Obama, a possible Democratic presidential candidate for 2008, was the first to weigh in, in a call that started at 7 p.m. EST. "Unlike the manufacturers who are under enormous competitive pressure from global low-cost producers, Wal-Mart is making enormous profits and yet it has chosen to go with low wages and diminished benefits," he said. "The battle to engage Wal-Mart and force them to examine their corporate values and policies is absolutely vital to America today."
A Living Wage
Obama spoke for less than 10 minutes, and much of the call was taken up by members of WakeUpWalMart.com. The group was set up by the United Food & Commercial Workers International Union, which has tried to organize the company's workers—without success. The Hope for the Holidays campaign is designed to change what the group calls Wal-Mart's "anti-family business practices" and persuade the company to provide a "living wage and affordable health care" to employees. "With great wealth comes great responsibility," says Chris Kofinis, spokesman for WakeUpWalMart.com. "As one of the world's most powerful economic forces and one of the most profitable companies, Wal-Mart has the responsibility to improve the lives of its workers."
Wal-Mart, which has seen numerous attacks by politicians in the past, was restrained in its response to the event. "We are disappointed that Senators Obama and Edwards have chosen to participate in a politically motivated event," says David Tovar, spokesman at Wal-Mart. "Wal-Mart creates jobs for Americans, reduces costs of health care with its $4 generic drugs, and is a leader on environmental sustainability." The company says it is on the side of working Americans, providing more than 1 million with jobs and offering more products at affordable prices than any other retailer.
The calls come just as the holiday shopping season is kicking into high gear. Wal-Mart has vowed to lead its industry in cutting prices as it tries to boost sales. On Nov. 14, the company reported third-quarter sales that were shy of analysts' expectations, although profits were at the high end of Wall Street forecasts (see BusinessWeek.com, 11/14/06, "Wal-Mart: Back to Basics for the Holidays").
Democrats Appeal to Workers
The Obama-Edwards conference calls are a clear sign that, with the ascendancy of Democrats in Washington, political pressure on Wal-Mart is on the rise. Other Democrats have appeared in rallies that call for Wal-Mart to change. And in a column in The Wall Street Journal on Nov. 15, Democratic Senator-elect Jim Webb (D-Va.) laments that tax codes protect the rich and American corporations. "The average CEO of a sizeable corporation makes more than $10 million a year, while the minimum wage for workers amounts to about $10,000 a year, and has not been raised in nearly a decade," Webb wrote.
Labor unions, of course, have long been allied with Democrats, and they now believe that their voices will be heard by politicians with power. However, the Democrats appear to be appealing to a broader audience of workers, not just those in unions. They're appealing to the many employees who feel like they're being pinched between low pay and escalating costs for things like health care.
"Folks on Wall Street, and people in the top 1% of the income bracket are getting more and more of the productive resources," said Obama, "while ordinary folks are finding themselves systematically in jobs where they don't find adequate wages, no health-care benefits, and no significant form of retirement security. It's not like the economy took a hit. We are grappling with this trend even as the U.S. economy has been going gangbusters and corporate profits have gone up astronomically."
Not Playing Favorites
Though it has historically been closer to Republicans, Wal-Mart has been trying to court politicians from both parties. While it has donated 69% of its federal political contributions to Republicans and 31% to Democrats, it recently hired Leslie Dach, a Democratic operative and former political adviser to Al Gore, as head of its government relations and corporate communications. It has also stepped up its political contributions to politicians of both parties at the state and local levels (see BusinessWeek.com, 9/28/06, "Wal-Mart Doesn't Discount Politicians").
The current campaign against Wal-Mart particularly targets the company's new round of workplace restrictions—wage caps, cutting the number of hours with a corresponding cut in wages, compelling part-time workers to be available for shifts around the clock, and a stringent attendance policy. Along with these changes, Wal-Mart is looking to transform its workforce from 20% part-time to 40% part-time. Some employees say that the company wants to push out full-time and unhealthy employees because they are too expensive for the company to retain (see BusinessWeek.com, 10/17/06, "Wal-Mart Workers Walk Out").
The politicians are offering Wal-Mart advice, along with their criticism. Obama pointed to Wal-Mart's rival Costco (COST), where the average pay is 60% higher and health-care benefits are provided to more than 80% of its employees, compared to less than half at Wal-Mart. Obama said Wal-Mart workers and supporters should work together to change its policies: "We have a history in this country of ordinary people doing extraordinary things when they work together."
