The Wal-Mart Watch Blog
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| Jul 02, 2009

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Here are what the voices on the Internet are saying about Wal-Mart’s support of employer-mandated health care...not surprisingly, it hasn’t taken long for most to deduce that Wal-Mart is hardly acting in an altruistic way.

Number one on Wal-Mart’s hit list? Easy. Target. Because small businesses would either be exempt from the mandate or face a less-strenuous requirement, it would be Wal-Mart’s large competitors (and more specifically those who have to this point been better at managing health care costs than Wal-Mart) that would feel the brunt of the hurt.

Jonathan Cohn at The New Republic:

I don’t want to make too much of this: Wal-Mart may chicken out once the specifics of an employer mandate end up on the table. Even if they don’t, they may not lift a finger to help. And, make no mistake, Wal-Mart is acting--as it always does--out of pure self-interest.

My undestanding is that, after all of these years, Wal-Mart has suddenly found itself in the same situation its competitors once did: Dealing with unpredictable health costs and facing new competition from businesses that have found ways to spend even less on employee health benefits. Is there some justice there? You bet.

Reihan Salam with the National Review:

There is another way of looking at this. As a large, powerful, deep-pocketed firm, Wal-Mart can sustain regulatory burdens that mom-and-pops and new entrants can’t. And so burdensome regulations are invariably Wal-Mart’s ally. Jonathan Rauch explained this dynamic brilliantly in his book Government’s End. It makes perfect sense for Wal-Mart to back a regulatory initiative that hurts its bottom line as long as it hurts its competitors more.

Megan McArdle for The Atlantic:

Wal-Mart is always going to have a seat at the table when employer mandates are discussed, because Wal-Mart is the nation’s largest private employer.  Target and Macy’s probably won’t have a seat at the table.  So Wal-Mart can influence the rules in ways that benefit Wal-Mart at the expense of the competition.

Jeffrey Young in The Atlantic:

Based on the axiom that nobody in business or politics acts strictly out of altruism, it’s safe to assume that Duke and Wal-Mart’s board of directors concluded that backing the employer mandate would provide the company with some kind of competitive advantage. When I originally reported the story, it wasn’t immediately clear to me what that might be, though I suspected it must have had something to do with Wal-Mart’s calculation of how much money the mandate would cost them relative to other retailers.

Michael Cannon, for the Cato Institute:

A couple of years ago, I shared a cab to the airport with a Wal-Mart lobbyist, who told me that Wal-Mart supports an “employer mandate.” An employer mandate is a legal requirement that employers provide a government-defined package of health benefits to their workers...But it all became clear when the lobbyist explained the reason for Wal-Mart’s position: “Target’s health-benefits costs are lower.”

I have no idea what Target’s or Wal-Mart’s health-benefits costs are.  Let’s say that Target spends $5,000 per worker on health benefits and Wal-Mart spends $10,000.  An employer mandate that requires both retail giants to spend $9,000 per worker would have no effect on Wal-Mart.  But it would cripple one of Wal-Mart’s chief competitors.

U.S. Chamber of Commerce, quoted nearly everywhere (here courtesy again, of Mr. Jeffrey Young):

The U.S. Chamber of Commerce took a pretty nasty swipe at Wal-Mart when I emailed them for a comment. Here’s the statement the Chamber’s press office sent me, attributed to James Gelfand, its senior manager for health policy: “Some businesses make the decision to use the government as a weapon against their competition. We do not agree with this method.” Ouch.

| Jul 01, 2009

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This is it, so don’t get scared now.

The Orange County Board of Supervisors is set to make a decision once and for all on the fate of the Wilderness Wal-Mart - a public hearing has been scheduled for July 27th, which will be the last time the public (and Robert Duvall) will be able to make their opinions known before the board takes the matter for good. Note: As a Civil War vet, Robert Duvall can actually comment all he’d like.

What will they decide? Will Wal-Mart be allowed to desecrate a piece of American history? Will they be denied, and an alternate site be recommended?

There seems to be a divide between the County Planning Commission and Orange County residents - the Commission voted 5-4 last week to approve development on the Battlefield site, yet at previous public hearings, the majority of Orange County residents were against the project (by an estimated 2-1 margin). This public outcry, combined with the history of the land at stake, would make it seem appropriate that Wal-Mart would be eager for a compromise that would still allow them to develop in the area, if one were presented...but to this point, no dice. Which is why County Administrator Bill Rolfe believes it’s now up to the supervisors to make the “win-win” a reality.

“The question that begs to be asked is, ‘Why isn’t the county trying to broker a deal that keeps Wal-Mart in the county and moves it further away from the congressionally approved boundary line of the Wilderness Battlefield?’ Both would be in our best interest,” Rolfe wrote the Board of Supervisors in a June 15 e-mail...He noted two goals--that Orange enlarge and diversify its tax base, and not do anything that would “detract from the [Wilderness] battlefield as a tourism destination for our community.”

