Wal-Mart Watch Files Complaints with Attorneys General and TV Station Managers
For Immediate Release
Wednesday, August 30, 2006
Washington, D.C. – Wal-Mart Watch last night filed formal complaints with the attorneys general of Arizona and Nebraska, refuting and challenging misleading statements made by Wal-Mart in its new Tucson and Omaha advertising campaigns. The complaints, filed with the consumer protection divisions of both states, charge that Wal-Mart’s incorrect claims of consumer savings, job creation and health care affordability are in violation of the Arizona Consumer Fraud Act and the Nebraska Uniform Deceptive Trade Practices Act. Separate letters were also sent to all television station managers in the Tucson and Omaha markets, challenging the validity of the claims and requesting that the stations pull the advertisements.
The full text of the attorneys general letters is below:
General Terry Goddard
Attorney General, State of Arizona
1275 West Washington Street
Phoenix, AZ 85007
General Goddard,
Please be aware that my organization, Wal-Mart Watch, has submitted a complaint with the Consumer Protection Division of your office pursuant to the Arizona Consumer Fraud Act. The complaint is in response to television advertisements paid for by the Wal-Mart Corporation, now airing in Tucson. These advertisements are at best misleading, and, at worst, patently false. The ads began airing yesterday, August 28, 2006, and, according to a story in today’s New York Times (“Wal-Mart Counters Criticism with a Political-Style Ad Campaign”), will continue to air in the Tucson area with the intent of national release in the future.
A copy of our complaint is attached, as well as documentation refuting and challenging incorrect or misleading statements by Wal-Mart. We have also written letters to the televisions stations carrying these advertisements and asked them to pull the ads off the air. We ask that your office investigate the accuracy of these statements and contact the appropriate entities to remove the misleading ads from public distribution in order to protect consumers in your state.
Wal-Mart Watch, an organization whose mission is to urge Wal-Mart to become a more responsible corporate citizen even as it is the largest corporate employer in the world, challenges statements made by Wal-Mart in the advertisement, including that:
1) “Wal-Mart saves the average working family $2300 per year.” This “fact” has been discredited by a leading economic research think tank, the Economic Policy Institute (EPI), in a recent analysis of profits, prices, and wages at Wal-Mart. Their analysis was in large part a critique of an earlier study by the firm Global Insight (GI) – that was funded entirely by Wal-Mart.
The GI claim rests entirely on the fact that, over the past ten years, Wal-Mart expanded as consumer prices fell. But to say Wal-Mart caused these price declines it is necessary to ignore everything else – unemployment levels, changes in income, taxation, inflation, interest rates, weather, terrorism, etc. To ignore all factors that aren’t Wal-Mart defies simple logic. For an economist to ignore them is to purposively deceive.
When EPI added other more likely variables to the equation, other factors that did influence prices, the Wal-Mart “effect” quickly vanished (see attached EPI Issue Brief, “The Wal-Mart Debate” and the study itself at http://www.epi.org/content.cfm/wp276).
2) “Wal-Mart creates tens of thousands of jobs per year.” One recent study found that “Wal-Mart expansion tends to generate employment that supplants competing merchandising jobs paying 18% more in urban counties. This leads to substantial downward pressure on wages, with Wal-Mart store openings leading to a 0.5–0.8% reduction in average earnings per worker in the general merchandising sector, and pay lowered by 0.8–0.9% for grocery workers.” [Dube, Arindrajit and Steve Wertheim. 2005. “Wal-Mart and Job Quality: What Do We Know and Why Should We Care?”, Presentation at the Center for American Progress. Washington, D.C.] Unlike with, say, an auto factory, opening a store doesn’t necessarily create jobs. In any given market, consumers only have so much to spend, and will only spend so much on groceries particularly (a crucial part of Wal-Mart’s expansion). Thus, business at a new store isn’t new activity; it’s in large part just sales—and eventually jobs—that Wal-Mart has taken from a competitors.
3) Wal-Mart offers affordable health care benefits to its associates. Wal-Mart knows that their coverage is actually quite expensive for its workforce. A memo written by Susan Chambers, Executive Vice President for Benefits, said: “Our critics are correct in some of their observations. Specifically, our coverage is expensive for low-income families.” [Susan Chambers Memo to the Wal-Mart Board of Directors, http://walmartwatch.com/memo; New York Times, 10/26/05]
This supposedly affordable health care plan includes high deductibles, $1,000 for individuals and $3,000 for families, and additional charges. Standard services – including office visit co-pays, emergency room visits and ambulance services, per-event deductibles, and pharmacy co-pays – are not applied toward the standard deductible. For example, in addition to the standard deductible, a $300 pharmacy deductible must be reached, a $1,000 in-patient facility deductible per visit must be paid, and a $500 out-patient surgical facility deductible per visit must be paid. [Wal-Mart 2006 Associate Benefits Book]
According to the Center for a Changing Workforce, Wal-Mart employees paid 41% of insurance premium costs in 2003. At the time of the report, Costco employees paid about 10% of premium costs. Nationally, workers today pay an average of 16% of premiums for single coverage and 26% of premiums for family coverage. [Employer Health Benefits 2005 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust; Wal-Mart and Healthcare: Condition Critical, Center for a Changing Workforce, 10/26/05]
These statements by Wal-Mart, now airing for thousands of consumers to view, are incorrect or misleading, as evidenced by ascertainable facts. With the launch of this media campaign, now using the Tucson community as a test case, Wal-Mart has begun waging a pricey but insincere campaign to convince the American buying public that Wal-Mart is a compassionate corporate partner in the lives of its employees, customers and local communities. These same employees, customers and communities deserve to know the complete facts behind these misleading statements. We offer our organization as a source of accurate information on these issues and welcome your inquiries.
