Archive for the ‘Retail’ Category

Challenging Wal-Mart’s Freeloading Ways

Thursday, November 21st, 2013
from Cleveland.com

from Cleveland.com

Countless words have been published about the retrograde labor practices of Wal-Mart, but none of that writing conveyed as much as the short message recently reported to have been taped to a bin in an employees-only area at one of the company’s stores in Ohio: “Please donate food items here so Associates in Need can enjoy Thanksgiving Dinner.”

My first reaction was that this was a stunt staged by the Yes Men to embarrass the giant retailer. Yet it was all too real. In fact, a corporate spokesperson saw nothing amiss, saying it showed how much the company’s employees care about each other. No doubt they do, but the problem is that Wal-Mart is so deliberately obtuse about its obligation to provide a decent living to those on its payroll.

Leaving it to hard-pressed workers to support their colleagues is just one of the ways Wal-Mart shifts its costs to others. The company puts a much bigger burden on taxpayers, who end up paying for the healthcare coverage that so many of its employees must get from public programs such as Medicaid.

In the early 2000s some states began to disclose which employers accounted for the most low-wage workers and their dependents in these programs. Wal-Mart was invariably at or near the top of these lists. (See the Good Jobs First compilation here.)

Unfortunately, fewer of these lists are being released (and the Affordable Care Act will apparently do nothing to help). Yet the few recent disclosures show Wal-Mart is still creating more of these hidden taxpayer costs than any other company. For example, in July the Dayton Daily News obtained data from the Ohio Department of Job and Family Services indicating that Wal-Mart had more employees or household members on Medicaid or food stamps than any other employer in the state. The most recent compilation of employers accounting for the largest number of recipients in Connecticut’s Husky program (its version of Medicaid) also had Wal-Mart as number one.

Another approach was taken in a recent report by the Democratic staff of the U.S. House Committee on Education and the Workforce, which estimates that the workforce of a typical Wal-Mart Supercenter costs taxpayers some $250,000 a year for Medicaid services (as part of at least $904,000 a year in overall federal safety net costs per store).

These hidden costs are not the only way Wal-Mart sticks taxpayers with the bill. The company has traditionally also been shameless in demanding special tax breaks and other forms of financial assistance when it opens a new store or distribution center. My colleagues and I at Good Jobs First have been tracking this practice since 2004, when we published a report estimating that the company had collected some $1 billion in such subsidies. We later updated the report, finding that the total had risen to $1.2 billion, and we assembled all the data in a website called Walmart Subsidy Watch.

In many of its more controversial urban siting efforts in recent years, Wal-Mart has put less emphasis on special subsidies, which we like to think is because we made the practice more radioactive. Yet the company cannot resist its giveaway demands entirely.

Recently, for example, the company sought tax breaks totaling some $5.4 million for a Supercenter and Sam’s Club it is proposing to build in the Chicago suburb of Tinley Park. Thankfully, the plan was shot down by the board of the Summit Hill School District, which took its vote after a hearing in which one resident described Wal-Mart as a “corporate monster.”

In Texas, however, Wal-Mart seems to be on track to receive a property tax abatement worth $3 million in connection with its plan to build an e-commerce distribution center near Fort Worth Alliance Airport. (For other recent awards, see the company’s entries in the Good Jobs First Subsidy Tracker database, which covers all companies; be sure to search under the official corporate name Wal-Mart as well as the brand name Walmart).

The spirit of the Summit Hill School District is reflected in the activism of rank and file workers, who with the assistance of OUR Walmart are planning to resume protests at company stores on Black Friday. Their efforts will help replace food drives with a living wage and eventually get Wal-Mart to change all its freeloading ways.

Job Actions Have Wal-Mart Running Scared

Thursday, June 27th, 2013

Walmart_strikeIt’s déjà vu all over again at Wal-Mart. Returning to its customary practice of using intimidation to respond to demands for improved working conditions, the company recently began firing some of the “associates” who participated in strikes at its stores. Other workers are being disciplined under the pretext of violating Wal-Mart’s attendance policy.

While this is bad news for the workers affected, the use of heavy-handed tactics is a sign that the company is worried about the historic job actions that have been spreading through its U.S. operations. If Wal-Mart really believed its claims that the OUR Walmart group spearheading the protests has limited support among the company’s massive workforce, then it would be ignoring the movement rather than desperately trying to squelch it.

The current wave of firings is actually an escalation of repressive policies that the company has been implementing since OUR Walmart began ramping up its campaign in 2011. A report released in May by American Rights at Work found that the company has been responding to the activism by disguising acts of retaliation as legitimate discipline or routine enforcement of company policy. Accusing Wal-Mart of fostering a “climate of fear,” the report also documented ways in which the company violated federal labor law by denying OUR Walmart members and organizers access for protected concerted activity.

