
million last year, including stock options, who hops around the
globe on Wal-Marts fleet of jets and who lives in a gated community
called Pinnacle.
But the Times also reported that Scott worked his way up in the
company. He joined Wal-Mart in 1979 as its assistant trucking
manager and was named CEO in 2000. In fact, the company says it
promotes many from within, and 76 percent of its store management
started in hourly positions.
Worlds Largest Must Be Bad
Slanting the news toward the negative has been common in Wal-Mart
stories. CNNs Andy Serwer delivered several Wal-Mart items on the
February 17 American Morning. He started off saying Conventional
wisdom has it that Wal-Mart destroys other companies, other
businesses, other retailers, and puts them out of business if
theyre nearby. No doubt that is true of thousands of times over,
over the past couple decades. And that was how he introduced a
positive story about new evidence that shows that companies like
to be near Wal-Mart because it helps their businesses.
Serwer also took a shot at Wal-Mart for bringing yet another
low-cost item to its customers. We want to talk about the continued
power of Wal-Mart because it does continue to exercise this kind of
clout, he said. The clout of the moment was the companys
introduction of a new store brand its version of the popular
alternative sweetener Splenda. Serwer said this has Wall Street
analysts very, very, very concerned about the prospects of Splenda.
Because once Wal-Mart comes in with sort of a store brand like this,
it can really do some serious, serious damage to a product.
He didnt mention that the 138 million customers who shop at Wal-Marts
worldwide each week appreciate the lower prices and new options
especially lower-income families who are able to afford other goods
because of their savings. The Posts Mallaby wrote on Nov. 28, 2005,
about Jason Furman of New York University and his report of some
facts about Wal-Mart. Mallaby said Wal-Marts discounting on food
alone boosts the welfare of American shoppers by at least $50
billion a year. The savings are probably five times that much if you
count all of Wal-Marts products. Thats very meaningful to
Wal-Marts customers, who have an average income of $35,000, Mallaby
said.
CBS took a recent opportunity to capitalize on a tragedy that made
Wal-Mart look bad. Parents of nine children sued after their
children were injured while riding bikes bought at Wal-Mart. A
California jury ruled in February that the bikes were not defective
and Wal-Mart was not at fault. Wal-Mart hasnt sold the bikes in
question since 2001. But on January 26, when the issue was still
unresolved, CBS Early Show did a one-sided story highlighting the
plaintiffs claims without any statements from the company. The
report featured angry parents like Cathy Belyeu, who accused the
company: They knew about this bicycle. They knew that it was
defective. They knew it was hurting children. The report said about
500,000 of the bikes had been sold at Wal-Mart, but did not mention
other injuries aside from the plaintiffs.
Another story that has gotten the Wal-Mart treatment is the
companys application for an industrial loan corporation (ILC) in
Utah. Although the firm is not seeking to enter retail banking, its
critics and the media have made it appear that way. Target Corp.
already has an ILC, which it uses to offer credit cards, as The
Washington Posts Kathleen Day reported on February 12. Wal-Mart
says it would use its ILC to cut down on the cost of processing
credit transactions.
But that information was buried deep in Days story. At the top of
the story, she chronicled the Wal-Mart effect on other business
sectors, as the stores competitive prices beat its rivals in the
grocery and toy industries. Day asked whether federal regulators
should permit Wal-Mart to use a legal loophole to enter banking and
potentially do in that arena what it has done to nearly every other
consumer product and service it has touched? She later said that
the real opposition to Wal-Marts ILC application didnt come from
customers. It came from its potential competitors bankers.
For more information:
Retail Rumble, The Wall Street Journal
Wal-Mart
Facts (Wal-Marts own site)
The Benefit Battle