Rolfe went on to point out that the coalition of historic preservation groups currently fighting the Wilderness plan would appear to be amenable to a development located farther from the battlefield park. And it just so happens that just such a piece of land could be made available next to a nearby 51-acre retail development. The question is, will County Supervisors go for it, or will they doom the Wilderness Battlefield to witnessing another brutal defeat?

Seeking win-win in store debate [Fredericksburg Free Lance-Star]

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| Jun 25, 2009

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We hate to say “I told you so,” but....

Marc Gunther on ClimateBiz discussed Wal-Mart on his blog yesterday, and points out something we’ve been trying to get across as well. Even as its greenhouse gas emissions have begun to fall, the company’s overall carbon footprint has continued to rise.

As Gwen Ruta of the Environmental Defense Fund, a Wal-Mart partner, writes in her frank assessment of the company’s 2009 sustainability report, the problem is that all the good things that Wal-Mart is doing—increasing its use of renewable energy, driving efficiency in individual stores, improving its fleet operations and pushing up its recycling rate—are offset by the fact that the company is adding more stores and selling more stuff.

In late 2007 we released our own environmental report, in which we brought up the following:

Wal-Mart’s new stores will use more energy than its energy-saving measures will save. Its fleet of trucks, massive overseas shipping to import its goods, and the increasing vehicle miles traveled by its consumers all contribute heavily to CO2 emissions and the number of ozone-causing particulates released into the air. Its huge stores and even larger parking lots contribute to the degradation of our water supply, affecting our drinking water and the viability of aquatic life.

Wal-Mart’s response has been that by increasing its market share, it can replace less efficient competitors and thereby reduce emissions in the retail sector as a whole, even as it continues to expand. That might ultimately be true in the far, far distant future, especially if one day every store is a Wal-Mart. But in the interim, Wal-Mart’s total carbon emissions continue to outpace its efficiency gains. And as Gunther so eloquently adds:

If the Earth’s atmosphere could speak, it would tell us that it doesn’t care about efficiency or renewables or recyling—or market share.

Wal-Mart’s Big Problem: Climate Change [ClimateBiz]

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| Jun 19, 2009

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As you know, the Wal-Mart Watch community in New York, Chicago and LA has been rising up to voice their opposition to Wal-Mart’s attempt to exand into their city urban expansion.

The response in the Big Apple has been particularly impressive. Well over 15,000 letters were sent to all 51 New York City council members from all five boroughs concerning the negative impact that Wal-Mart will have on New York City businesses and community culture.  Several of you have already sent in responses received from your NY councilmembers - who have enthusiastically supported you in your stand against Wal-Mart - and for Employee Free Choice.

Here are a few of your letters:

I understand that Wal-Mart is interested in opening stores in Manhattan at Union Square, in Chelsea, or along Sixth Avenue. I strongly oppose the opening of a Wal-Mart store in our city. We who live in New York City have no need for a retailer that pays low wages and fails to provide quality health care for its employees, driving them to the use of hospital emergency rooms, thereby contributing to the increase in the cost of health care for the rest of us. Wal-Mart’s cost requirements encourage the payment of low wages to the employees of its suppliers, thus allowing it to become an unfair competitor and leading to the closing of many of its local business competitors. These actions of Wal-Mart drain money from our communities. If the Employee Free Choice Act, currently in Congress, were passed, then, and only then, would the arrival of Wal-Mart on the scene in New York City make any sense.  Wal-Mart workers would then have a chance to bargain for fair salaries and decent benefits and working conditions.  And, Wal-Mart would be forced to compete on an even playing field with its competitors who often are products of the neighborhoods they serve. I hope you’ll do whatever you can to support this crucial legislation as it makes its way through Congress. In this way, you will protect our city and its workers.  And, perhaps, make it possible for a newer, kinder, better Wal-Mart to evolve.

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I’ve heard that Wal-mart might be opening a store in Union Square and I am absolutely appalled.  For starters, I’ve lived in the building directly across from the space, (old circuit city/ Virgin Mega store), for nearly 8 years.  Wal-mart is absolutely antithetical to what NYC is to me, not to mention as anti-nyc neighborhood as it gets.  We need more small businesses hiring people at respectable wages to boost the city, and the people living here.  Wal-mart certainly won’t help me, a tax payer paying directly into the district. I know my local bodegas, my local drugstore, my local clothing shops, my local specialty nooks. These places probably can’t compete with a place like Walmart.  I’ve already seen my favorite East Village bagel shop get muscled out by hot and crusty… And my favorite clothing shops muscled out by rising rent.  And these are the places that make NYC what it is, and bring people to live here, and tourists to visit.  That space in Union Square is PRIME location, and Union Square is the true heart of the city.  Fill it with Walmart, and you kill the heart of the city. Please.  I’m pleading with you, I voted for you, to give me my voice in matters such as these.  And right now, I’m asking you to use your power to oppose Wal-Mart. Thank you for protecting our city.