Such actions continue a tradition of anti-union animus that has characterized Wal-Mart since its earliest years. While some have sought to romanticize founder Sam Walton and pin the blame for the company’s notorious labor policies on his successors, it was Sam himself who first brought in union-busting consultants when some members of his then much smaller workforce began to talk about organizing in the 1970s. The investment paid off for management. For example, after about half of the workers at a Wal-Mart warehouse in Searcy, Arkansas signed cards in support of Teamsters representation in the early 1980s, the consultants used the run-up to the election to scare the workforce into ultimately voting more than three-to-one against the union.

This scenario would play out again and again, both in the United States and Canada. For example, in 1997 the Ontario Labor Relations Board ruled that Wal-Mart had violated Canadian law by intimidating workers in the period preceding a representation election involving the United Steelworkers union. As a result, the board certified the Steelworkers, even though a majority of workers had voted against the union. The company, however, simply refused to bargain with the union.

In 2000 a small group of courageous meatcutters at a Wal-Mart Supercenter in Jacksonville, Texas voted for representation by the United Food and Commercial Workers (UFCW). Within two weeks, the company announced that it was shutting down the meatcutting operations at that store and at more than 175 more in six states. The NLRB later ruled that the company had violated federal labor law by refusing to discuss the closing with the workers who had chosen union representation, but the issue was by then moot.

In 2001 the UFCW said it was launching a national organizing drive at Wal-Mart, but it focused on a few areas such as Las Vegas, where it engaged in a fierce battle with a slew of anti-union specialists flown in from corporate headquarters in Bentonville, Arkansas. Years later, the NLRB found that the company had engaged in various unfair labor practices, but by then the organizing effort had fizzled out. Looking back on the situation, the Las Vegas Sun published an article headlined WAL-MART BREAKS THE LAW, GETS PUNISHED, WINS ANYWAY.

Wal-Mart’s labor relations practices have been so egregious that they go beyond regulatory infractions and enter the realm of human rights abuses. It’s thus no surprise that Human Rights Watch, which typically analyzes atrocities in dictatorial governments, once published a report concluding Wal-Mart violated the right of its workers to freedom of association.

The problem for current Wal-Mart management is that its workers are more difficult to intimidate than they were in the past. Organizing efforts used to be limited to single locations; now OUR Walmart, using non-traditional tactics, is operating in many places and can mobilize large numbers of people, as seen in last year’s Black Friday job actions as well as the recent strikes and the protests at the company’s annual meeting.

One way Wal-Mart management is responding to the growing solidarity is by increasing its use of a category of worker it believes it can more readily control: temps. The company traditionally used such contingent workers only during the holiday season. Recently there have been reports that some Wal-Mart stores are hiring only temps.

So much for those TV ads that sought to portray a job at Wal-Mart as the stepping-stone to a career.

Amazon Gets Its Way

Thursday, April 25th, 2013

amazonWhen companies get subsidies from state and local governments, it usually means that they have to pay less in taxes. Internet retailing behemoth Amazon.com built its business on making sure it could avoid collecting sales taxes from many of its customers, thus allowing it to undercut its brick and mortar rivals.

It now looks like that indirect subsidy is finally coming to an end. Congress seems poised to pass legislation that would require all online merchants with $1 million or more in revenue (Amazon’s annual sales are 60,000 times larger at $61 billion) to collect state and municipal sales taxes from customers anywhere in the country. This will be a godsend to struggling governments that need the revenue to pay for education, healthcare and other vital services.

Amazon has already come to terms with this policy change and in fact has been taking steps to exploit it. As has been widely reported, Amazon recognizes that the next stage in internet retailing is same-day delivery, at least in selected areas. To make that service possible, Amazon needs to greatly expand its network of huge distribution centers from which all those Kindles and toys and kitchen gadgets can be quickly transported to impatient customers. The company just reported a 37 percent drop in its first quarter profits that has been attributed in part to the cost of expanding that distribution network.

Don’t shed any tears for Amazon. That drop is probably just a blip. The company has already taken steps to radically reduce the cost of building those new facilities.

It has done this by using its sales tax collection practices as leverage in negotiating with state governments. For several years, the company negotiated special exemptions from the requirement to collect taxes in those states where it had a physical presence such as a warehouse. In some states, such as South Carolina in 2011, it used the promise of job creation linked to new distribution centers as bait to get the exemptions.

