Organizing Wal-Mart: Always Low Wages. Always.


Last Thursday panelists (from left to right) Brian McArthur of the UFCW, Canada, Prof. David Weil of the Univ. of Boston and Ken Jacobs of UC Berkeley spoke on issues surrounding the organization of Wal-Mart employees.

Last Thursday, the HLS Labor and Worklife Program sponsored a panel discussion entitled “Organizing Wal-Mart.” Panelists included moderator David Weil, a professor at the Boston University School of Management, Ken Jacobs, Deputy Chair of the Labor Center at UC Berkeley and co-author of the recently published “Hidden Cost of Wal-Mart Jobs” which examines the societal and financial impact of the Wal-Mart model, and Brian McArthur, Special Assistant to the National Director, United Food & Commercial Workers (UFCW), Canada.

The discussion drew a diverse audience from HLS and other graduate schools in addition to a large number of Boston area union members.

As the title suggests, the discussion primarily focused on the reasons for, and the setbacks and successes in, organizing Wal-Mart employees. Professor Weil opened by introducing his two co-panelists and then set the stage by explaining why Wal-Mart itself was such an interesting company to study. He pointed to sustained year-over-year double digit revenue growth for the last ten years – 2005 revenue was in excess of $280 billion – and a seven-fold increase in non-U.S. stores among other things.

Mr. Jacobs was the next to speak. He began his portion of the talk by discussing why the organization of Wal-Mart employees is so critical. He referred to an October 2003 UFCW strike that took place in Southern California involving around 70,000 employees of area Safeway, Albertson’s, and Krogers grocery stores. The employees walked out due to demands from their employers that they increase their personal contribution to health care costs in order that the companies might more effectively compete with Wal-mart’s pricing. Even more interesting was the fact that Wal-Mart had not actually moved into the area yet, but merely planned to open stores in the future. The employee payment increase was thus an anticipatory tactic on the part of local grocers.

The strike highlighted two of Mr. Jacobs’ points. First, Wal-Mart had the ability to adversely affect the wages of large swathes of the population in areas that they operate. Second, Wal-Mart’s had quite an effect on low prices on incumbent retailers.

Mr. Jacobs gave three reasons that Wal-Mart is able to maintain such low prices: 1) supply chain management – Wal-Mart has one of the most advanced systems in place for reducing excess inventory, 2) its pressuring of suppliers – due to Wal-Mart’s size and influence, they are able to obtain significant cost reductions from suppliers, and 3) its holding down of labor costs – according to Mr. Jacobs’ paper, Wal-Mart’s labor costs are 15% less than comparable large retailers as a whole and 30% lower in California.

In order to maintain low labor costs, Mr. Jacobs and subsequently Mr. McArthur argued that Wal-Mart has maintained a decidedly anti-union stance, going so far as to shutdown and then outsource departments which became unionized. With Wal-Mart’s traditional markets in the South and Midwest becoming saturated, Mr. Jacobs sees the company moving into metropolitan areas (such as Los Angeles) in which there are strong union presences. As such, he sees an increasing need for the organization of Wal-Mart employees.

Several initiatives are already in place to curb Wal-Mart’s alleged negative externalities. Consumer and eco-groups (Wakeup Wal-Mart and Wal-Mart Watch are two of the most prominent) have launched major campaigns to make the public aware of the downsides of Wal-Mart, such as increased traffic, urban sprawl, and the negative impact on local businesses and wages. “Site fights” over planned Wal-Mart constructions have also been somewhat successful. Additionally, many municipalities have adopted ordinances designed to curb the negative impact of Wal-Mart stores while not necessarily banning Wal-Mart outright. For instance, Los Angeles required studies to determine the impact of Wal-Mart stores on the city prior to allowing them, and Chicago passed a living wage law in order to force Wal-Mart to raise wages.

On the worker organization front, progress has been slow but headway has been made. In late 2005, Central Florida workers from roughly 40 Wal-Mart superstores formed a non-union workers’ association to collectively air their complaints. The fledgling association currently has approximately 300 members. In Canada, where legislation arguably makes it easier to unionize than in the U.S., there have also been some successes on the organization front. Mr. McArthur said that four Wal-Marts had been successfully unionized – three in Quebec and one in British Columbia, though one store in Jonquière, Quebec has since been shutdown.

Despite these successes, those seeking the organization of Wal-Mart employees face many hurdles in addition to Wal-Mart’s anti-organization stance. For instance, Mr. Jacobs pointed out that the lack of social organizing – employees often do not know the last names of their co-workers, as one example – within individual stores makes it difficult to spread the organization’s message. Also, the high rate of turnover among entry-level employees makes it difficult to find workers who have sufficient interest in the long term goals that labor organizations promote. In addition, many organizers are concerned with the availability of funds to continue the organization effort and whether those organizations already in place are self-sustainable.

Ultimately the success of these labor initiatives to increase wages and healthcare benefits of Wal-Mart employees will rest with the consumer. An increase in labor costs would most likely result in price increases at Wal-Mart stores. The question then becomes whether consumers are willing to accept this extra cost based on the benefits they confer on Wal-Mart employees and the greater community.