BUSINESS

The long, losing war to smear Wal-Mart

STEVE MAICH October 23 2006
BUSINESS

The long, losing war to smear Wal-Mart

STEVE MAICH October 23 2006

The long, losing war to smear Wal-Mart

BUSINESS

STEVE MAICH

Pity the Wal-Mart haters. For them, these are dark days.

Until recently, you didn’t have to work too hard to convince people that the world’s biggest retailer was plotting to destroy every little community in which it set up shop. Over the past decade, we’ve been repeatedly told that Wal-Mart is a nasty, rapacious, corporate villain that exploits workers, crushes rivals and is responsible for everything from the U.S. trade deficit to the destruction of the environment. Ask most progressive-thinking urbanites about WalMart, they’ll likely tell you the so-called “Beast from Bentonville” represents everything that’s wrong with big business.

The facts say otherwise, and the facts are finally starting to win the argument.

Last week, for example, Wal-Mart announced the expansion of its program to slash prices on a long list of common generic drugs. By the end of next year, the company has promised to make about 300 medications available nationwide for US$4 per month. Wal-Mart’s critics, of course, aren’t impressed by this. They say the company is only using its enormous buying power to grab market share from rival drugstores, and to cash in on some good publicity. The beneficiaries of this initiative are not so churlish, however. The malcontents can call it a publicity stunt if they wish, but tens of thousands of poor and sick Americans aren’t really interested in nitpicking over motives. They just want the pills.

This is a particularly important issue for Wal-Mart, because the company is regularly assailed for its own failure to provide decent health coverage for its employees. Of course this is a problem that goes well beyond WalMart—more than 46 million Americans lack health insurance, according to the latest figures from the U.S. Census Bureau. Still, less than half of Wal-Mart’s workers buy into its health insurance, and last October, an internal memo was leaked in which officials acknowledged that the company’s medical benefits were too expensive for many of its hourly employees

to afford. The critics claimed they finally had “smoking gun” proof that Wal-Mart was knowingly exploiting its workers.

A more dispassionate reading of the memo might have given the company credit for taking a hard look at the criticisms, and for acknowledging some merit in the complaints. But Wal-Mart’s critics aren’t generally inclined to give it the benefit of any doubt. And so, when executives recently announced an overhaul of the company’s medical benefits, replacing its high-premium, low-deductible package with a plan offering low premiums (US$11 a month), higher deductibles, and health savings accounts in which employee contributions are matched by up to US$2,500 from the company, opponents wailed that it was even worse than the old system.

Once again, however, the objections miss the real point. The main problem with the old

The company’s opponents are losing the fight because they picked the wrong target

package was that the expense prevented staffers from joining in the first place, and it imposed long wait times on new hires. Those problems are now largely fixed. And in a country in which skyrocketing health costs are prompting hundreds of major companies to scale back coverage or to cancel it entirely, Wal-Mart is swimming in the opposite direction—extending medical insurance benefits to thousands of people who currently have none. You might think that would warrant a pat on the back, even from the critics. But this is Wal-Mart we’re talking about.

It’s becoming increasingly clear, however, that ordinary North Americans have begun to see the anti-Wal-Mart crusade for the illfounded smear campaign that it is.

For evidence of the shifting tide in public opinion, look no further than the city of Chicago. Local lawmakers fought for years to keep Wal-Mart out of the Windy City, even attempting to pass a law prohibiting “big box” development unless the stores agreed to pay all staff at least US$10 an hour. But last month, the city’s Democratic, union-backed mayor vetoed the ordinance, arguing that Wal-Mart and other similar retailers would bring muchneeded jobs, investment and development to desperately poor parts of the city. WalMart received 15,000 applications for the 400

available jobs, and last week, people waited in line for hours to take part in its grand opening. By the end of that first day, more than 5,000 had streamed through its doors.

This isn’t just consumer apathy or worker desperation at work. The company’s opponents, led by the United Food and Commercial Workers Union, are losing the grassroots fight because they picked the wrong target. They insist that Wal-Mart devastates local economies, but the places that are struggling most are those that fought to keep the stores out, and then watched as more and more commercial activity and employment fled to the Wal-Mart-friendly suburbs. They attack Wal-Mart for victimizing poor people, when in reality it may be the best thing that ever happened to low-income families. Consider that Wal-Mart is among the most prominent voices in Washington fighting for a raise in

the U.S.’s pitiful minimum wage of US$5.15 an hour. Why? Because Wal-Mart pays its staff well over US$8 an hour on average, but millions of its customers aren’t so lucky. A raise in the minimum wage would put money in the pockets of typical Wal-Mart shoppers but wouldn’t raise the chain’s costs at all.

These are the uncomfortable facts that suck the life out of the anti-Wal-Mart campaigns. There will always be snobs and dogooders who hate Wal-Mart for one reason or another, and that’s their prerogative. But don’t think for a second that those who shop or work there are the dupes. They’re the ones who’ve been paying attention. M