Spin Cycle: Your Guide to Wal-Mart’s Spin
Wal-Mart’s PR “War Room” is in action this week, spoon-feeding their misleading talking points to media outlets across the country. For evidence of Wal-Mart’s new-found message control, look no further than the op-ed pages of the New York Times and Washington Post.
Can you spot the talking points? Read our guide to Wal-Mart's Spin below.
SPIN CYCLE #1: LET THEM EAT CAKE!
* “But [one pro-Wal-Mart study] points out that Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year. The savings are possibly five times that much if you count all of Wal-Mart's products.” [Sebastian Mallaby, Washington Post, “Progressive Wal-Mart. Really,” 11/28/05]
* “Furman…notes that the possible decline in wages is minuscule compared with what the typical family saves by shopping at Wal-Mart: nearly $800 per year on groceries alone, a savings that's especially valuable to the many low-income shoppers at Wal-Mart.” [John Tierney, New York Times, “The Good Goliath,” 11/26/05]
THE FACTS: PROPONENTS TOUT TAINTED CLAIMS OF WAL-MART SAVINGS
* Study Cited Was Paid For by Wal-Mart and Relied on Internal, Unverifiable Data. In their opinion columns, both Mallaby and Tierney repeat assertions by pro-Wal-Mart scholar Jason Furman that Wal-Mart’s savings to consumers are proven. Furman relied on a recent study on Wal-Mart conducted by Global Insight. BusinessWeek reported of the Global Insight study, “Wal-Mart hired Global Insight to conduct its own study of the retailer's economic impact. It gave Global what it says is unprecedented access to its internal data about wages, benefits, and other employment issues.” [BusinessWeek, 10/20/05]
SPIN CYCLE #2: BLAME THE CUSTOMER!
*“These gains are especially important to poor and moderate-income families. The average Wal-Mart customer earns $35,000 a year, compared with $50,000 at Target and $74,000 at Costco.” [Sebastian Mallaby, Washington Post, “Progressive Wal-Mart. Really,” 11/28/05]
* “The average income of shoppers at Wal-Mart is $35,000, compared with $50,000 at Target and $74,000 at Costco. Costco is touted as the virtuous alternative to Wal-Mart because it pays better wages, but it needs to because it requires higher-skilled workers to sell higher-end products to its more affluent customers.” [John Tierney, New York Times, “The Good Goliath,” 11/26/05]
THE FACTS: LIKE COMPETITORS, WAL-MART COURTS UPSCALE CONSUMERS
* Wal-Mart Touted Luxury Items in Bid to Attract Affluent Shoppers. The New York Times reported, “Walmart.com has broken through its own glass ceiling, selling high-priced platinum and diamond jewelry, cashmere sweaters and other goods designed to appeal more to the Tiffany crowd than to the bargain hunters who browse the company's terrestrial stores. The question is why, and the answer is straightforward: Wal-Mart, the world's biggest retailer, with 1.3 million workers and nearly $300 billion in annual revenue, is reaching out to more affluent shoppers. With disappointing sales of late and its stock price lagging, it has begun displaying more fashionable clothes and more upscale home furnishings in its stores.” [New York Times, 11/21/05]
SPIN CYCLE #3: ANY JOB IS A GOOD JOB!
* “When Wal-Mart opened a store in Glendale, Ariz., last year, it received 8,000 applications for 525 jobs, suggesting that not everyone believes the pay and benefits are unattractive.” [Sebastian Mallaby, Washington Post, “Progressive Wal-Mart. Really,” 11/28/05]
* “From that perspective, Wal-Mart has been one of the most successful antipoverty programs in America. It provides entry-level jobs that unskilled workers badly want - there are often 5 or 10 applicants for each position at a new store.” [John Tierney, New York Times, “The Good Goliath,” 11/26/05]
THE FACTS: WAL-MART JOB QUALITY FALLS BELOW INDUSTRY COMPARISONS
* Wal-Mart Associates Earn $2.60 Less Per Hour than American Retail Workers. According to data reported by the New York Times, hourly wages at Wal-Mart are $9.68. This amount is $2.60 per hour less than the average hourly wages of retail workers of $12.28. Costco, for example, pays its hourly workers $16.00. [New York Times, 5/3/05]
* Wal-Mart Sales Clerks Live Below Poverty Level. According to the Century Foundation’s Simon Head, at the end of 2004, “the average pay of a sales clerk at Wal-Mart was $8.50 per hour or about $14,000 per year - $1,000 below the government’s definition of the poverty level for a family of three.” [New York Review of Books, Head, “Inside the Leviathan,” 12/16/04]
* At $8,434 Per Hour, Wal-Mart CEO’s Salary Dwarfs Compensation of Hourly Workers. Wal-Mart President and CEO H. Lee Scott earned $17.5 million in total compensation in 2004. That amount is double the average for leading CEOs. Scott’s average hourly pay is $8,434, compared to the average Wal-Mart worker’s wage of $9.68 per hour. [Wal-Mart Proxy Statement, http://www.walmartstores.com; Business Week, 4/18/05; Institute for Policy Studies, “Wal-Mart Pay Gap”]
SPIN CYCLE #4: PEER PRESSURE
