Stuff for Sir Arthur
WalMart debate intensifies
BY LAUREN WEBER
STAFF WRITER
What began many years ago as a low murmur of discussion has grown into a full-throated debate. It's a question that is engaging activists, economists, legislators and even the company around which the controversy swirls: Is Wal-Mart good for America?
Well, it depends on whom you ask. But what's striking is the extent to which the debate has been characterized by high emotions, conflicting information and prodigious public-relations campaigns. When was the last time a single corporation was the subject of so much hand-wringing and public angst?
The debate has begun to spawn a mini-industry of research by economists and other academics exploring the effects of a corporate giant whose tentacles spread into nearly every corner of American society.
What Wal-Mart says
Earlier this month, Wal-Mart jumped into the fray with what seemed to be a good-faith attempt to measure, definitively, its economic impact on U.S consumers. It released a study by Global Insight, a Boston-based economic research firm that Wal-Mart had commissioned to conduct a year-long study addressing such issues as prices, jobs and wages.
Wal-Mart's study found that Wal-Mart has a largely positive effect on Americans' lives, and that its low prices give consumers more buying power by holding down prices throughout the economy. It also concluded that Wal-Mart jobs generally pay market-rate wages.
But the study did not address some of the most trenchant criticisms of the company. It did not compare Wal-Mart's benefits policies with those of its competitors, nor did it look at whether Wal-Mart's low-wage jobs lead employees to seek out government programs such as Medicaid. That issue was the catalyst for legislation passed earlier this year in both Suffolk County and New York City to force the big-box retailers to pay a greater share of their employees' health benefits.
Wal-Mart's study also largely avoided hard-to-quantify social concerns, such as whether Wal-Mart diverts sales from downtown shopping districts and, in doing so, damages the character of America's small towns and neighborhoods. Even less tangible effects -- such as the retailer's using its market dominance to pressure musicians into changing lyrics and CD cover art that it deems objectionable -- are not addressed in Wal-Mart's study.
Debate comes to a head
The debate could go up a few decibels this month with the release of the Robert Greenwald documentary, "Wal-Mart: The High Cost of Low Prices," and a week of protests. At the same time, the company is promoting a film, called "Why Wal-Mart Works: And Why That Drives Some People Crazy."
For its part, Wal-Mart has acknowledged that it has opened itself up to criticism, but spokesman Nate Hurst said the company did its study to "serve as a benchmark moving forward. There's so many topics and issues you could go with. We see this as a first step in opening up the dialogue."
Against this backdrop, here's a sampling of what economists and other experts are saying about the company at the heart of the controversy.
Pricing and its influence
Global Insight found that Wal-Mart's presence holds down prices of consumer goods in the U.S. by 3.1 percent. The effect is both direct -- Wal-Mart's own low prices -- and indirect -- suppliers and rivals reduce their prices to sell to or compete with Wal-Mart. In a world without Wal-Mart, you might spend $100 on back-to-school shopping. Because Wal-Mart exists, that same shopping trip will cost you about $97.
Adjusting for inflation, the report says that means Americans saved $118 billion in 2004, or $402 per person, thanks to Wal-Mart.
Another independent study, by economist Emek Basker, found that Wal-Mart was particularly effective at holding down prices on drugstore goods such as aspirin, shampoo and toothpaste.
Jobs are gained and lost
When a new Wal-Mart store opens, the company hires 150 to 350 new employees to staff it. The Global Insight study found that some local retailers shut down after Wal-Mart came to town, so other jobs were lost. The biggest losses occurred at food stores and apparel shops. Overall, the report found, an average of 97 long-term retail jobs are gained each time a new Wal-Mart opens.
In plain English: Every new Wal-Mart creates 150 to 350 new jobs but displaces anywhere from 53 to 253 existing jobs, for a net gain of 97 new jobs. Global Insight didn't address the quality of those jobs -- in other words, whether the new jobs paid better or worse than the displaced ones, or had better or worse benefit packages.
But there remains conflict on the topic of job creation, partly because researchers use different (and often exceedingly complex) statistical models, or study different geographic regions.
A team led by David Neumark, an economist at the Public Policy Institute of California, found that Wal-Mart stores actually reduce retail employment by 2 to 4 percent in a given county.
Wages data inconclusive
According to Global Insight, Wal-Mart generally pays wages comparable to other discount retailers. That stands to reason -- in today's fairly strong labor market, if the shop around the corner is paying significantly more than Wal-Mart, no one's going to apply for jobs at Wal-Mart; the company would have to raise its wages to attract workers.
But looking at wage data alone is inconclusive. Benefits now constitute, on average, about 40 percent of a worker's total compensation, so critics say a true understanding of whether Wal-Mart offers comparable employment would have to include benefits such as health and disability insurance, pension plan, vacation and sick leave.
