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

News at Home

Mr. Rees is Associate Professor of History at Colorado State University - Pueblo. He is the author of MANAGING THE MILLS: LABOR POLICY IN THE AMERICAN STEEL INDUSTRY DURING THE NONUNION ERA (University Press of America, 2004) and co-editor of THE VOICE OF THE PEOPLE: PRIMARY SOURCES ON THE HISTORY OF AMERICAN LABOR, INDUSTRIAL RELATIONS AND WORKING-CLASS CULTURE (Harlan Davidson, 2004).

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.

If America wants, part of this dynamic could be repeated. We cannot vote Wal-Mart out of office this November, but we can change the culture in which Wal-Mart operates by voting out George Bush. Don’t be fooled by soothing music and pictures of smiling workers.

comments powered by Disqus

More Comments:

Dave Livingston - 1/7/2005

As Ralph Peters, I think it was, said in effect, "Globalism perhaps portends the demise of the born in America economic edge on the rest of the world, competion perhaps spells the end of an automatic higher standard of living in comparison to the rest of the world to which Americans have grown used to expect as their birthright. For one thing, to the degree we've been living on our Capital, America's wonderful natural resources, as we continue to use up those resources we'll be faced with having to compete without the edge they have given us over the centuries, save our farmlands, with their wonderful well-watered loam soil.

It is beside the point we may have enormous untapped oil, natural gas and mineral resources in national forests, because the urban-bound Left insists we not disturb nature in the raw. Those are the same environmentalists who claim to know better than I, a rustic, how I should husband the land on which I've lived these past 29 years. Those same environmentalists would rather see our forests burn in wildfires than for the forests to be exploited however little for private gain.

Why should, for instance, Oracle, hire American software engineers at $80,000 to $100,000 per year when it can hire Indian ones who'll work for $15,000 a year & be very glad to have the jobs? Leftists here at home may demand that American wages be maintained high, but what use are forced by government high wages when in response to government dictates the jobs are moved where wages are lower? By the same token, what's wrong with an Indian as well educated and trained as the American software engineer being willing, if he freely choses, to work for those lower wages?

Dave Livingston - 1/7/2005

Friend Arnold Shcherban,

Granted, it was largely due to the efforts of labor unions that the American working class was able to carve out a piece of the good life economically. Likewise, it was in part due to the unions that child labor laws were introduced. Those were good things to be accomplished, but unions have long out-lived their usefulness to wider society; they've become parasitic, a striking example of being in the position of being able to demand from society at large a disportionate share of the economic pie.

Were it not for the efforts of trade unions and social reformers, we'd still have seven & eight-year-old boys working in coal mines. But unions are in somewhat the same position of some charities. What they set out to achieve was accomplished, but unions & some charity bureaucracies live on forever. For instance, the March of Dimes was established to fight polio, polio as a disease has been effectively wiped out, but the March of Dimes marches on; it has refused to fade away.

Dave Livingston - 1/7/2005

Wal-Mart irks the Left because it continues to be a roaring success while disregarding pet themes pushed by the Left, particularly academics who've never held a job in the private economy nor have operated a private business whilst meeting a payroll.

Whether or no the Left likes it, & it doesn't, Wal-Mart 1) makes 9% of all non-automotive retail sales in the U.S., 2) eight American families shop at least once a year at Wal-Mart, 3) Wal-Mart is responsible for producing better than 2% of the U.S. GDP.

Wal-Mart has achieved these remarkable retail goals by ignoring standard Leftist dictates about how to do business, unionize & charge high prices, for instance.

The oft-heard plaint that Wal-Mart moves into small towns with the ambition of destroying them. This is nonsense. Generally whenever Wal-Mart sets up shop in a community its low prices serve to raise the standards of living of those communities by enabling folks' hsrd-earned dollars stretch further than they had before Wal-Mart opened in the community.

Scott Leee, Wal-Mart's CEO doesn't realize or care that the firm is destroying small-town Amereica. Humbug! He knows it isn't destroying small-town America. For one thing, he born in smallish Joplin, Missouri was raised in tiny, population of less than 3,000, Baxter Springs, Kansas & went to college at small Pittsburg (Kansas)State. Pittsburg itself was when he was in school a town of a bit under 25,000. Ergo, unlike most complaining academics & trade unionists, Lee knows small-town America & as a product of it is most unlikely to hate or seek to destroy it.

One wonders why there are are so many complaints about Wal-Mart's non-union wage scale by people who don't work for Wal-Mart? Correction, it is evident that most of the complaints are uttered by knee-jerk Leftists, particularly trade unionists. And by academics enscounced safely in their Socialist enclaves & who resent the working class getting a leg up financially because it at Wal-Mart doesn't have to pay grossly inflated prices for goods.

Dave Livingston - 1/7/2005

That should read, "Eight American families in ten."

