Wal-Mart and the Bush/Cheney Campaign Are Working from the Same Play Book

The New York Times recently reported on events at the podium during the annual meeting of Wal-Mart Stores, Inc.:

"How many of you have heard something negative about a Wal-Mart job?" one executive, Susan Oliver, asked the crowd. When their hands sailed into the air, she responded: "It hurts to hear it, doesn't it?"

She urged them, as did other speakers at the meeting, to spread positive stories about the company, and showed a video featuring jubilant Wal-Mart workers from across the globe, backed by a recording of Louis Armstrong singing "What a Wonderful World."

While this speech was part of a fanfare describing a series of new labor policies, Wal-Mart CEO Lee Scott offered little detail about upcoming changes in the company’s wage system. “‘No one's pay will be reduced as a result of implementing this new structure,’ he stressed, ‘but some associates will receive an increase.’”

Wal-Mart’s famous low prices are a product of its legendary low cost structure and cheap labor plays a vital role in making those prices possible. Therefore, Wal-Mart workers have a right to be suspicious of such vague proposals. According to Business Week, the new system will include pay caps for employees and limits on merit raises, thus harming the future earnings prospects of long-term workers even if their pay would not go down.

These changes, like the video with the Louis Armstrong music and the company’s recent commercials about its contributions to communities, are part of Wal-Mart’s reaction to bad publicity it has faced lately. The best example of this bad press is the recent judicial decision that certified a massive sex discrimination case as a class action suit, but the company has had many other public relations problems in recent months.

This bad publicity has put Wal-Mart’s vaunted anti-union stance to the test for the first time. One stock analyst told Business Week that the new labor policies might be intended as “shark repellent against the unions.”

What the company doesn’t seem to understand is that effective shark repellant requires real change. History offers many counterexamples of non-union firms that made significant policy changes that kept organized labor at bay by significantly improving the lives of many workers.

Historian Nelson Lichtenstein has compared Wal-Mart to General Motors because both firms are standard setters for corporate capitalism in their respective eras. With respect to labor policy, this is comparing apples and oranges because Wal-Mart is non-union and General Motors in its heyday was anything but.

United States Steel, on the other hand, was the most important non-union company in the American economy after its founding in 1901. Because of its diverse, vertically-integrated operations, it had influence on keeping firms in industries ranging from cement making to transport non-union too.

Unlike Wal-Mart, U.S. Steel paid the highest wages in the entire steel industry during its first decades. More importantly, it created an elaborate policy of welfare capitalism, programs and policies not required by labor market forces, which cost it millions of dollars to implement and maintain. While some of these policies like pensions and a stock purchase plan were of only limited effectiveness, others such as safety programs and nurses who conducted home visits made a real difference.

Wal-Mart, on the other hand, offers music videos with happy workers in them rather than labor practices that make most workers happy. For example, a recent study showed that less than half of the company’s workers were insured on the company plan. Furthermore, a disproportionate number of the rest have to rely on government assistance for health care because their wages are so low and the out-of-pocket cost of the Wal-Mart plan is so high.

Is it any wonder then that the Bush administration has specifically endorsed Wal-Mart as a credit to American capitalism? As Vice President Cheney recently told workers at a Wal-Mart distribution center near the company’s Bentonville, Arkansas headquarters, “This is one of our nation's great companies, and one of the most familiar names in all of America. The story of Wal-Mart exemplifies some of the very best qualities in our country -- hard work, the spirit of enterprise, fair dealing, and integrity.” Wal-Mart has returned the favor by ramping up its political contributions so that it is now the number two campaign giver this election cycle. Eighty-five percent of that money has gone to Republican candidates.

“It was fitting that Cheney came to hail the success of Wal-Mart,” writes Paul Waldman in the Gadflyer, “because there are few American institutions that so embody the Bush administration's vision of what the American economy should look like.” Waldman focuses on traits such as the company’s low wages and its anti-unionism because they echo Bush policies, but this comparison works just as well with regard to presentation.

A film of smiling workers with “What a Wonderful World” playing in the background would be equally at home in a Bush campaign commercial as it was at Wal-Mart’s annual meeting. Indeed, so far this campaign season the Bush has been able to offer little but optimism in defense of his economic and Iraq policies. The administration’s deceptive changes in federal overtime rules are an example of how Bush’s sunny rhetoric hides his malicious intent.

In contrast, U.S. Steel’s welfare capitalist policies were in large part a response to government pressure applied by Republican administrations. U.S. Steel believed that if the public viewed it as a benevolent employer, there would be less pressure for the federal government to slap it with an antitrust suit or create other impediments to its nonunion operations.

U.S. Steel’s serious attempt to improve the lives of its workers demonstrates the importance of politics to low-wage workers. Government pressure and management’s sense of noblesse oblige combined to create significant changes in the lives of rank-and-file steelworkers.