When necessary, the company also tried to use those promises to evade obligations to make good on judgments concerning uncollected past taxes. For example, last year the company reached a deal with Texas that allowed it to skate on a $269 million assessment for uncollected taxes. In exchange, the company agreed to invest $200 million on facilities it would have had to build anyway.

The company is also shifting its demands to traditional economic development subsidies such as income tax credits, property tax abatements and cash grants. For example, the company got a $7.5 million state grant and a $1 million local abatement for a distribution center it agreed to build in Delaware, and it agreed to build two such facilities in New Jersey on the condition that it receive a subsidy package, the value of which has not yet been announced

Amazon has also received a $2 million tax credit and up to $300,000 in training grants from the Indiana Economic Development Corporation for a fulfillment center it agreed to build in Jeffersonville. That agency — whose website lures companies with the pitch “Looking for a right-to-work state with all the right resources, business incentives, low corporate tax rates and AAA credit rating in place to reach your full potential?  – is in tune with Amazon’s sensibilities. For in addition to seeking financial assistance, Amazon takes advantage of the implicit subsidy created by weak labor laws.

The fact that its U.S. operations have remained entirely non-union has made it easier for the company to impose inhuman working conditions in its facilities, which have been the target of criticism by groups such as Working Washington. The controversy has also emerged at Amazon’s operations in Germany, where the company was accused of using neo-Nazi thugs to intimidate immigrant workers at the facilities.

Amazon, it appears, will stop at nothing in its quest to dominate online commerce.

Wal-Mart’s Other Sins

Thursday, October 25th, 2012

The job actions taking place at many Wal-Mart locations around the United States have brought new attention to the abysmal labor practices of the country’s largest private employer. More than any other company, Wal-Mart depends on low wages, meager benefits, overtime abuses and gender discrimination to keep its labor costs artificially low while quashing any efforts by workers to rectify those conditions.

Two weeks ago, I used this blog to recount Wal-Mart’s labor and employment track record. Here I want to remind readers of some of the company’s many sins outside the workplace, using information I assembled for the new 5,000-word Wal-Mart entry in my Corporate Rap Sheets series.

Corruption. Wal-Mart doesn’t seem to mind its hardline reputation on personnel matters, but it has tried to otherwise paint itself as a squeaky-clean operation. That image was shattered last spring, when the New York Times published an 8,000-word front-page exposé about moves by top management to thwart and ultimately shelve an investigation of Foreign Corrupt Practices Act violations, focusing on extensive bribes paid by lower-level company officials as part of an effort to increase Wal-Mart’s market share in Mexico.

That story made a huge splash and reportedly undermined the company’s urban expansion efforts. A major public pension fund, the California State Teachers’ Retirement System, sued the company for breach of fiduciary duty in connection with the bribery scandal. It and other institutional investors showed their discontent with top management by opposing the official slate of directors at Wal-Mart’s annual meeting. About 12 percent of the shares outstanding were voted against the slate, an unprecedented level of dissent by the company’s previously quiescent shareholders. The company, apparently still trying to deal with the fallout, has just announced an overhaul of its compliance department.

State income tax avoidance. In 2007 the Wall Street Journal published a front-page story revealing that Wal-Mart was using a real estate gimmick to avoid paying many millions of dollars in state corporate income taxes each year. It was doing this by putting many of its stores under the ownership of a real estate investment trust (REIT) controlled by the company. The stores would pay rent to the captive REIT and deduct those payments as a business expense.

This trick, essentially paying rent to itself, reduced the company’s taxable income and thus lowered its state tax bill (the REIT was structured so its income wasn’t taxed by any state). A report by Citizens for Tax Justice estimated that Wal-Mart had thereby avoided some $2.3 billion in state income tax payments between 1999 and 2005–an average of more than $300 million a year.

Local property tax avoidance.  A 2007 report by my colleagues and me at Good Jobs First found that Wal-Mart has sought to reduce its property tax payments by frequently and aggressively challenging the assessed value attached to its U.S. stores and distribution centers by local officials.  The report examined a 10 percent random sample of the stores and found that such challenges had been filed for about one-third of them; an examination of all of the distribution centers found challenges at 40 percent, even though many of the latter had been granted property tax abatements when they were built.

Sales tax “skimming.” In a 2008 report by Good Jobs First entitled Skimming the Sales Tax, we found that Wal-Mart was receiving an estimated $60 million a year as a result of the little-known practice in some states of compensating retailers for collecting sales taxes and calculating the amount of that compensation based on total sales. This, in addition to the estimated $130 million in sales-tax-based economic development subsidies, means that Wal-Mart is depriving hard-pressed state and local governments of at least $73 million each year. This is just a small part of the more than $1.2 billion in state and local subsidies that Good Jobs First has documented on our website Wal-Mart Subsidy Watch.