Global Insight acknowledged as much: "Many external observers have held that the cost of Wal-Mart's success in offering lower prices has come at the expense of its workers. Coming to a comprehensive position on this issue is beyond the scope of this study. It would require a thorough, comparative analysis of of Wal-Mart's wages, working conditions, and benefits relative to a fair and comparable benchmark."
Some scholars have compared Wal-Mart's wages with those of unionized supermarket employees. That's partly a response to fears that Wal-Mart's supercenters -- which include full-scale grocery stores -- force local supermarkets to shut down or lower their wages to compete. (Currently, there are no supercenters on Long Island.)
In California, where such fears led to a 5-month grocery strike in 2003, a team of urban planners compared Wal-Mart's wages and benefits with those of union supermarket workers in the San Francisco Bay Area. They concluded that union workers received an hourly wage of $15.30, versus $9.60 for Wal-Mart workers. Adding in benefits, union workers earned an equivalent of $23.64 per hour, almost twice the $11.95 earned by Wal-Mart workers.
Medicaid as a job benefit
In September, the Suffolk County legislature passed a law requiring big-box stores to pay a greater share of their employees' health insurance costs. This law and similar ones proposed around the country -- often referred to as "Wal-Mart tax" bills -- respond to the concern that retail workers are relying heavily on state-funded insurance programs because their wages aren't sufficient to pay the premiums on company-sponsored health plans.
Michael Hicks, an economist at the Air Force Institute of Technology in Ohio, tested that theory and found that for every new Wal-Mart store, roughly 16 Medicaid cases are added to that county's rolls. In a second study, he concludes that, on average, every new Wal-Mart worker costs a state an average of about $900 in new Medicaid costs.
But advocates of "Wal-Mart taxes," take note: Hicks says his conclusions are "policy-neutral." In other words, such laws are unwarranted because, even if Wal-Mart costs states money for Medicaid programs, the company also adds to county and state revenues through property and sales taxes. These costs and benefits can cancel each other out. (In a parallel policy recommendation, Hicks says Wal-Mart also doesn't deserve tax subsidies as incentives for opening new stores.)
And that extra $900 in Medicaid costs per employee? that's not limited to Wal-Mart, Hicks writes. That figure "is consistent with other studies of the Medicaid costs per low-wage worker across the United States."
All companies that pay their employees low wages -- in the retail sector and elsewhere -- increase the burden on government safety net programs.
Copyright 2005 Newsday Inc.
Duelling documetaries debate merits of Wal-Mart
Wal-Mart is getting behind a documentary extolling the company's virtues in an effort to counter a damning Robert Greenwald film.
Greenwald's Wal-Mart: The High Cost of Low Price, was released Tuesday, and opens in cinemas in New York and Los Angeles on Nov. 4.
Made on a shoestring budget of $1.8 million, it will get limited release in theatres, but in the current age of popular documentaries, Greenwald hopes it will become a cult hit like Michael Moore's critique of General Motors, Roger and Me.
In The High Cost of Low Price Greenwald talked to Wal-Mart employees, who complained about being cheated out of overtime and being unable to afford the company's health insurance.
The film looks at Wal-Mart's development practices, building large stores on the outskirts of towns and sucking the life out of many small communities.
Current and former employees describe the company's inner workings and community leaders and poets from throughout the U.S. describe its practices as "an assault on families and American values," Greenwald says.
Wal-Mart, known for eschewing public relations under founder Sam Walton, has hired prominent public relations firm Edelman to bolster its image against the perceived threat from the documentary and from other activists who have criticized its practices.
Wal-Mart fears it will lose the support of middle-class consumers. Earlier this year unions organized a boycott of the retailer by asking teachers not to purchase school supplies there.
Among those coordinating the campaign to boost Wal-Mart's image is Michael Deaver, one of Ronald Reagan's closest advisors, according to the New York Times.
Independent filmmaker Ron Galloway has made a film called Why Wal-Mart Works and Why That Makes Some People Crazy, which he has funded himself.
Wal-Mart has become involved in promoting Galloway's documentary, urging staff to attend screenings and writing letters in support of the film.
While Wal-Mart executives would not agree to be interviewed for Greenwald's film, they have made themselves available for the Galloway counter-offensive.
In advance of Greenwald's movie release, they accused the filmmaker of getting his facts wrong. And now they are challenging Greenwald to show the two films side by side.
On his website, Greenwald urges faith groups, community activists and schools to host a screening of his documentary. The filmmaker says he plans 3,000 such screenings in the week of Nov. 13-19, describing this as a worldwide grassroots premiere.
Greenwald is the director of the 2004 movie Outfoxed: Rupert Murdoch's War on Journalism and TV movies and miniseries including The Book of Ruth and The Burning Bed. The Wal-Mart movie is being backed by his own production house, Best Films.
