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Inside the Leviathan

Sandra Stevenson was an overnight supervisor at a Wal-Mart store in Gurnee, Illinois, whose job was to get the store ready for the next day’s business. Stevenson was supposed to be assigned between fourteen and sixteen employees to do the job properly; but she was usually understaffed and her requests for additional workers were always turned down. Nevertheless, Stevenson was severely reprimanded for “the condition of the store in the mornings.”5 After a string of such incidents, Stevenson found that her “spirit was broken” and she left the company. Many others have had similar experiences.

The pervasive understaffing at Wal-Mart gives rise to one of the most common employee infractions at the company, “time theft.” With each em-ployee having more work to do, managers assume that whenever they see an employee not working, she must be shirking her duties, or “stealing time” from the corporation, a punishable offense. When Barbara Ehrenreich worked at a Minneapolis Wal-Mart as part of her research for her book on low-wage work, Nickel and Dimed, she was told by her boss that “time theft” in the form of “associates standing around talking to one another” was his “pet peeve.” Later a fellow worker warned Ehrenreich that they could only talk about their work, and that anything else counted as “time theft” and was forbidden. Ehrenreich soon found that her boss and his fellow management spies were a constant presence on the shop floor, looking out for time thieves.

2.

The harshness of the working conditions at Wal-Mart helps to account for the exceptionally high employee turnover at the company. Some 50 percent of Wal-Mart workers employed at the beginning of 2003 had left the company by the end of the year. At the retailer Costco, where employees are better treated, turnover in 2003 was just 24 percent.6 But Wal-Mart’s harshness is not simply a consequence of management’s efforts to extract maximum productivity from its workforce at minimum cost. There are also employees and groups of employees that management particularly mistrusts, and these have often been subjected to relentless harassment. Hundreds of employees have testified against Wal-Mart in the many class-action lawsuits brought against the corporation, and their sworn depositions provide a detailed account of what it is like to work at Wal-Mart day by day, even hour by hour.

Perhaps the best evidence we have of this selective harassment is to be found in the depositions of 115 women who have testified against Wal-Mart in the Dukes case, a class-action lawsuit brought in 2001 by six female employees and named for one of the six, Betty Dukes, a Wal-Mart employee in Pittsburg, California. Most of the witnesses in the case have since either left Wal-Mart or been fired, but Betty Dukes herself continues to work as a greeter at the Pittsburg Wal-Mart. The suit, which alleges systematic discrimination by Wal-Mart both in the pay and promotion of women, is brought on behalf of 1.6 million female employees of Wal-Mart past and present, the largest civil rights case of its kind in US history. On June 22, 2004, US District Judge Martin Jenkins of San Francisco held that the Dukes lawsuit could proceed to trial, although a date has not been set.

Sex discrimination at Wal-Mart has a long history. Bethany Moreton, a doctoral candidate in history at Yale, has stressed the importance of Wal-Mart’s origins in the rural, small-town culture of the Ozarks, where Wal-Mart’s corporate headquarters at Bentonville, Arkansas, is still located.7 In the early years many of the women who worked at Wal-Mart were the wives of local Ozark farmers, and the women’s earnings were a meager supplement to their husbands’. The women in the Dukes case say that some of their store managers still often think of them as resembling those farmers’ wives. Ramona Scott, a Dukes case petitioner who worked for Wal-Mart in the 1990s, was told by her store manager that “men are here to make a career and women aren’t. Retail is for housewives who just need to earn extra money.”

In her book on the Dukes case, Selling Women Short, Liza Featherstone describes the women who have testified against Wal-Mart and shows why they have been willing to take on the corporation, often at the cost of their jobs. What the Dukes case women share in common is competence (as revealed in their work records), an ambition to move on to more responsible and better-paying jobs, and a sense of indignation when they discover that their male counterparts are paid significantly more than they are and are promoted ahead of them. The group includes college graduates who have worked at Wal-Mart’s Bentonville headquarters, as well as high school graduates and dropouts assigned to Wal-Mart’s checkout counters. For example, Stephanie Odle, an assistant store manager at a Riverside, California, Wal-Mart, decided that she would testify in the Dukes case when she found that a male assistant manager was earning $10,000 a year more than she was.

The business economist and historian James Hoopes has described Wal-Mart as “one of the most highly disciplined firms in the history of busi-ness.”8 The independence of spirit shown by the women in the Dukes case has therefore challenged the strict obedience that Wal-Mart requires of its rank-and-file employees. Indeed, the corporation insists on an elaborate aptitude test for new employees that is intended to weed out troublemakers. When Barbara Ehrenreich took the test at the Minneapolis Wal-Mart, she was told that she had given a wrong answer when she agreed “strongly” with the proposition that “rules have to be followed to the letter at all times.” The only acceptable answer for Wal-Mart was “very strongly.” Similarly, the only correct answer to the proposition “there is room in every corporation for a non-conformist” was: “totally disagree.”