Dave Livingston - 1/7/2005

The town in which Professor Rees works had its local economy virtually ruined a decade and a half ago because its primary source of jobs, C.F. & I. Steel, went bankrupt. C.F. & I. went bankrupt because it couldn't effectively compete because of the unreasonably high wages demanded by its unionized workers. The unions won over management's judgement on what the wage scale should have been. Now the C.F. & I. wage scale is zero, because those jobs have disappeared--a great union victory, no?

Ken Melvin - 7/15/2004

Today, in America we hear from the Grover Norquist ilk that only a privileged few have any claim to the nation’s wealth. None other have right to decent employment; public education, health care, or care in old age. We can only assume that this claim to the nation’s wealth by this chosen few rest on the sacrifices of their progenitors, to wit, many of their forbearers gave their lives in time of war and of their sweat and blood in the building of America. To believe that all Grovers are of a long line who slaved 60 hours per week in factories or mines or on plantations, lived in tenement slums and died young of old age is not too much to ask. But, what of those of less privileged ancestry? Surely the birthright of the heirs to the fortunes of those rich who got rich on building the cities and transit systems is just as great. Shouldn’t the scion of a family made rich without sacrifice have rights equal these of the heirs of the working people who sacrificed their lives, their sons and daughters lives to build America. Who could possibly wish to deny the Hearst and Huntington heirs the access to education and health care they need in order to compete on an equal basis? Only a truly cruel person could permit their being unprovided for in their old age. Think how much stronger our nation when we include the undeserving. The nation deserves no less. A nation that does these things truly deserves the support and loyalty of all its citizens.

Though many think the wealthy skim off the production of working people, in reality it is the working people who, given opportunity, would take of the wealth destined the wealthy. While it seems clear that nature intended working people be completely dependent and without claim, working people have ever so long sought usage of wealth whilst ‘tis en route destiny using such arguments as: since lightning may strike at any time, destiny may be perverted, and a working person might get rich so working people need develop a feel for wealth. Oddly though seemingly completely selfish on their part, this laying on of hands for a few hours each week by the working people has proven beneficial society and indeed essential the development and survival of this we call a nation, i.e., this slowing of wealth’s ascendency has proven to be a good thing. Over time working people have devised various means of slowing this ascendency, including but not limited to: armed robbery, prostitution, dope dealing, extortion, kidnaping, welfare, and demanding pay for labor. In modern jargon, such connivances are known as schemes for the ‘distribution wealth’ or ‘laws of economics’. Of these, when there’s not a surplus and some respect is afforded working people, pay for labor works fairly well, but, at times throughout history, advances in technology have lead to an overabundant work force unable to demand even the smallest wage leaving no impediment to the upward flow of wealth, thus indangering the nation. Through time, many remedies to this imbalance have been proposed, several being tried with varying degrees of success: multiple hangings and starvation were once popular in England; another better known, exportation, has worked well at various junctures of history; and, today, in the USA, prison is the big favorite.

This brief laying on of hands crucial our nation’s survival needs be long enough to allow working people to believe that they are somehow vested in the nation’s future. Else, who indeed would fight the wars, clean the streets, and teach the children? In order for this particular scheme to succeed, each working person, or someone they know, must at various times in their lives either have salary sufficient to allow them to advance or believe such salary in the realm of the possible. Alas, untouched by working peole, the money goes directly to the wealthy, markets dry up, production collapses, the nation fails, all is lost.

Ken Melvin - 7/14/2004

And such an expert on such matters would be so kind as to tell us where the union jobs went? And, where was the expert on these matters when the good union jobs went to the southern states and where was he again when they went on to Mexico and then on to China chasing cheap labor? Maybe this expert was there watching as I and others like me automated the plants; reducing the labor fore by 75-80% while increasing capacity by 40+%? Maybe this good same expert can tell the American worker how to live on $1.50 an hour, or better yet, on $1.50 a day? Hey, maybe this expert in matters social and economic has lived on renumeration equivalent $1.50 and hour or is living on such income this very day?

Arnold Shcherban - 7/14/2004

It just irks the left, Ah?

Historically, about all existing worker benefits and social protections for working Americans, in general, have been achieved not 'cause corporate officers were
raised in democratic environment of small cities or
taught to be sympathetic to the needs of their employees,
but over the decades of dramatic struggle of the workers themselves and to a great extent the protecting their rights trade-unions against the power of corporate monopolies. (Before the latter with the help of mafia
corrupted many trade-union leaders and thus largely discredited trade-unionist movement in the eyes of American society along with numerous explicit or implicit acts of the govermental anti-union law-making.)

I would like to hear about a single major benefit, social protection or wage increase in the history of the US working class that hasn't been achieved in the result of the workers' movement, or strikes, or trade-union actions/negotiations, or something related to those, but
given them as gift by conscientious Corporate bosses.

Only this way you can prove that you are not just an Republican ideologue, but unbiased student of history.

Ken Melvin - 7/12/2004

For the same reason that ADM has commercials on the Newshour; Wal-Mart is now airing commercials on network news shows. Why? Control of content.