Environmental violations. Wal-Mart has tried very hard in recent years to depict itself as a pioneer of sustainability by wide-ranging initiatives with regard to energy efficiency and the addition of organic foods and other green products to its shelves. Wal-Mart is largely silent about the environmental impact of the millions of customers who in most cases must still drive to the company’s retail outlets. It also wants us to forget that the company itself has had its share of environmental violations. For example, in 2004 the U.S. Department of Justice and the Environmental Protection Agency announced that Wal-Mart would pay a $3.1 million civil penalty and take remedial action to resolve alleged violations of the Clean Water Act in connection with storm water runoff from two dozen company construction sites in nine states. The following year, the company agreed to pay $1.15 million to the state of Connecticut to settle a suit alleging that it had allowed rain water to carry fertilizer, pesticides and other harmful substances stored outside its retail outlets into rivers and streams. It also signed a consent decree with the EPA to resolve charges relating to diesel truck idling at its facilities.

Undocumented Workers. When talking about Wal-Mart it is difficult to avoid the workplace entirely. Aside from its mistreatment of its own employees, the company takes advantage of exploited contract workers. For example, in 2003 a federal racketeering suit was filed against Wal-Mart by lawyers seeking to represent thousands of janitors who cleaned company stores and were reported to be working seven days a week and not receiving overtime pay. The filing took place 18 days after federal agents raided 60 Wal-Mart stores in 21 states to round up about 250 janitors described as undocumented aliens. In 2005 Wal-Mart agreed to pay $11 million to settle federal immigration charges. Documents later emerged suggesting that Wal-Mart executives knew that the company’s cleaning contractors were using undocumented immigrants.

“Dead Peasant” Insurance. Wal-Mart has not only worked people to death but also continued exploiting them after their demise. The mega-retailer is one of the large companies that engaged in the repugnant practice of secretly taking out life insurance on low-paid employees and making itself the beneficiary. The polite term for this is corporate-owned life insurance, though critics have labeled it “janitor’s insurance” or “dead peasant insurance.” In 2004 Wal-Mart settled one case brought in Houston for an undisclosed amount. Two years later it agreed to pay $5.1 million for a class action brought by the estates of former employees in Oklahoma, and in 2011 the company agreed to pay just over $2 million in a class-action suit filed in Florida.

The list could go on. In fact, it is difficult to find a form of corporate misconduct Wal-Mart has not exhibited. Yet it is probably the labor arena that counts the most in determining whether the company will be reined in. Support your local Wal-Mart “associates” in their efforts to stand up to the bully of Bentonville.

Standing Up to the Bully of Bentonville

Friday, October 12th, 2012

The spreading job actions by Wal-Mart workers around the country, while still involving modest numbers, come across as a kind of catharsis. They inspire the same uplifting emotion as those movie scenes in which a long-suffering victim of bullying finally fights back against the tormentor.

Wal-Mart, probably more than any other large corporation, deserves the title of bully. For decades it has demonstrated utter contempt for the rights of its employees to act in concert to improve their conditions of work, which are in serious need of amelioration. It rules over a vast army of underpaid “associates” who in many cases are involuntarily limited to part-time status and thus denied even the meager benefits provided to full-timers, forcing them, with the cynical encouragement of management, to apply for taxpayer funded health coverage such as Medicaid that is not meant for employees of a $460 billion corporation.

Such impacts are not limited to those actually on Wal-Mart’s payroll. Since it is by far the largest U.S. private-sector employer, Wal-Mart’s abominable labor practices have set an example that makes it easier for many other employers to commit similar sins.

In the hope that we are indeed seeing a major turning point in the relationship between the giant retailers and its workforce, it is worth looking back at the company’s record to recall just how bad its behavior has been.

While some have sought to romanticize founder Sam Walton and pin the blame for the company’s retrograde policies on his successors, the exploitative approach was there from the start. As Bob Ortega points out in his 1998 book In Sam We Trust, Wal-Mart Sam Walton deliberately used superficial forms of paternalism to gain the loyalty of his workers while keeping labor costs at rock bottom. “We really didn’t do much for the clerks except pay them an hourly wage,” Walton wrote in his autobiography, “and I guess that wage was as little as we could get by with at the time.”

When Walton learned in the 1970s that some of his workers were talking about unionization, he did not try to address their concerns. Instead, he brought in a union-busting consultant named John E. Tate, who devised the policy of uncompromising resistance that would characterize Wal-Mart’s labor relations posture for decades to follow. That applied not only at the company’s stores, but also at its large network of distribution centers. For example, after nearly 50 percent of workers at a warehouse in Searcy, Arkansas signed cards in support of Teamsters representation in the early 1980s, Tate and his staff used the run-up to the election to scare the workforce into ultimately voting more than three-to-one against the union.

