Move over, Enron. Wal-Mart is the new punching bag.
In the run-up to elections, America's top employer takes it on the chin for driving US jobs abroad and trampling workers at home. Should it share the blame?
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"Those are complaints that should be directed toward government," Hastings says. "It is not the purpose of Wal-Mart to provide 'public goods' like clean air and clean water, and make sure that everyone has a well-paying job." Whether healthcare should be the responsibility of industry or government, he says, "is an argument that needs to take place, [but] Wal-Mart [should] not be put at the center of that argument."Skip to next paragraph
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The potentially disruptive side effects of Wal-Mart's sway over supplier chains merit watching - but, again, by government, Hastings adds.
To the degree that the company operates within the law, Wal-Mart's success has a fairly simple explanation. "Wal-Mart's competitors over the past 20 or 25 years made a lot of stupid mistakes and put themselves out of business," Hastings says. Wal-Mart management, he says, didn't. "It gobbled up market share, and ran a more tightly controlled enterprise."
That efficiency, says Mr. Neef, carries a cost. "You can only get so much productivity before you start squeezing labor costs," he says. "Once you start doing that you're going to make somebody unhappy. If consumers benefit, it's usually at the expense of workers."
Last month, at an industry conference in New York, Wal-Mart chief executive H. Lee Scott called for a coordinated effort by Washington and the retail industry to work toward fair trade and get healthcare costs under control. (Wal-Mart has said a large chunk of its workforce forgoes insurance coverage through the company because it has other coverage.)
In a new public- relations offensive, Wal-Mart is trying to shore up its image as a caring employer. But some critics don't buy it - nor the idea that Wal-Mart's ascent is a result of its managerial prowess.
"The same relentless focus on cost-cutting that makes it an outstanding example of managerial innovation may also make it a more unconscionable employer than many others," says Jim Hoopes, professor of business ethics at Babson College, in an e-mail. "Corporate life for low-end workers is a lot harsher everywhere than it was a quarter-century ago," writes Mr. Hoopes, "[but] my impression is that there are few, if any, companies facing an equivalent number of legal actions for ... unfair labor practices," even pro-rated for size.
Where Hoopes blames Wal-Mart for contributing to workers' woes, however, others cite American consumer behavior for driving an economic cycle in which Wal-Mart is simply a participant. It's not just that US consumers love bargain retailers. Many also believe that heavy spending will lift their social standing.
"The postwar economy was built around mass consumption - the notion that through broad participation in mass market we could create a more egalitarian America," says Lizabeth Cohen, a historian at Harvard University and author of "A Consumers' Republic: The Politics of Mass Consumption in Postwar America." But in a global economy, that notion no longer holds, says Ms. Cohen.
Experts question whether any force on the horizon will end Wal-Mart's dominance. But at least one challenge looms: Toymakers, hit last Christmas by low-priced sales of their wares by Wal-Mart and other discounters, are considering sending fewer hot-selling toys to Wal-Mart in favor of full-retail toy stores.
Hastings, for his part, sees Wal-Mart adapting, adding more service components - as Home Depot has in specialty retail.
In some ways, criticism could be good for Wal-Mart, says Hoopes, who suspects there is a disconnect between its corporate management and store managers struggling to meet goals - with managers poised to take the fall when practices don't appear to reflect founder Sam Walton's values.
"It may be that the corporate level could use some pretty serious self-examination," he says, "as to how well it is meeting its ethical responsibility to enable the front-line [workers] to live up to its 'values.' "