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| Jun 18, 2009

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By this time we should all be aware of the controversies surrounding credit companies - in addition to increasingly complex and confusing options for credit applicants, credit card issuers have been raising interest rates and fees for many current borrowers, many of whom were in complete compliance with their card holders’ agreements when their rates were raised. This is a major reason behind the call for continuing credit card reform.

What many people might not be aware of is the struggle between credit companies and the retailers at which their cards are used. As Bloomberg explains, this could end in a giant Visa vs. Wal-Mart rumble:

Lawmakers are promising new rules to bring down the interchange fee, a charge on purchases sometimes topping 3 percent that’s split by the two banks serving the customer and merchant. Supporters of the legislation include the biggest retail chains, restaurants and small businesses, which say the fees erode profit and inflate prices...Interchange is the second-biggest cost after payroll, Target said, and merchants want to negotiate lower payments collectively without running afoul of antitrust law.

The issue has become such a hot topic, the Government Accountability Office has been ordered to study the effect interchange fees have on both consumers and merchants. The “interchange fee” is the fraction of every credit card transaction that the card’s issuer retains. When combined with additional smaller fees levied by a retailer’s own bank (to which the retailer first submits the transaction), interchange fees can cut into retailer revenue - especially important for those retailers with slim profit margins.

Interchange fees have risen over time - interesting, since technological advances would suggest the cost of such transactions should go down - and the result is a growing battle between retailers and card issuers. Wikipedia provides a surprisingly simple example of how the fees work:

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| Jun 16, 2009

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Not long ago, we reached out to our Wal-Mart Watch communities in New York, Los Angeles, and Chicago, asking them to contact their city councils and urge them to continue to oppose Wal-Mart’s moving into their cities. Combined, the populations of Chicago, NYC and LA house nearly 15 million people, or roughly 5% of the U.S. population.

For years, Wal-Mart has tried to build stores in those and other urban centers including Detroit, Washington, DC, and Boston. Building stores in these cities represents one of the last few rich avenues for domestic U.S growth open to Wal-Mart, but to this point it’s been one big, giant FAIL.

Since submitting our request, over 25,000 letters have been sent to the city councils in LA, New York and Chicago. And below is an example of the responses those letters have been generating - this one is from David Yassky, a member of the New York City Council currently running for New York City Comptroller:

Dear Neighbor:

Thank you for your concern regarding the recent proposals to open Wal-Mart stores in New York City. I agree that this is not the answer to our City’s economic problems, and I am concerned by the company’s poor track record regarding the treatment of its employees and its devastating effect on local businesses.  Small businesses are the life-blood of our City and as the Chair of the City Council’s Small Business Committee, I will fight against the development of new Wal-Mart stores that bring more harm than good to a community.

Moreover, I strongly support passing the Employee Free Choice Act. This legislation would be an important safeguard against employee abuses.  The Employee Free Choice Act would promote better working conditions and benefits for those who need it most:  New York’s working families.  I will continue to support this legislation and employee rights whenever I have the opportunity to do so. Thank you again for your interest.

Sincerely,
David Yassky
Council Member, 33rd District

We’ll keep updating you as we continue to get more responses. Until then, you can check out more on Wal-Mart’s Urban Problem here. What these cities need now are jobs that pay a living wage, good health benefits that keep people healthy and productive (and off public health care), and thriving small businesses that give back to their communities. Wal-Mart need not apply.

| Jun 11, 2009

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Image above from the Center on Budget and Policy Priorities

When Wal-Mart’s use of an intricate web of subsidiaries to avoid state taxes was discovered, the N.C. Secretary of Revenue famously sent tax lawyers and auditors after the world’s biggest retailer. With state economies strapped for cash, North Carolina is now looking to halt such shenanigans before they can start.

A proposed “combined-reporting” law would require companies with multiple subsidiaries operating in several states to file tax returns as a single business. Opponents of this legislation have given lawmakers the shivers...But in the face of the state’s biggest budget crisis since the Great Depression, combined reporting took a first step Tuesday toward becoming law. After a contentious House Finance Committee meeting, the Democrat-led committee voted along party lines to approve a larger tax package that includes combined reporting.

Combined reporting basically treats a parent company and its subsidiaries as one entity for tax purposes. A driving force behind the move was the public realization of just how much money North Carolina has been losing through loopholes in its tax laws.