This scenario would play out again and again, both in the United States and Canada. For example, in 1997 the Ontario Labor Relations Board ruled that Wal-Mart had violated Canadian law by intimidating workers in the period preceding a representation election involving the United Steelworkers union. As a result, the board certified the Steelworkers, even though a majority of workers had voted against the union. The company, however, simply refused to bargain with the union.

When Wal-Mart used the same intimidation tactics during a 1997 election at one of its stores in Wisconsin, the National Labor Relations Board criticized the company but did not take the same sort of action as its Ontario counterpart. Later in 1997, exasperated United Mine Workers officials decided to call off an organizing drive at a Wal-Mart in Fairfield, Alabama less than 24 hours before the representation was scheduled to take place.

In 2000 a small group of courageous meatcutters at a Wal-Mart Supercenter in Jacksonville, Texas voted for representation by the United Food and Commercial Workers (UFCW). Within two weeks, the company announced that it was shutting down the meatcutting operations at that store and at more than 175 more in six states. The NLRB later ruled that the company had violated federal labor law by refusing to discuss the closing with the workers who had chosen union representation.

In 2001 the UFCW said it was launching a national organizing drive at Wal-Mart, but it focused on a few areas such as Las Vegas, where it engaged in a fierce battle with a slew of anti-union specialists flown in from corporate headquarters in Bentonville, Arkansas. Years later, the NLRB found that the company had engaged in various unfair labor practices, but by then the organizing effort had fizzled out. Looking back on the situation, the Las Vegas Sun published an article headlined WAL-MART BREAKS THE LAW, GETS PUNISHED, WINS ANYWAY.

While the UFCW largely turned away from individual store organizing in the United States, it continued the effort in Canada, on the assumption that the legal environment would be more conducive there. Yet Wal-Mart continued to run roughshod over Canadian law as well.

When workers at a store voted for representation, Wal-Mart simply refused to bargain with the union. If it was forced to do so, it turned to the same tactic it employed in Texas: shutting down the store or department where workers had asserted their desire for collective bargaining, pretending that the step was being taken for economic reasons.

After such a move in 2005 involving a store in Jonquiere, Quebec, Wal-Mart CEO Lee Scott defended the action in an interview with the Washington Post, saying that he “saw no upside to the higher labor costs” that union representation would have brought and that he “refused to cede ground to the union for the sake of being ‘altruistic.’”

That, in a nutshell, is Wal-Mart’s view of the world—that its desire to keep costs, especially those relating to labor, at the absolute minimum is all that matters. Any measures in furtherance of that goal are justified.

Along with fighting unions tooth and nail, the religion of cost minimization led to other practices that made life hellish for the company’s workforce. This included the systematic use of wage theft to cheat workers out of overtime pay as well as gender and racial discrimination. Over the past decade, the company has paid hundreds of millions of dollars to settle lawsuits over wage and hour violations. In 2005 it paid $11 million to settle federal charges related to the illegal use of undocumented immigrants—who were found to be working some 56 hours a week—to clean its stores. And Wal-Mart would have paid much more in damages for sex discrimination if the U.S. Supreme Court had not come to its rescue and derailed a massive class action suit (though other more limited suits took its place).

Wal-Mart’s employment practices have been so egregious that they go beyond regulatory infractions and enter the realm of human rights abuses. It’s thus no surprise that Human Rights Watch, which typically  analyzes atrocities in dictatorial governments, once published a report concluding Wal-Mart violated the right of its workers to freedom of association.

So here’s hoping that the freedom fighters of the Wal-Mart workforce succeed in fully taming the bully of Bentonville.

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New in CORPORATE RAP SHEETS: Dossiers on water villains Nestlé and Coca-Cola Company.

The Collapse of Wal-Mart’s Social Responsibility Charade

Thursday, June 7th, 2012

For the past eight years, Wal-Mart has pursued an image campaign apparently inspired by the Marx Brothers line: “Who you gonna believe, me or your own eyes?”

Despite the preponderance of evidence of its unenlightened practices, the company has tried to give the impression that it is really a model corporate citizen. Recent events suggest that the giant retailer’s social responsibility charade is now crumbling.

Through all of its scandals and controversies over the years, Wal-Mart could at least count on the support of its institutional shareholders, which for a long time turned a blind eye to the company’s transgressions and focused on its growth. Now even that is changing. The recently released results of voting at the company’s annual meeting indicate unprecedented discontent with its leadership. Not counting the large bloc of shares controlled by descendants of founder Sam Walton, more than 30 percent of the votes were cast against CEO Mike Duke, board chair Rob Walton and former CEO and board member Lee Scott. In the past, Wal-Mart board members typically had approval rates close to 100 percent.