For Wal-Mart the Dukes case women were therefore troublemakers who had somehow managed to get past Wal-Mart’s digital gatekeeper and had ended up where they didn’t belong. Wal-Mart management has been prepared to go to considerable lengths to discourage the women from making complaints, and to stop them from pursuing the Dukes case. The purpose of this management offensive was not simply to maintain discipline at Wal-Mart, but also to protect the corporation’s pattern of sex discrimination. Since lower wages and salaries paid to female employees have added significantly to profits, the company’s profit margin was threatened by the Dukes women’s demands for fair promotion and for equal pay.

The Dukes case depositions show how ruthless and inventive Wal-Mart managers can be in keeping troublesome women in their place. To discipline the workforce, Wal-Mart managers can use a variety of formidable penalties and punishments. There are written reprimands in the form of “pink slips”; spoken reprimands in the form of “coachings”; “decision making days” when an employee must explain why he or she should not be fired; and, finally, summary dismissal. Women who inquire about promotion are often told they must conform to rules or qualifications that are invented on the spur of the moment and have never been required of male employees. Claudia Renati, a marketing specialist at a Roseville, California, Wal-Mart, was told by her boss that she could not join a management training course unless she could first prove to him that she could lift fifty-pound bags of dog food. “When I told him I could not repeatedly lift 50 pounds, he told me that there was nothing he could do for me.” Renati was also told that she was not eligible for management training unless she was prepared to sell her house in Roseville and move immediately to Alaska.

The women in the Dukes case were frequently punished or fired for trivial or trumped-up offences. Melissa Howard, a manager at several Indiana Wal-Marts, resigned from the company when a senior manager well known for his belittling of women humiliated Howard in front of her subordinates. He berated her for designating a certain type of plastic spoon as a nonreplenishable item, even though a junior manager had told him that Howard had done the right thing. Trudy Crom, an assistant manager at a Loveland, Colorado, Wal-Mart, was told by her immediate boss, the store manager, to reprimand all the shop floor employees who were working forty hours a week or more and were therefore likely to earn higher overtime pay. This was a way of making it easier for Wal-Mart to fire such potentially expensive employees if the corporation needed to reduce its wage bill. Crom twice queried the order with her store manager, and was told both times that it was company policy and she should go ahead. But when some of the employees complained to senior management about this treatment, the store manager denied ever have given the order to Crom, and it was Crom who was reprimanded.

The productivity figures at Wal-Mart wouldn’t be as good as they are unless most employees were doing their jobs efficiently most of the time. But it is hard for Wal-Mart employees to take pride in their work or to have confidence in themselves. Perhaps the most powerful insight that Barbara Ehrenreich took away from her time at Wal-Mart was that the daily routines of the low-wage world damage the self-esteem of employees:

If you are treated as an untrustworthy person—a potential slacker, drug addict or thief—you may begin to feel less trustworthy yourself. If you are constantly reminded of your lowly position in the social hierarchy, whether by individual managers or by a plethora of impersonal rules—you begin to accept that unfortunate status.

With its deliberate understaffing, its obsession about time theft, its management spies, and its arbitrary punishments, Wal-Mart is a workplace where management’s suspicion can affect the morale of even the best employees, creating a discrepancy between their objective record of high productivity and how they come to regard their performance on the job as a result of their day-to-day dealings with management. This discrepancy helps keep wages and benefits low at Wal-Mart.

One of the most telling of all the criticisms of Wal-Mart is to be found in a February 2004 report by the Democratic Staff of the House Education and Workforce Committee. In analyzing Wal-Mart’s success in holding employee compensation at low levels, the report assesses the costs to US taxpayers of employees who are so badly paid that they qualify for government assistance even under the less than generous rules of the federal welfare system. For a two-hundred-employee Wal-Mart store, the government is spending $108,000 a year for children’s health care; $125,000 a year in tax credits and deductions for low-income families; and $42,000 a year in housing assistance. The report estimates that a two-hundred-employee Wal-Mart store costs federal taxpayers $420,000 a year, or about $2,103 per Wal-Mart employee. That translates into a total annual welfare bill of $2.5 billion for Wal-Mart’s 1.2 million US employees.

Wal-Mart is also a burden on state governments. According to a study by the Institute for Labor and Employment at the University of California, Berkeley, in 2003 California taxpayers subsidized $20.5 million worth of medical care for Wal-Mart employees. In Georgia ten thousand children of Wal-Mart employees were enrolled in the state’s program for needy children in 2003, with one in four Wal-Mart employees having a child in the program.9

3.

In the introduction to her book Liza Featherstone argues convincingly that Wal-Mart is a “scandal, not a praiseworthy business model.” Yet Wal-Mart is Fortune‘s most admired corporation, the star of McKinsey’s productivity study, and the subject, as recently as last April, of a hagiographic cover story in The Economist, “Wal-Mart: Learning to Love It.”10

Wal-Mart has also set off a particularly destructive form of competition among corporations, which seek competitive advantage by pushing down the wages and benefits of employees. A clear example of this has been the conflict provoked by Wal-Mart’s decision in 2002 to enter the southern California grocery market with forty of its “supercenters”—where the shopper can buy everything from tomatoes to deck furniture and spare tires. Although Wal-Mart has not yet opened any of these new stores, the response of California supermarkets, led by Safeway, has been to demand cuts in their employees’ wages and benefits, with the cuts falling heavily on newly hired workers. This posed a serious threat to the supermarket employees, 70,000 of whom are members of the Union of Food and Commercial Workers (UFCW) and have benefited from its bargaining with employers. While a sales clerk at Wal-Mart earns only $8.50 an hour, a worker holding a similar job at Safeway or Albertson could earn $13 an hour along with full health care benefits.11 For employees that could make the difference between minimal financial security and a life spent scraping by on the poverty line.

