Why Wal-Mart May Respond to Black Friday Strike Threats, Adjust Wage Structure: Labor Expert

By Lila MacLellan  OCT 19, 2012 1:00 PM

So far, the company has called the coordinated efforts of Wal-Mart employees nothing but a publicity stunt. Not so, say experts.

 


MINYANVILLE ORIGINAL When journalists visit the media relations page on Wal-Mart’s (NYSE:WMT) website, they're asked to select from a drop-down menu the category that best describes the nature of their questions. But there’s one option that’s not on the list: Labor relations. One can assume that’s going to change very soon.

Two weeks ago, on October 4, 88 Wal-Mart employees at various Wal-Mart stores staged the company’s first ever job walk-out in the firm’s history. Even though the workers didn’t have union protection, their concerted efforts were legal. (See Why Wal-Mart Won’t Fire Striking Workers -- and What That Means for You.) The employees who walked out were protesting the company's well-documented methods for discouraging unions and retaliating against hourly employees who push for change.

The day of the strike, we spoke by phone to a Wal-Mart employee at a Los Angeles-area store who had joined the walk-out. Manuela Rosales, 25, who has been working at Wal-Mart for two years, told us that her hourly wages were not enough to support her life with her two-year-old son. “Me personally, as a single mom, it’s very hard. I go day-by-day with my paycheck, and sometimes I have to take loans,” she said. “I don’t think I should have to do that. And I don’t want to go for welfare, either. Why would I go to welfare when I work for a company that could pay me more? A company that makes billions and billions of dollars?”

Since that day, the movement has grown considerably. According to organizers, strikes were carried out at 28 stores in 12 states last week. On Sunday, three workers at a store in Sapulpa, Oklahoma, left their shifts to protest outside with homemade placards. They were apparently encouraged by news coverage of the other strikes -- the difference being that the Sapulpa employees worked independently of the national group that’s been coordinating the actions, OUR Walmart, which stands for Organization United For Respect at Wal-Mart, who are in turn backed by the United Food and Commercial Workers Union.

"I saw what was happening at stores in Dallas and around the country, and I did my research," Jeffrey Landry, 34, told the press. He also said Wal-Mart cut his schedule earlier this fall after he went to HR to discuss issues with departments to which he was being assigned.

Employees say they’re often randomly moved between departments, which affects their pay and the quality of the customer service they can offer. Schedules can also vary widely, making it difficult for students or parents to attend school or make plans for child care. From the company’s perspective, that kind of staffing flexibility is part of what keeps costs down and ensures no section is ever overstaffed or understaffed.

Frustrated with Wal-Mart’s response to the strikes so far -- the company’s spokesman has appeared on national talk shows saying that only a small percentage of employees have supported the “publicity stunt” -- OUR Walmart employees have since promised to go big, scaling up their efforts and vowing to take action again...on Black Friday. Black Friday, the day after Thanksgiving, can be the most lucrative day of the year for many retailers.

A worker in Dallas told Salon that if Wal-Mart didn't address OUR Walmart demands, many associates will "make sure that Black Friday is memorable for [the company].” The actions could include strikes, leafleting to customers, and flash mobs.

Needless to say, that threat brought instant headlines in the national media and speculation about how many employees would be willing to take such a stand on the highest holy day of the shopping season. OUR Walmart organizers are not yet offering details about the exact plans for Black Friday, but in a follow-up interview with Minyanville, Rosales told us that some hourly associates at her store are interested in striking, although they’re also hesitant and unsure how a Black Friday walk-out would affect holiday pay. “OUR Walmart is just giving us information about it and asking how we feel. A lot of people are willing to do it, but we're going to have one more meeting to try and get some details,” she said.

“We've seen a lot more associates get more interested,” Rosales added. “We've had a lot of positive and negative feedback in the store, but more positive than negative.”

So far, Wal-Mart is playing it cool in response to the Black Friday calls for action, outwardly anyway. A leaked memo has also shown that executives are training in-store management regarding everything they can and can't do to respond to employees who may be organizing. 

To the rest of the world, Dan Fogleman, Wal-Mart’s spokesman, is claiming that the company is expecting business as usual come November 23. In an email to Minyanville, a boilerplate response letter, he opens on a chipper note, saying, "Black Friday is a favorite time of the year for our customers and associates. We’re excited about what’s in store for our customers with some great merchandise and our unbeatable prices and don’t expect any business disruptions.“

His email also stated: “We recognize that there is a very small number of our associates who have been raising some concerns, but they don’t represent the views of the vast majority of our 1.3 million associates.