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| Jun 08, 2009

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The Virginia Democratic Primary is tomorrow, and with it gubernatorial candidates on both sides of the aisle are making their views known on the controversial Battlefield Wal-Mart. This also comes just days before the Orange Planning Commission is scheduled to meet to consider the site developer’s request for a special-use permit for the 138,000-square-foot Wal-Mart store.

By now we all know that Wal-Mart wants to build a 141,000-square-foot supercenter on the edge of the Wilderness Battlefield National Park in central Virginia. The plan came under heavy opposition last year by several groups focused on everything from preserving the site’s historical significance to protecting the local environment. Collectively these groups have come to be known as the Wilderness Battlefield Coalition.

This past weekend, the Fredericksburg Free Lance-Star took a look at the positions of the Virginia gubernatorial hopefuls. Democratic candidates Creigh Deeds and Terry McAuliffe both are in favor of preserving the site, having sent letters expressing as much to current Wal-Mart CEO Mike Duke, with Deeds going so far as saying he felt an obligation to do so. Both of their letters echo the sentiments of preservation groups - that alternative sites exist that would allow Wal-Mart to build while protecting the sanctity of the Battlefield site.

Deeds:

“The opponents of the proposed project have identified [alternative] sites within two or three miles of the current site,” he wrote Duke. “With this compromise, we can continue to preserve the land and history of the Wilderness battlefield while still providing your company a location for a store.”

McAuliffe:

He asked Duke to “consider moving the Wal-Mart a little ways down the road so that we can preserve this historic site. The Wal-Mart you are building could potentially jeopardize the most popular tourist attraction in Orange County.”

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| Jun 02, 2009

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According to the Courthouse News Service, Wal-Mart has been using a sales tax loophole to swindle customers out of a full refund on returned merchandise. Basically, the lawsuit claims that when customers have purchased items at a store that charges a particular sales tax, and have returned the item at a store in an area with a lower sales tax, Wal-Mart has refused to return the difference in paid tax if the rate at the point of sale is higher than that at the store where the merchandise is being returned.

(Plaintiff John) Whitewall says he bought a Blue Ray disc player from Wal-Mart’s store in Collinsville, Ill. for $214.04, at an 8.1 percent sales tax rate. But when he returned the player to Wal-Mart’s store in Glen Carbon, Ill., he received only $211.56, because that store has a 6.85 percent sales tax.

This seems like such a small issue - $3.50 or $4 dollars on a sale - but multiplied over thousands of transactions it has the potential to add up. Wal-Mart has had similar issues with returns before - late last year the Connecticut Attorney General began looking into Wal-Mart after charges began surfacing that major retailers (most notably Wal-Mart) were violating state law by charging a second sales tax when merchandise paid for with cash was exchanged. You can refresh your memory on that story here and here.

The lawsuit was filed as a national class action, and we’ll continue checking for updates. You can read the complaint here. The lawsuit is seeking actual damages, plus any additional damages the court would deem appropriate - read: punitive damages in an amount high enough to make Wal-Mart consider changing its practices.

It’s unclear if the plaintiff has examples beyond his own - the complaint mentions only the Blu-ray player purchase - but I have to believe they have additional plaintiffs. A class action based on one case is, after all, not really in much danger of moving forward as a class action.

Class Sues Wal-Mart Over Returns Policy [Courthouse News Service]

| Jun 01, 2009

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According to Bloomberg, Wal-Mart has won preliminary court approval to pay as much as $85 million to settle 30 wage/hour lawsuits. The lawsuits claimed the company didn’t pay employees for all hours worked, forcing them to miss breaks and forgo overtime pay.

Late last year, Wal-Mart announced that it would settle 63 wage and hour class action lawsuits that have been pending against the company for several years. There were just under 80 such suits pending against Wal-Mart at the time, so it represented a pretty large legal housecleaning. This $85 million settlement covers just under half those cases as part of the larger agreement made back in December, which could cost the company up to $640 million before all is said and done.

Following the initial settlement, we noted that what these cases revealed through evidence and employee testimony was a “corporate culture” and systematic approach geared towards cutting labor costs, by dictating managers hire below the “preferred” staffing levels and rewarding managers for keeping labor costs down. Steven Greenhouse on TPM has pointed out that while store management is ultimately responsible for setting schedules, pressure often comes from the top:

Robert Eckert, a former assistant store manager at several Wal-Marts in California, said: “They tell you that working off the clock is against the law, is not allowed by Wal-Mart, and then they tell you to get the job done. But they didn’t give you the budget to get the job done. It is clearly understood that if you don’t make payroll, it’s a serious issue and you can lose your job over it.”

For more information on wage theft in general, you should check out Kim Bobo’s “Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid - And What We Can Do About It.”

As for the $85 settlement, a Federal Judge in granting temporary approval called the wage theft agreement “fair, reasonable, and adequate.” Merely adequate for the workers, perhaps, but no doubt a “steal” for Wal-Mart.

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