November 2, 2005
By RITU KALRA, Courant Staff Writer
In the battle against Wal-Mart, the lines have been drawn.
The war is about to escalate.
On one side is a sophisticated coalition of community activists, environmentalists,
documentary filmmakers, religious leaders, Wal-Mart workers and organized
labor. The groups have recruited heavy-hitting political campaign directors,
created powerful websites and waged guerrilla campaigns against the retailing
On the other side are Wal-Mart's supporters, including many of its employees,
some economists and a documentary filmmaker, as well. The supporters maintain
that Wal-Mart's low-price business model has cut inflation and is a boon
to the economy, that outsourcing has helped to improve living conditions
for workers around the world and that the discount retailer's savvy logistics
have driven other companies to be more competitive.
Although both campaigns appear to revolve around the benefits and pitfalls
of the world's largest retailer, the struggle serves as a backdrop, highlighting
significant concerns that touch every aspect of society.
Wall Street, meanwhile, is watching carefully - especially as the discount
retailer tries to make inroads in urban areas and lure higher-income customers.
"That's why this campaign is intensifying," said Mark Husson,
a research analyst with HSBC Securities. "Wal-Mart has historically
been a red-state retailer. As it tries to move into blue states, this
is what you must expect."
"There's no doubt," he said,
that the withering attacks have had an impact.
Even Wal-Mart has admitted that some shoppers are beginning to sour on the
company. With negative publicity taking an increasing toll on sales, the
company has recently taken high-profile steps to boost its image and revive
its sagging stock price. The New York Times reported Tuesday that Wal-Mart
has even hired former presidential advisers to help it swing into action.
The critics' message is potent: The world's largest retailer creates traffic,
pollution and sprawl in the wake of its big-box stores, and spells the death
of neighborhood shops. It pays poverty-level wages and dumps employee health
costs onto taxpayers, discriminates against female employees, violates child
labor laws, squeezes suppliers and drives competing employers to do the same
in a spiraling race to the bottom.
This month, they will wage their largest
campaign yet. The first round begins Friday, with the theatrical launch
of a searing and satirical film, "Wal-Mart:
The High Cost of Low Prices," directed by independent filmmaker Robert
"There was a neighbor of mine who had recently been hired by Wal-Mart.
I was congratulating him and saying great, he'd finally be getting health
care," Greenwald said Tuesday, recalling a conversation that took place
more than a year ago and inspired him to create the film.
"He said `no,' because it was too
expensive and he had to work there too long. But he said, `The really nice
managers are helping me fill out forms so I can apply for aid from California.'
At that moment, I thought something was wrong. Here was a corporation encouraging
employees to apply for public aid."
When Greenwald discovered that Wal-Mart's founding family, the Waltons,
had a collective net worth of $90 billion, and that the company's profits
topped $10 billion last year while its workers were left to depend on public
welfare, he decided to make the movie, he said.
"It raised questions about greed. People have strange responses to
these words, but to me this is about patriotism and democracy. This is not
what I think should be happening to people in this country. It's just wrong," said
Greenwald, who made the film on a $1.8 million budget financed largely
through personal bank loans.
Greenwald is coordinating with Wal-Mart Watch, an umbrella group launched
in the spring by Andrew Stern, the maverick union leader whose Service Employees
International Union was one of several unions to break away from the AFL-CIO
earlier this year. Organized labor, one of the most vocal Wal-Mart critics,
has been fighting unsuccessfully for years to unionize Wal-Mart workers,
and the dissident faction has made organizing Wal-Mart a top priority.
Wal-Mart Watch plans to intensify its
attacks, beginning Nov. 13, with a coalition of more than 400 grassroots
organizations across the country mounting hundreds of local actions in
a campaign called "Higher Expectations
Week" targeted to hit the retailer - including in Connecticut - just
as the holiday shopping season begins. As part of the weeklong campaign,
Greenwald's movie will be shown at churches and in thousands of homes
across the country.
In response, another independent filmmaker
is launching his own documentary, "Why
Wal-Mart Works: And Why That Makes Some People C-r-a-z-y," which casts
Wal-Mart workers, if not its executives, in more positive light.
"I find myself in the odd Forrest Gump-like position of defending the
world's largest corporation," said Ron Galloway, who spent $85,000 to
make his film. "I'm coming from the pure free market perspective. I
know this sounds weird, but right now Wal-Mart does more good for lower-income
people than any other institution in society just by the mere fact that they
save families about $1,000 a year. That's big money," Galloway said.
Wal-Mart is not stocking Galloway's film in its stores, but it has launched
its own charm offensive. In the past two weeks, CEO H. Lee Scott has announced
a new health care plan, revealed new environmental initiatives and said the
company would monitor overseas suppliers. Wal-Mart has also produced its
own video to dispute assertions made by Greenwald, who denies there are errors
in his film.
But the offensive has run into obstacles. Days
after touting the low premiums in its new health plan, a leaked internal
memo cast a disturbing light on the retailer's proposed strategies to cut
benefit costs. And Monday, the Labor Department's inspector general blasted
a government settlement with the retailer over child labor law violations,
saying Wal-Mart had written some of the most offensive provisions of the
Even Wal-Mart's staunch defense of its business model - that its low prices
are a boon to the national economy - is in question.
The retailer hired consulting firm Global Insight to study its impact
on the U.S. economy, and is sponsoring a conference Friday, the day that
Greenwald's film debuts, to discuss the results. As part of the yearlong
study, Global Insight collected nine independent academic papers on the
Some of the independent research, such as a paper by Jerry Hausman of MIT,
concludes that Wal-Mart's low prices have shaved off a substantial amount
of price inflation.
But others, including a study co-authored by senior fellow David Neumark
at the Public Policy Institute of California, show that Wal-Mart's critics
may stand on firm ground. When Wal-Mart opens a new store, total wages in
that county - not just in the retailing sector - fall by 3 percent to 5 percent
in the following years, according to Neumark's study, which analyzed reams
of data spanning a 20-year period for stores across the nation.
"The earnings results are clear," said Neumark, who has harshly
criticized minimum wage laws and is traditionally portrayed as a conservative
economist. "It's a few percent, it's not huge, but it's by no means
Of course, questions regarding Wal-Mart's influence - over the global economy,
the environment, and ultimately over society - require complex and nuanced
As prices fall along with wages, some people gain while others fall behind.
As the company relies on manufacturers in China to supply cheap goods, American
workers may lose jobs, but wages in China and other developing nations rise,
and a substantial middle class is made possible in countries where none previously
Rising affluence in poorer countries, in turn, creates its own political
as well as ecological advantages and tensions, including improved living
conditions and lower birth rates, but also greater demand for already strained
resources, such as oil and fresh water.
Critics and supporters agree that the questions matter, not just for Wal-Mart
employees and investors, but also for society as a whole.
"It's more than just Wal-Mart," Greenwald said. "It's
about some of the most significant issues we face in terms of what kind
of country we want to have."
For information, including show times of the films, see www.whywalmartworks.com
Reprinted with permission of the Hartford Courant.
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