“The reality is, Wal-Mart has some of the best jobs in the retail industry – good pay, affordable benefits, and the chance for advancement,” Fogleman's letter said, before listing some of positive statistics based on the company’s research. To prove that “Wal-Mart is someplace people want to work,” he points out that Wal-Mart took in five million job applications in 2011.

The letter also addressed a question about the employer's scheduling system, saying associates are able to build their own schedules and that the hours are finalized three weeks in advance “so associates have plenty of time to make any adjustments necessary.

But in what some might consider a cheap shot-- considering the clout that comes with being a spokesman for a multinational company versus that of an employee making $10 per hour-- the notes finishes with: “What we have found is that, in many cases, the associates who have raised concerns about getting fewer hours than they would like to have also indicated they can’t – or won’t – work during hours of peak customer traffic, such as evenings and weekends.”

Labor Expert: Wal-Mart Might Respond This Time.

So what can Wal-Mart associates realistically expect from their movement?

Ken Jacobs, Chair of the UC Berkeley Center for Labor Research and Education, tells Minyanville that he thinks it’s possible that employees, and investors, will see a response from Wal-Mart  -- and a change in the company’s wage structure  -- given the growing popularity of the strikes and the spotlight they’re shining on Wal-Mart policies both internally (among other associates) and externally, via the media.

“What the strikes are doing is continuing to bring attention to the low wages and subpar benefits that Wal-Mart workers receive compared to their counterparts in the unionized grocery industry and retail workers overall,” he notes. According to the Center’s research, Wal-Mart workers earn significantly less than other retail workers -- about 12.4% less than retail workers as a whole and 13% less than large retail workers. There's a reason similar actions are not brewing at competitors like Costco (NASDAQ:COST) or Target (NYSE:TGT)  -- yet.

Investors might benefit in one key way should Wal-Mart pay employees more, Jacobs argues, because the company would likely see a warmer response from urban centers in the US, a segment of the market it has yet to penetrate. “As Wal-Mart expanded out of Bentonville, it resulted in the decline of grocery worker wages and retail worker wages, not just because Wal-Mart was a larger piece of the pie, but because the others have had to compete. So what we’ve seen since early on was a response that said, ‘Let’s keep Wal-Mart out of urban areas so they don’t drive a race to the bottom.' ”

The trend seems to indicate that workers are going to push for continued improvements to pay and benefits and will use concerted efforts to make inroads. “What we may see out of this in terms of the workers organizing might not look like a traditional union,” Jacobs says, adding that whether we'll see an actual union materialize, or when, is an open question.

Overseas, Wal-Mart works with unions but only when it has to. Countries with unionized Wal-Mart employees include England, China, and Chile. “They do what they can get away with in whatever country they’re in, and if they’re in a country where there is a strong labor relations system, then Wal-Mart will operate with those conditions,” says Jacobs.

To investigate the ramifications of a pay increase for Wal-Mart employees,  the UC Berkeley labor research center recently updated its study Living Wage Policies and Big Box Retail. Its findings concluded that if Wal-Mart moved wages to a minimum of $12 per hour, and pushed 100% of the expenses on to consumers, it would cost shoppers an average of $.46 per shopping visit, or $12.49 for the year. In all, it would be an increase of 1.1% facing consumers, well-below the discount Wal-Mart aims to offer shoppers.

Earning a minimum of $12 per hour would greatly improve the lives of Wal-Mart employees currently living close to the poverty line -- 41% would go to workers in families with total incomes below 200% of the federal poverty level -- but would not greatly impact consumers, even low-income families, according to the study.

In debating whether Wal-Mart could afford such a move, Jacobs adds, it's important to consider the company's overall profitability, not its store-specific returns. Wal-Mart, a major Dow (INDEXDJX:DJI) component, has annual sales of about $444 billion and profits of nearly $16 billion per year. The stock price has been up nearly 24% this year.

In 2010, labor economist Sylvia Allegretto, also at the UC Berkeley Center for Labor Research and Education, found that the wealth of the six Walton family members who are heirs to the retailer's fortune have a net worth equal to the income of the bottom 41.5% of all American families.

Says Jacobs: “Is there a way to improve wages and benefits while maintaining profitability? I think there’s no question that there is.”
No positions in stocks mentioned.

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