* “Wal-Mart's critics also paint the company as a parasite on taxpayers, because 5 percent of its workers are on Medicaid. Actually that's a typical level for large retail firms, and the national average for all firms is 4 percent.” [Sebastian Mallaby, Washington Post, “Progressive Wal-Mart. Really,” 11/28/05]
* “Wal-Mart offers health benefits that are generally comparable to what other retailers offer.” [John Tierney, New York Times, “The Good Goliath,” 11/26/05]
THE FACTS: WAL-MART BENEFITS BELOW INDUSTRY COMPARISONS
* Wal-Mart Admitted Its Health Plan Leaves Children Behind. According to the secret Wal-Mart memo leaked by Wal-Mart Watch to the New York Times, “We also have a significant number of Associates and their children who receive health insurance through public-assistance programs. Five percent of our Associates are on Medicaid compared to an average for national employers of 4 percent. Twenty-seven percent of Associates’ children are on such programs, compared to a national average of 22 percent. In total, 46 percent of Associates’ children are either on Medicaid or are uninsured.” [Susan Chambers Memo to the Wal-Mart Board of Directors, Page 8, http://walmartwatch.com/memo; New York Times, 10/26/05]
Wal-Mart Covers Just 44 Percent of its Employees. According to the company’s website Wal-MartFacts.Com, the company provides health care benefits about to 568,000 of Wal-Mart’s 1.3 million associates in the United States. Based on Wal-Mart’s own figures, the company covers only 44 percent of its workforce. In comparison, 68 percent of workers in large firms (200 employees or more) receive their health benefits from their employer. [http://www.walmartfacts.com/newsdesk/wal-mart-fact-sheets.aspx; National Public Radio, 11/1/05; Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits 2004 Annual Survey, Exhibit 3.2, New York Times, 5/4/05]
Wal-Mart Under-Spends on Benefits. A recent study of Wal-Mart’s health care offering by the Center for a Changing Workforce found that company spending on employee health care has been well below-average. “According to company testimony given in 2004 company, Wal-Mart spent $3,100 per employee on health insurance. A Harvard Business School study estimated Wal-Mart’s average annual cost at $3,500 in the same year. By comparison, the average spending per employee in the wholesale/retailing sector was $4,800, and for U.S. employers in general, the average was $5,600 per employee.” [Center for a Changing Workforce, “Wal-Mart and Health Care: Condition Critical, 10/26/05]
SPIN CYCLE #5: BE STILL MY BLEEDING HEART
* “Poor Americans will be chief among the casualties.” [Sebastian Mallaby, Washington Post, “Progressive Wal-Mart. Really,” 11/28/05]
* “But why would anyone who claims to be fighting for social justice be so determined to take money out of the pockets of the poor?” [John Tierney, New York Times, “The Good Goliath,” 11/26/05]
THE FACTS: WAL-MART MODEL DRIVES RACE TO POVERTY
* Wal-Mart Has the Power to Make America Better Off. Christian Weller, senior economist at the Center for American Progress addresses the Wal-Mart poverty argument. “For all the reductions in prices that Wal-Mart generates for consumers, the company's business practices, such as leaving more than half of its employees not covered by its health insurance plan, also contribute to real reductions in the purchasing power of its employees. And when many companies follow Wal-Mart's lead, as they must, millions of Americans are left with declining real wages and rising debt -- exactly what is happening in today's economy. If Henry Ford wanted his workers to be rich enough to buy his cars, Wal-Mart is leading us to an economy in which its employees are barely able to shop at Wal-Mart. No one should welcome this. Wal-Mart could distribute more of its billions of dollars in profits to its workers without even raising prices. Or Wal-Mart could raise prices marginally but, in so doing, help hundreds of thousands of Americans move from being debtors to savers. Either way, America would be better off.” [Letter, Washington Post, 12/3/05]
* Higher Wages Mean More Productive Employees; Low Wage Model Cuts Consumer Spending. A 2004 study by Business Week found that higher-paid Costco employees were more productive. “Costco actually keeps its labor costs lower than Wal-Mart's as a percentage of sales, and its 68,000 hourly workers in the U.S. sell more per square foot. Put another way, the 102,000 Sam's employees in the U.S. generated some $35 billion in sales last year, while Costco did $34 billion with one-third fewer employees. Bottom line: Costco pulled in $13,647 in U.S. operating profit per hourly employee last year, vs. $11,039 at Sam's. … What's more, the low-wage approach cuts into consumer spending and, potentially, economic growth. ‘You can't have every company adopt a Wal-Mart strategy. It isn't sustainable,’ says Rutgers University management professor Eileen Appelbaum.” [BusinessWeek Online, 4/12/04]
Help counter Wal-Mart's spin!
1. Keep your eyes out for more journalists who get spoon-fed these faulty facts.
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