The high degree of no-confidence this time around is largely attributable to the fallout from an 8,000-word exposé by New York Times alleging that high-level executives at the company quashed an internal investigation of foreign bribery. Before the annual meeting, the California State Teachers’ Retirement System filed a lawsuit against current and former Wal-Mart executives and board members for breach of their fiduciary duties in connection with the bribery scandal.

That scandal also appears to have played a significant role in Wal-Mart’s decision to cave in to calls to suspend its membership in the American Legislative Exchange Council, which is under siege for its role in promoting “stand your ground” laws such as the one in Florida linked to the shooting of Trayvon Martin. In the past, Wal-Mart, long a stalwart member of ALEC, would have ignored pressure of the kind being exerted by the anti-ALEC campaign.

By all rights, the disintegration of Wal-Mart’s responsibility image should have come from its retrograde labor and employment practices, which were the main reason for the public relations effort but which didn’t substantially change during the campaign. The company has never strayed from its uncompromising opposition to unions (except for toothless ones in China). The Organization United for Respect at Walmart is not a conventional union-organizing effort, yet the company recently fired several activists in the group in an apparent act of intimidation.

In its 1.4 million-employee U.S. retail operations, Wal-Mart has maintained a low-road approach of meager wages, inadequate benefits and overuse of part-timers. Workers at its more than 100 distribution centers had enjoyed somewhat better conditions, but it appears that is no longer the case. A new report from the National Employment Law Project finds that the company is increasingly using logistics subcontractors and temp agencies that engage in rampant wage-and-hour abuses and other labor-law violations.

In the latest in a long line of its own fair labor standards cases, Wal-Mart was recently forced by the U.S. Labor Department to pay $5.3 million in back pay, penalties and damages for violating overtime rules. Although the U.S. Supreme Court came to Wal-Mart’s rescue last year by blocking a massive class-action sex discrimination case, several non-class actions have been brought in recent months making the same allegations on behalf of thousands of women.

One area in which Wal-Mart believes it has attained a measure of legitimacy is environmental policy. It has succeeded in winning over some green groups, which cannot resist the temptation of working with such a mammoth company to change industry standards.

Yet the funny thing about Wal-Mart’s green initiatives is that most of them involve changes that the retailer is requiring from its suppliers, who are expected to bear the costs of altering their products and their packaging. This is consistent with Wal-Mart’s longstanding practice of forcing suppliers to cut their wholesale prices to the bone. When Wal-Mart does take steps on its own, such as in reducing energy usage in its facilities, those reforms are ones that reduce its operating costs and thus add to its bottom line.

Even if you believe it is okay for Wal-Mart to boost its profits while pressing suppliers to be more environmentally responsible, it’s important to remember that many of those suppliers are in countries such as China where oversight is difficult. A recent investigative report in Mother Jones found that Wal-Mart’s monitoring of Chinese plants left a lot to be desired and that this is causing frustration among some of the environmentalists who have been working with the company.

A report by Stacy Mitchell of the Institute for Local Self-Reliance finds that Wal-Mart’s domestic green initiatives, such as using more renewable energy sources, are also faltering, while the company ignores the detrimental environmental impacts of its land use practices. All this is compounded, Mitchell notes, by Wal-Mart’s extensive political contributions to candidates who are global warming deniers or otherwise have poor voting records on the environment.

The demise of  Wal-Mart’s phony social responsibility initiative poses a fascinating question: Can the company return to its old critics-be-damned stance, or will it finally have to make some genuine reforms in the way it does business?

Amazon’s Anti-Tax Crusade

Thursday, June 30th, 2011

When large companies complain about taxes, they are usually talking about levies they have to pay out of their own deep pockets. Amazon.com is engaged in a battle to make it easier for its customers to avoid paying their taxes – their sales tax, that is, on what they purchase from the giant online retailer.

The outcome of this dispute will have broad consequences for a U.S. economy in which state and local governments face ongoing revenue shortfalls and commerce increasingly takes place online.

At the center of the dispute is the question of whether web-based retailers such as Amazon have the same obligation as brick-and-mortar stores to collect sales tax from their customers. Sales taxes are essential to the finances of state governments, accounting for nearly half of all their tax revenue. Widespread corporate income tax dodging and business property tax breaks have made the sales levy all the more important.