After the UFCW called a large-scale strike against the Safeway stores last winter, two other retailers, Kroger and Albertsons, locked out their workforce—and replaced it with temporary employees—as a demonstration of support for Safeway even though their workers were not on strike themselves. Taking full advantage of their right to hire replacements for striking and nonstriking workers, the supermarket owners beat the Safeway strike and forced the UFCW to accept cuts in wages and benefits.

The failure of the California grocery strike, not to mention the history of labor relations at Wal-Mart, points to the urgent need for reform of labor law in the United States. Wal-Mart is a ferociously anti-union company, and the UFCW has yet to organize a Wal-Mart store. Every store manager at Wal-Mart is issued a “Manager’s Toolbox to Remaining Union Free,” which warns managers to be on the lookout for signs of union activity, such as “frequent meetings at associates’ homes” or “associates who are never seen together…talking or associating with each other.”

The “Toolbox” provides managers with a special hotline so that they can get in touch with Wal-Mart’s Bentonville headquarters the moment they think employees may be planning to organize a union. A high-powered union-busting team will then be dispatched by corporate jet to the offending store, to be followed by days of compulsory anti-union meetings for all employees. In the only known case of union success at Wal-Mart, in 2000 workers at the meat-cutting department of a Texas Wal-Mart somehow managed to circumvent this corporate FBI, and voted to join the UFCW in an election certified by the National Labor Relations Board. A week later Wal-Mart closed down the meat-cutting department and fired the offending employees, both illegal acts under the National Labor Relations Act. The NLRB ordered Wal-Mart to reopen the department, reemploy the fired workers, and bargain with the union, but Wal-Mart has appealed the NLRB decision and the litigation continues.

Unions are needed at Wal-Mart for much the same reasons that they were needed at Ford and GM in the 1930s—to prevent the mistreatment of employees, and to obtain for them fair, living wages. Unions are also needed to curb the unedifying “race to the bottom” among corporations. If Wal-Mart had been a union company and its employees had the same wages and benefits as other California store employees, Safeway and Albertsons could not have used Wal-Mart’s planned entry into the California market as an excuse to beat down employee wages and benefits.

As things stand now, the National Labor Relations Act, the toothless federal law governing the right to organize, allows union-busting corporations like Wal-Mart to break the law with virtual impunity. Since 1995 the US government has issued sixty complaints against Wal-Mart at the National Labor Relations Board, citing the illegal firing of pro-union employees, as well as the unlawful surveillance and intimidation of employees. But under the present law persistent violators of government rules such as Wal-Mart are responsible only for restoring the lost pay of fired workers—in most cases, not more than a few thousand dollars—and these penalties do not increase with successive violations. So long as US law makes it possible for Wal-Mart to crush efforts to organize unions it will continue to treat its more than a million workers shabbily, while the company no doubt continues to be celebrated in the business press as a a model of efficient modern management.

The exploitation of the working poor is now central to the business strategy favored by America’s most powerful and, by some criteria, most successful corporation. With the re-election of a president as enamored of corporate power as George W. Bush, there is every prospect that this strategy and its harsh practices will continue to spread throughout the economy.

  1. 5

    United States District Court, Northern District of California: Betty Dukes, Patricia Surgeson, Cleo Page, et al Plaintiff, v. Wal-Mart Stores Inc., Defendant. Declaration of Sandra Stevenson in support of plaintiffs, pp. 2–3. Hereafter referred to as “Dukes Case Declarations.”

  2. 6

    Ann Zimmerman, “Costco’s Dilemma: Be Kind to Its Workers, or Wall Street?” The Wall Street Journal, March 26, 2004.

  3. 7

    Bethany Moreton, “It Came From Bentonville: The New South Origins of Wal-Mart’s Managerial Culture,” UCSB conference paper, forthcoming in Wal-Mart: Template for 21st Century Capitalism?, edited by Nelson Lichtenstein.

  4. 8

    James Hoopes, “Growth Through Knowledge: Wal-Mart, High Technology, and the Ever Less Visible Hand of the Manager,” forthcoming in Wal-Mart: Template for 21st Century Capitalism? and available at www.americaincorporatedweblog.com/index.php, p. 2.

  5. 9

    See the House Committee on Education and the Workforce, Everyday Low Wages, p. 9. See also Featherstone, Selling Women Short, p. 148.

  6. 10

    April 17–23, 2004.

  7. 11

    See Greenhouse, “Wal-Mart, Driving Workers and Supermarkets Crazy.”

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