Sincerely,
Andrew Grossman
Executive Director, Wal-Mart Watch
***
General Jon Bruning
Attorney General, State of Nebraska
2115 State Capitol
Lincoln, NE 68509
General Bruning,
Please be aware that my organization, Wal-Mart Watch, has submitted a complaint with the Consumer Protection Division of your office pursuant to the Nebraska Uniform Deceptive Trade Practices Act. The complaint is in response to television advertisements paid for by the Wal-Mart Corporation, now airing in Omaha. These advertisements are at best misleading, and, at worst, patently false. The ads began airing yesterday, August 28, 2006, and, according to a story in today’s New York Times (“Wal-Mart Counters Criticism with a Political-Style Ad Campaign”), will continue to air in the Omaha area with the intent of national release in the future.
A copy of our complaint is attached, as well as documentation refuting and challenging incorrect or misleading statements by Wal-Mart. We have also written letters to the televisions stations carrying these advertisements and asked them to pull the ads off the air. We ask that your office investigate the accuracy of these statements and contact the appropriate entities to remove the misleading ads from public distribution in order to protect consumers in your state.
Wal-Mart Watch, an organization whose mission is to urge Wal-Mart to become a more responsible corporate citizen even as it is the largest corporate employer in the world, challenges statements made by Wal-Mart in the advertisement, including that:
1) “Wal-Mart saves the average working family $2300 per year.” This “fact” has been discredited by a leading economic research think tank, the Economic Policy Institute (EPI), in a recent analysis of profits, prices, and wages at Wal-Mart. Their analysis was in large part a critique of an earlier study by the firm Global Insight (GI) – that was funded entirely by Wal-Mart.
The GI claim rests entirely on the fact that, over the past ten years, Wal-Mart expanded as consumer prices fell. But to say Wal-Mart caused these price declines it is necessary to ignore everything else – unemployment levels, changes in income, taxation, inflation, interest rates, weather, terrorism, etc. To ignore all factors that aren’t Wal-Mart defies simple logic. For an economist to ignore them is to purposively deceive.
When EPI added other more likely variables to the equation, other factors that did influence prices, the Wal-Mart “effect” quickly vanished (see attached EPI Issue Brief, “The Wal-Mart Debate” and the study itself at http://www.epi.org/content.cfm/wp276).
2) “Wal-Mart creates tens of thousands of jobs per year.” One recent study found that “Wal-Mart expansion tends to generate employment that supplants competing merchandising jobs paying 18% more in urban counties. This leads to substantial downward pressure on wages, with Wal-Mart store openings leading to a 0.5–0.8% reduction in average earnings per worker in the general merchandising sector, and pay lowered by 0.8–0.9% for grocery workers.” [Dube, Arindrajit and Steve Wertheim. 2005. “Wal-Mart and Job Quality: What Do We Know and Why Should We Care?”, Presentation at the Center for American Progress. Washington, D.C.] Unlike with, say, an auto factory, opening a store doesn’t necessarily create jobs. In any given market, consumers only have so much to spend, and will only spend so much on groceries particularly (a crucial part of Wal-Mart’s expansion). Thus, business at a new store isn’t new activity; it’s in large part just sales—and eventually jobs—that Wal-Mart has taken from a competitors.
3) Wal-Mart offers affordable health care benefits to its associates. Wal-Mart knows that their coverage is actually quite expensive for its workforce. A memo written by Susan Chambers, Executive Vice President for Benefits, said: “Our critics are correct in some of their observations. Specifically, our coverage is expensive for low-income families.” [Susan Chambers Memo to the Wal-Mart Board of Directors, http://walmartwatch.com/memo; New York Times, 10/26/05]
This supposedly affordable health care plan includes high deductibles, $1,000 for individuals and $3,000 for families, and additional charges. Standard services – including office visit co-pays, emergency room visits and ambulance services, per-event deductibles, and pharmacy co-pays – are not applied toward the standard deductible. For example, in addition to the standard deductible, a $300 pharmacy deductible must be reached, a $1,000 in-patient facility deductible per visit must be paid, and a $500 out-patient surgical facility deductible per visit must be paid. [Wal-Mart 2006 Associate Benefits Book]
According to the Center for a Changing Workforce, Wal-Mart employees paid 41% of insurance premium costs in 2003. At the time of the report, Costco employees paid about 10% of premium costs. Nationally, workers today pay an average of 16% of premiums for single coverage and 26% of premiums for family coverage. [Employer Health Benefits 2005 Annual Survey, The Kaiser Family Foundation and Health Research and Educational Trust; Wal-Mart and Healthcare: Condition Critical, Center for a Changing Workforce, 10/26/05]
These statements by Wal-Mart, now airing for thousands of consumers to view, are incorrect or misleading, as evidenced by ascertainable facts. With the launch of this media campaign, now using the Tucson community as a test case, Wal-Mart has begun waging a pricey but insincere campaign to convince the American buying public that Wal-Mart is a compassionate corporate partner in the lives of its employees, customers and local communities. These same employees, customers and communities deserve to know the complete facts behind these misleading statements. We offer our organization as a source of accurate information on these issues and welcome your inquiries.
Sincerely,
Andrew Grossman
Executive Director, Wal-Mart Watch