While traditional retailers have no choice about collecting the sales tax mandated by state and local authorities, the story is more complicated when it comes to e-commerce. A 1992 U.S. Supreme Court opinion barred states from requiring catalogue and internet sellers to collect sales tax unless they had a physical presence (“nexus” in legalese) such as a distribution center in the customer’s state. The argument was that forcing merchants to keep track of varying tax rates across thousands of jurisdictions was too onerous.

That ruling, which was handed down before Amazon.com was founded, did not mean that online transactions were tax-free. Many states require residents to voluntarily report their online purchases and pay taxes directly to the government. Most people are unaware of these rules or choose to ignore them. The failure of online retailers to collect taxes thus results in revenue losses that a University of Tennessee study estimates will reach $11 billion next year.

The Supreme Court hinted that a solution to the problem should come in the form of federal legislation sanctioning sales tax collection on remote transactions along with efforts by the states to streamline and simplify their sales tax practices. Progress on these fronts has been slow.

As people spend more and more of their money in cyberspace, some states feel they cannot wait. They have been devising creative ways to establish nexus. New York led the way in 2008 with legislation, dubbed the “Amazon law,” that requires online retailers to collect taxes if they have affiliate websites in the state promoting sales on their behalf. A few other states followed suit in 2009 and 2010.

This year the issue has mushroomed. More than a dozen state legislatures have taken up the matter, and Amazon laws have been enacted in Illinois, Connecticut and California. Amazon is furious. It responds to the new laws by vowing to terminate its relationship with affiliates in the affected states and by threatening legal action.

The company’s aversion to sales tax collection is so strong that it carries over into states in which it should have a nexus obligation. As Michael Mazerov of the Center on Budget and Policy Priorities points out, Amazon has put ownership of its physical facilities in the hands of subsidiaries and then claimed there was no basis for the parent company to collect taxes. When that has not worked, the company has sought special exemptions by what amounts to bribing the state with promises of job creation. Such an effort just failed in Texas, but Amazon prevailed in a drawn-out dispute in South Carolina.

In early June, South Carolina legislators reversed themselves and approved a bill that gives Amazon a five-year exemption from its sales tax collection duties. The move came after the company upped to 2,000 the number of jobs it promised to create in the state in the course of building a $125 million distribution center.  Amazon had also been offered subsidies such as income tax credits and property tax breaks, but it is significant that the sales tax collection issue was the deal breaker for the company.

Despite all evidence to the contrary, Amazon claims that its opposition to collecting sales tax is not driven by a desire to gain a price advantage over its competitors. Instead, the company insists that collecting sales tax in every state would be excessively burdensome.

It would be one thing for that claim to be made by a mom-and-pop operation. But this is Amazon—the online service that not only sells its customers a vast array of merchandise but also anticipates what they may want to purchase by offering an endless stream of targeted recommendations and by listing what customers who bought a particular item also purchased.

A company that has the computing power to predict the consuming habits of each of its tens of millions of customers could easily handle a few thousand different sales tax rates.

At stake are not only Amazon’s convenience and state revenue loss. By taking a hard line on sales tax collection, Amazon is contributing to the anti-tax sentiment that is doing so much harm to the country. Everyone likes a bargain, but it should not come at the expense of revenues needed to sustain vital public services.

Targeting Target

Thursday, May 26th, 2011

Logo of the UFCW's Target campaign

The news of a union organizing drive at a group of Target Corporation stores in the New York City area raises the tantalizing possibility that the master of cheap chic may finally be knocked off its pedestal.

For years, Target has used its stylish image to obscure the fact that many of its employment and other practices are not significantly different from those of its scandal-ridden rival, Wal-Mart. It’s even managed to get itself included on a list of the “world’s most ethical corporations.”

Target’s stores, like those of Wal-Mart’s U.S. operations, are entirely non-union, and the company intends to keep them that way. The New York Times account of the organizing drive has Jim Rowader, Target’s vice president for labor relations, spouting the usual corporate rhetoric about how a union (the UFCW) would undermine the supposed trust that the company has built up with its workers. BNA’s Labor Relations Week (subscription-only) reports that Target is subjecting workers to captive meetings “conducted by store management in an attempt to dissuade workers from seeking union representation.”

Since no representation elections have been held yet, it is unclear whether Target will follow the lead of Wal-Mart in eliminating the jobs of those who dare to vote in favor of a union.

Target does not have a reputation quite as abhorrent as that of Wal-Mart when it comes to other employment practices, but neither is its record untarnished.  It has been accused of subjecting its largely part-time workforce to the same abuses—inadequate wages, restrictions on health coverage, overtime violations, etc.—seen among other big-box retailers. Though not as often as Wal-Mart, Target has shown up on lists prepared by state governments of the employers with the most workers or their dependents receiving taxpayer-funded healthcare benefits. Target has fought against living wage campaigns, most notably in Chicago in 2006, when it threatened to cancel plans for two new stores in the city unless Mayor Richard Daley vetoed a wage ordinance (which he did).

