business news in context, analysis with attitude

MNB had a story yesterday about a Wal-Mart-related controversy in Pensacola, Florida, where the retailer forced the local newspaper to remove its racks from the retailer’s property after a columnist wrote a story critical of some of Wal-Mart’s labor and health care policies. The store manager offered to reverse his decision if the newspaper fired the columnist – but in what we saw as a righteous First Amendment defense, the newspaper refused to do so, and then reported on Wal-Mart’s demand.

Subsequently, Wal-Mart HQ in Bentonville ordered the newspaper racks reinstalled, and said that it made “an error in judgment” and did not make a practice of removing critical books or periodicals from its shelves.

We asked two questions:

Was the Pensacola move an aberration?

Or was it an accurate reflection of an arrogant corporate culture that refuses to tolerate criticism, that is unwilling to admit that it is wrong?

One MNB user responded:

No one likes or appreciates journalists that tell only the side of an issue they favor…

However this is probably just another case of a local manager not getting the guidance from others, and/or from above, before going into action. Much the same as has been found in many working off the clock cases. Putting mouth into motion before engaging brain.

None of the reported facts on either the Georgia or North Carolina reports contains all the ifs, ands or buts concerning the numbers. Until someone does that it is hard to accept the bare figures being quoted by the press and opponents of Wal-Mart as being 100% accurate as they are used and reported.

Is it Wal-Mart's responsibility that an employee with several dependents can not support them on just what they earn at Wal-Mart? If they can't then they should look for a better paying job.

If the job at Wal-Mart is the best paying for what they are qualified, what responsibility falls on the company to enable them to have what they aren't earning? Is it any company's responsibility to make life easy for their employees or to just pay them what the company considers a reasonable wage for the work they do?

You’re actually missing the point of yesterday’s story – it was about what appeared to be Wal-Mart’s inability to accept criticism, not about its labor policies.

But let’s address the latter for a moment.

You’re right. Wal-Mart doesn’t necessarily have the responsibility for paying people enough to support themselves and their families, nor is it required to supply sufficient health care so that people can get sick without going bankrupt.

The questions keep being asked, though, because Wal-Mart keeps saying that it can’t pay people more or give them better benefits because it then would not be able to have such low prices. But Costco has low prices – often lower prices than Wal-Mart – and manages to pay people more. Sure, the business model is a little different…but it still raises questions.

And what a lot of people are wondering is whether, in the long run, Wal-Mart is making a mistake by seeming to devalue its employees in such a way.

One MNB user recently observed in an email that Wal-Mart hires people who are otherwise unemployable as a way of keeping its costs down…we think that this is true, but that this is a message that doesn’t serve the company long-term. Ultimately, it will be a message heard longer and louder than all the commercials the company runs with carefully chosen employees saying how wonderful the company is.

Another MNB user wrote:

Wal-Mart needs to shout back when reporters slant stories about Wal-Mart's health care. Most likely the health insurance Wal-Mart provides for its employees is better than what that newspaper reporter is getting. With family health insurance premiums now about $10,000 a year, Wal-Mart or any other retailer cannot afford just to hand out free health insurance to all their employees. What a lot of reporters don't mention is that once an employee qualifies for health insurance at Wal-Mart, they are not entitled to any government sponsored insurance. They also never mention that Wal-Mart offers a similar health care package that is equal or better to what other companies like Target, Kmart, Family Dollar, etc. offer. Of course a lot of newly hired Wal-Mart employees don't have insurance and are using public assistance. That's just because Wal-Mart simply has a lot of employees with limited seniority. We could just as easily say that nearly 100% of employees using public assistance are residents of the USA and just blame the government. No, instead we pick on Wal-Mart. And even if Wal-Mart did provide free insurance to all their employees, some probably would not even bother to enroll anyway.

Wal-Mart is welcome to shout back.

Keep something in mind, though. When the store manager banished those newspaper racks and asked for the columnist to be fired, it confirmed a lot of people’s worst suspicions about the company. That wasn’t shouting. It was trying to be a bully.

Another MNB user disagrees with us:

How broad a brush you paint. Every act of bad judgment is the big mean Wal-Mart machine out to get the little guy? Don't get me wrong, there is room to suspect (Wal-Mart) is flexing muscles with approval. The reporter uncovers that there are states where taxpayers pick up the slack for corporate shortfalls and raise good questions. However it seems that always, Wal-Mart is guilty upon suspicion nowadays.

