Wal-Mart Supports Federal Wage Increase

By Abigail Goldman

Oct. 25, 2005 12 AM PT

Times Staff Writer

Wal-Mart Stores Inc. on Monday pledged to more closely monitor suppliers’ factories for labor abuses, improve health benefits for employees and support an increase in the federal minimum wage -- taking on critics of its treatment of employees while acknowledging the needs of working-class customers.

In addition, Chief Executive H. Lee Scott Jr. said the retail giant would improve the efficiency of its massive truck fleet and reduce solid waste at its stores to help the environment.

In a teleconference with thousands of store personnel and executives around the world, Scott said Wal-Mart had taken heed of mounting criticism of some of its business practices.

“For us, there is virtually no distinction between being a responsible citizen and a successful business. They are one and the same for Wal-Mart,” he said.

Critics, however, questioned whether the company could achieve meaningful change while maintaining its boast as the low-cost leader.

Nelson Lichtenstein, a professor of history at UC Santa Barbara and editor of the forthcoming book “Wal-Mart: The Face of 21st Century Capitalism,” said Wal-Mart’s new initiative was simply good business. The Bentonville, Ark., company needs to expand into areas that have grown increasingly hostile.

“From their point of view, the problem is how to get into the other half of America, basically coastal America, and to do that they adopted a number of strategies: attack their opponents and also, maybe on some issues, accommodate their opponents,” Lichtenstein said. “Part of it is smoke and mirrors, and part of it will be real accommodations.”

Criticism of Wal-Mart has billowed alongside its sales, which at $285 billion last year made it the world’s biggest company. Through local outreach and websites such as Wake Up Wal-Mart, supported by the United Food and Commercial Workers union, the anti-Wal-Mart forces have whipped up resistance to new stores and pressed local governments to enact ordinances aimed at forcing the retailer to improve wages and benefits.

As Americans have struggled with higher gasoline prices and worries about the economy, the company has watched its once-phenomenal sales growth slow.

Wal-Mart’s stock, which is off 13% this year, rose 49 cents Monday to $46.21.

Scott’s speech is part of a public effort to fight back.

The executive outlined what Wal-Mart calls a framework -- with broad goals but few specifics in most areas -- that the company says it will elaborate on in the next 12 to 18 months.

Among those goals, Scott said, is working with other multinational companies to better enforce and reward proper working conditions at supplier factories. Scott said Wal-Mart would implement an independent monitoring program, which global labor experts maintain is crucial to proper oversight.

Last month a labor rights group sued Wal-Mart in Los Angeles County Superior Court, alleging that the company failed to enforce its code of conduct at supplier factories around the world, misleading the American public while ignoring sweatshop conditions.

Scott’s most detailed remarks Monday involved environmental initiatives. The company, he said, would increase the energy efficiency of its truck fleet -- the nation’s largest -- by 25% in the next three years and double efficiency in the next decade; design a store prototype that is 25% to 30% more efficient and produces 30% fewer emissions of so-called greenhouse gases; and reduce solid waste from U.S. stores by 25% in the next three years.

Scott pledged to bring insurance within reach of all his employees -- a sticking point with labor, which contends that Wal-Mart’s combination grocery and general merchandise Supercenters drive out unionized supermarkets that offer higher wages and low-cost family healthcare. Fewer than half of 1.2 million U.S. workers at more than 3,600 stores are covered by the company’s insurance programs.

Wal-Mart will offer some associates a new plan with premiums as low as $11 a month, a program the company hopes to expand nationally. Other employees will be offered a plan for about $25 a month for individuals and $65 for families -- about 40% to 60% less than the current plan.

The new plan has a $1,000 deductible, similar to the company’s current program, but will allow three doctor visits for each family member, with a $20 co-pay, before the deductible kicks in, a spokesman said.

Scott said Wal-Mart would support an increase in the federal minimum wage from the current $5.15 an hour. On average, the company says, it pays full-time U.S. associates $9.68, so a higher minimum wage would have a much tougher effect on Wal-Mart’s smaller rivals.

“While it is unusual for us to take a public position on a public policy issue of this kind,” he said, “we simply believe it is time for Congress to take a responsible look at the minimum wage and other legislation that may help working families.”

Susan Aaronson, a professor at the University of North Carolina’s Business School and an expert in corporate social responsibility, applauded Wal-Mart’s initiative but added that the plans were not enough.

“The devil lies in the implementation,” she said. “I’m skeptical but hopeful.”

Times staff writer Debora Vrana contributed to this report.