Copyright ©2005 Canadian Broadcasting Corporation - All Rights Reserved
Waging war on Wal-Mart
Retailing giant faces intense scrutiny
New film adds to mounting pressure
Nov. 17, 2005. 06:06 AM
WASHINGTON BUREAU
WASHINGTON—Spies and turncoats.
Duelling propaganda films and war rooms, backroom operatives and political attacks.
A battle so crucial, according to one side, America "can't afford to lose." These are all elements of a campaign against retailing behemoth Wal-Mart, nothing short of a continental call-to-arms against the world's largest company.
It is the most expensive and likely most sophisticated offensive against a company in North American history, a battle being waged by unions, liberal advocacy organizations, Democrats and church, environmental and women's groups.
For years, frustrated unions have hurled stones at Wal-Mart.
Now, facing boulders instead of sporadic pebbles, Wal-Mart is doing something it never did before. It is fighting back, establishing a war room in its Bentonville, Ark., headquarters where the most revered political strategists from both U.S. parties — including Michael Deaver, the man credited with covering Ronald Reagan in Teflon — plot public relations counterattacks.
The campaign hits a crescendo this week, with some 4,000 anti-Wal-Mart activities planned by WakeupWalmart.com and Walmartwatch.com, founded by the United Food and Commercial Workers and the Service Employees International Union.
The centrepiece of the week of activity is the official release of Wal-Mart: The High Cost of Low Price, the $1.8 million (U.S.), 98-minute movie done by the darling of the American documentary left, Robert Greenwald.
A splashy premiere of the movie vilifying Wal-Mart here Tuesday is being accompanied by some 7,000 private showings across the U.S. this week, just in time for the crucial Christmas shopping season.
It's showing in Toronto at various locations this month.
But Greenwald has competition. Brothers Ron and Robert Galloway of Augusta, Ga., debuted their $85,000, 72-minute documentary Why Wal-Mart Works: And Why That Makes Some People Crazy at a theatre near the Bentonville corporate headquarters on Monday.
And Wal-Mart has released a 28-page rebuttal to Greenwald, calling him a "failed fantasy filmmaker" and accusing him of serial fabrications in a document it calls "The High Cost of Low Credibility."
The company also held a full-day forum in Washington to explain how it gives back to communities in the U.S. The stakes are so high, Wal-Mart tried to slip in a spy to see Greenwald's first screening in New York earlier this month. He was identified and ejected, barely escaping the tar and feathers.
The charges against Wal-Mart are familiar, but when catalogued by its opponents this week, they appear devastating.
The Greenwald film and various websites and media events chronicle the way Wal-Mart shuts down small businesses and sends its employees to the state for government-subsidized and taxpayer-supported health care, the choice of last resort for this nation's poorest.
It details its rock-bottom wages — its employees draw an average annual salary of $13,861, below the U.S. poverty rate — and says it draws down retail wages in this country by $3 billion.
Critics detail the unpaid overtime so-called "associates" must work and quotes former employees who watched colleagues go hungry at lunch hour because they were too poor to eat.
The company is accused of practising gender and racial inequality, fouling the environment, employing workers in Chinese sweat shops who are paid less than $3 a week, hiring illegal immigrants and locking them in the stores overnight.
It is portrayed as a company that receives hundreds of millions in government subsidies and is the most aggressive anti-union employer on the continent, using anti-union cameras, spy vans and 24-hour hotlines.
In a special addition to his film, Greenwald explores the decision to close the Wal-Mart in Jonquière, Que., after workers there received union certification. The company counters that employees voted against the union, but certification was allowed by the "labour-backed" provincial government.
"Wal-Mart sells itself as the all-American company, but it violates American family values every single day by mistreating its workers" Massachusetts Senator Edward Kennedy said at a press conference with Greenwald in Washington this week. "This is not just a congressional fight — it is an American fight that we should all join."
Wal-Mart counters with some facts and figures of its own.
It says it saves the average American household $2,329 per year, created 210,000 jobs in 2004. It employs 1.6 million worldwide (1.3 million in the U.S.) and has 5,900 stores, including 3,600 in the U.S.
In Canada, Wal-Mart has 256 stores and six Sam's Clubs, employing 65,000 Canadians.
It is opening 20 new stores each year and it says it poured $8 billion into 6,000 Canadian suppliers in 2004.
Wal-Mart in the U.S. Monday reported its smallest quarterly profit in four years, 3.8 per cent.
In the third-quarter in the U.S., sales hit $75.4 billion.
Meanwhile, the battle continues on the big screen.
"Our feeling is that this movie is nothing more than a thinly-sourced attack ad," Kevin Groh, of Wal-Mart Canada Corp.
The Galloways made their film on two credit cards. Greenwald says his was bankrolled by two anonymous benefactors, but two others backed out for fear of retaliation from Wal-Mart, the largest retailer of videos in North America. The films do have one thing in common — Wal-Mart will not carry either.
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posted by Advocatus Diaboli @ 12:13 a.m.
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