I can envision a more simple explanation. Store manager loves his job and company, after all he rose through the ranks to a pretty important position – he owes the company. As he sees it, the reporter writes ugly things (and whether true or not) – it offends the manager because you have targeted one he/she is loyal to. We defend those we love. So, what can he do to retaliate? Remove the offender! Store manager is a big customer and the only way to retaliate is to hurt the business of the reporter. Childish? yes. But no more than a knee jerk reaction to an attack on the 'family'.

While I recognize that the majority of our discussions on MNB revolve around issues that touch merchants and their wares, companies that can deliver a product at a lower price with the appropriate levels of features and benefits will always have an audience. I'm thinking here of Southwest Airlines. Great reasonable fares because they have managed their cost structure and passed it along to us. Why should other airlines be subsidized in order to compete with SA and be successful? Is this competition fair? But shouldn’t we also ask why the government (Pension Benefit Guaranty Corp) is taking responsibility for the Steelworkers pension plan and most recently United Air Lines retirement plan – because the companies have either gone belly up or can no longer afford the pensions?

So back to my original position (unclear though it probably is/was)...... Where and if Wal-Mart is responsible for people having no benefits that ought to have benefits, get your states to fix it. But fix it by requiring the same of all players in the state. And, by the way, recognize that all our jobs can be outsourced at some point.

Not all our jobs.

We can be replaced. But not outsourced.

MNB user Tom Kroupa observed:

Yes, the Pensacola News incident with Wal-Mart is an example of the arrogance of corporate culture in America today. They give the major perks to upper management who can fail and still come out millionaires.

You also see this same corporate culture in the current administration who will not accept criticism from the press or anybody else. The Valerie Plame case is the most egregious example. There are those who believe that our government is now so heavily influenced by corporate lobbyists (i.e., corporate culture) that Congress is acting like Wal-Mart both to its citizens and the rest of the world. 44 million citizens are without health insurance while the administration looks to shore up social security right now! Which one of these two issues should be addressed right now? It depends on what the lobbyists want. Wal-Mart is a microcosm of what is happening in our world today.

We wrote yesterday that Safeway has blamed organized labor for the competitive problems afflicting its Dominick’s division in Chicago, which led one MNB user to respond:

As to the Dominick's piece, I'm not sure Safeway has ever blamed organized labor for Dominick's sales issues. They have listed it as one of their challenges in that market (they've said labor cost parity is a problem in
all of their markets) but to my knowledge, have not said the unions are causing the problems. SWY knows that their marketing missteps (mostly around private label saturation and discontinuance of favorite regional brands) has caused much of their share loss not only in Dominick's but in Texas and Genuardi's as well.

Perhaps our memory is faulty. But we remember Safeway management saying several years ago that it needed major concessions from the unions if it were to become competitive. Certainly labor costs play a role, and maybe Safeway believes that its centralization policies had a role in its Chicago problems…but that didn’t seem to be the message at that time.

Finally, we had a story yesterday about how the Conference Board said that consumer confidence was down in July, but that the drop was “no cause for concern,” that the overall state of the economy remains healthy, and that “even the steady upward tick of fuel prices at the pump has done relatively little to dampen consumers' spirits.”

Our comment:

Whatever it is that the folks at the Conference Board are smoking, we want some.

Fuel prices are on the rise, with little sign that they will get under control anytime soon. There are continuing terrorist attacks in London, and cops are checking backpacks on the NY City subway system. The war continues in Iraq. Companies like Eastman Kodak, Hewlett-Packard, and Kimberly-Clark have all announced major job cuts.

It is amazing to us that consumer confidence is as high as it is.

To which one MNB user replied:

I liked the piece about the Confidence study today. Is it possible that we've all grown so used to anxiety that the new normal is: suicide bombs, huge gas prices...but hey, I'm ok, so whatever.

Seems like a real possibility to us.

We wonder sometimes how all this will affect our children. Will they believe that living in fear and trepidation is the new normal? Or will they become so inured that callousness and self-interest will replace compassion?

Neither option strikes us as acceptable, and yet either one could be the great legacy of the early 21st century.

Sometimes we think that we are in “rat’s alley where the dead men lost their bones.”
KC's View: