Last week, its top executive told reporters that Wal-Mart couldn't be a trendsetter on pay and benefits, that it couldn't be like General Motors was after World War II, helping to usher in the great American middle class.
What a cop-out.
Wal-Mart already sets the pace on hourly pay -- driving it down sharply. Grocery workers in California had to take big cuts last year despite a strike, because Wal-Mart unveiled plans to open 40 supercenters in the state. Safeway and Albertsons had to reduce costs to compete.
And the line about GM? Wal-Mart's chief executive, Lee Scott, made it sound like GM management made an altruistic decision to create prosperity for its workers. In fact, it was the union movement in Flint, Mich., and elsewhere that forced the auto industry's hand.
Union organizers had to endure violent attacks to get better wages, benefits and job security.
By citing GM, Wal-Mart actually makes a case for unionizing the country's biggest private employer. So does its position that it shouldn't be expected to lead the charge to a living wage.
If the No. 1 company on the Fortune 500 can't do it, who can?
Like the automakers, Wal-Mart may have to be dragged, kicking and screaming, into a new age.
In effect, that battle is already under way. Wal-Mart faces dozens of lawsuits over its workplace practices, from allegations of gender discrimination to requiring off-the-clock work.
A union movement is relentlessly targeting the company, pushing for higher wages and lower-priced benefits.
And scores of critics from academia, Congress and the media are portraying Wal-Mart as a company that doesn't take care of its own.
"Higher productivity and higher wages are the story of American economic success," says Harley Shaiken, a professor specializing in labor issues at the University of California, Berkeley. "Wal-Mart is on the cutting edge of productivity, but it's leading the way to lower wages."
Wal-Mart doesn't think it's getting a fair shake. It pays an average hourly salary of $9.68, much more than the minimum wage, and offers health insurance to a broader cross section of workers than some competitors.
It's proud of how many workers get their start at Wal-Mart, and of how many retirees join its ranks to supplement their incomes. Wal-Mart also has its roots in the rural South, where the cost of living is lower -- and lower pay scales are accepted.
But those explanations won't put an end to today's controversies. The company is entering new markets, including urban centers that sometimes fight its expansion; and its size alone draws attention.
Being No. 1 puts a company in the spotlight, whether it's the top player in an industry or the world. Exxon Mobil, Microsoft, Nike and the Gap know that added scrutiny comes with the territory.
Wal-Mart acts as if this issue is merely a public relations crisis. It held its first-ever media day last week in Bentonville, Ark., and has hired scores of public relations specialists to make its case.
But Shaiken says the company needs to re-examine its approach, not just defend itself. If it doesn't change its behavior, it won't ultimately change the public's perception, and it could be seriously tainted.
The Gap and Nike faced long-running criticism over the use of sweatshops in developing countries. Ultimately, they embraced their critics and demanded improvements in working conditions. The clouds -- and boycotts -- dissipated.
Wal-Mart has to do a balancing act. Low prices are the key to its model, and labor costs are an important element. The company argues convincingly that consumers benefit from the savings that it creates.
Wall Street demands a good return, too, and Wal-Mart stock is down 14 percent in the past year.
Then there are the 1.2 million U.S. employees, who also deserve their share of the action.
But this challenge isn't beyond the pale. Southwest Airlines is famous for its low costs and loyal work force. It's now the leader in what has become a commoditylike business with razor-thin margins, largely because its workers are so productive.
Southwest is heavily unionized, and it has an innovative pay scale that keeps fixed costs low and generously shares profits. At the end of the day, Southwest employees usually make more than their counterparts at the legacy airlines.
The Container Store, a strip-center retailer, is consistently named one of the best places to work.
Costco, whose wholesale warehouses outperform Wal-Mart's Sam's Club, pays its workers significantly more and provides some of the best benefits anywhere.
Pay starts at $10 an hour, and after four years, Costco employees make more than $40,000 annually. More than eight of 10 workers have health benefits, and the company pays almost 93 percent of the costs.
Little wonder that turnover is less than half the rate at Wal-Mart.
"Our philosophy has always been to pay employees well," says Richard Galanti, Costco's chief financial officer. "It's good for them, and it's good for business. They're our ambassadors."
Wall Street analysts have criticized Costco for paying more than it has to, but the company has stuck to its guns.
So why can't Wal-Mart figure this out?
Don't buy the argument that the service sector can't afford it. Shaiken says that the hotel business is the latest example of companies providing a living wage.
"You go to Las Vegas," Shaiken said, "and housekeepers are buying homes, and restaurant workers are aspiring to a middle-class lifestyle. This is not an impossibility or some type of utopian notion.
"It's a question of priorities," he says.
Wal-Mart is no wallflower. To get what it wants, it regularly flexes its muscle with suppliers, manufacturers, even communities. Put some of that brawn to work on behalf of employees, and it could reduce the number who have to get government assistance and can't afford the company's health care plans.
When Scott talked about GM, he said the auto industry was capital-intensive, so machines and technology led to higher output from each autoworker. Retailing is just the opposite, he said.
But Wal-Mart is the runaway leader in its industry. It pioneered breakthroughs in distribution and inventory control, and it's a beast with suppliers.
It has long had the highest worker productivity in retailing, even as others emulated its model.
Wal-Mart deserves credit for reshaping the retail business. There's no reason it can't become an innovator in how it treats employees, too.