Target has also faced accusations relating to the treatment of minority applicants and employees. In 2007 the company paid a total of more than $1.2 million to settle cases brought by the U.S. Equal Employment Opportunity Commission involving alleged racial discrimination in hiring in Wisconsin and a racially hostile environment in Pennsylvania.

There have been controversies involving the treatment of workers by Target suppliers and contractors, as well.  In 2002 Target was one of a group of retailers that together paid $20 million to settle class-action lawsuits charging them with permitting sweatshop conditions at factories run by their suppliers in Saipan, part of the U.S. Commonwealth of the Northern Mariana Islands in the Pacific. A 2006 report by SOMO, a Dutch research center on transnational corporations, documented other instances in which Target garment suppliers were reported to be abusing workers and the retailer did little in response.

Target has a history of hiring janitorial contractors for its U.S. stores that tend to engage in rampant wage theft. In 2004 one such contractor, Global Building Services, paid $1.9 million to settle an overtime-violation case brought by the federal government on behalf of immigrant workers.  In 2009 another Target cleaning contractor, Prestige Maintenance USA, settled an overtime lawsuit for up to $3.8 million.

Labor practices are not the only area in which Target’s accountability record falls short. Earlier this year, the company had to pay $22.5 million to settle civil charges that its operations throughout California had violated laws relating to the dumping of hazardous wastes. Target has had a good record on gay rights, though last year the company found itself at the center of a controversy after it was revealed to have contributed to a business PAC which in turn contributed to a gubernatorial candidate in Minnesota who campaigned against gay marriage (among other reactionary positions).  Target later apologized.

And then there’s the matter of subsidies. Like Wal-Mart, Target has extracted lucrative tax breaks and other forms of financial assistance from many of the communities where it has built stores or distribution centers. One of its more audacious efforts was a proposal for a $1.7 billion mixed-use project in the Minneapolis suburb of Brooklyn Park, for which Target wanted more than $20 million in property tax abatements and a public contribution of $60 million for infrastructure costs. Despite seeking all this taxpayer assistance, Target demanded a waiver from the city’s living-wage policy for many contract and part-time workers who would be employed at the site.

Perhaps the best thing that can be said about Target, aside from its style, is that it is much smaller than Wal-Mart. Its total revenues are only about one-sixth of the worldwide sales (and less than one-quarter of U.S. sales) of the Bentonville behemoth. Target’s workforce of 355,000, all in the United States, is dwarfed by Wal-Mart’s domestic headcount of 1.4 million and another 700,000 abroad. Target thus has a much smaller impact on overall labor practices and the global supply chain.

What impact it does have is not salubrious. Now that it is facing some union pressure, let’s hope Target breaks from Wal-Mart and decides that it is makes sense to treat its workers with as much respect as its customers.

NOTE: Speaking of subsidies, the Subsidy Tracker database I created for Good Jobs First has just been expanded and now has more than 65,000 entries covering 154 subsidy programs in 37 states.

Wal-Mart Plays the Victim

Thursday, September 23rd, 2010

In the mid-1990s business groups such as the American Trucking Association – then led by Thomas Donohue, currently head of the U.S. Chamber of Commerce – launched a crusade to ban union corporate campaigns. The effort fizzled out, but now Wal-Mart may be trying something similar to thwart site fights pursued by community groups opposed to the opening of the giant retailer’s stores and distribution centers.

The company is pouncing on a story published in the Wall Street Journal in June reporting that rival grocery chains such as Safeway and SuperValu helped to pay for the services of a firm called Saint Consulting Group, which has worked with community groups around the country in campaigns against Wal-Mart projects. The article also reported that Saint’s fees are sometimes paid by the United Food and Commercial Workers. The UFCW does not hide the fact that it works with community groups opposed to the virulently anti-union Wal-Mart, whose expansion threatens the jobs of UFCW members at unionized competitors. The UFCW confirmed to the Journal that it has funded Saint and insisted it had every right to do so. The newspaper said that the rival chains declined to comment.

In a just-published follow-up article, the Journal reports that Wal-Mart is asking courts to compel its opponents to disclose who is paying their legal bills in various environmental lawsuits challenging the company’s expansion. This could be the first step in an effort to get courts and perhaps friendly legislatures to put restrictions on site fights and their funding. While Wal-Mart claims to be most upset about the involvement of its competitors, the company may try to use this issue to weaken community groups and the UFCW, its long-time nemesis.

It is the height of hypocrisy for Wal-Mart to complain about collusion among its adversaries. The beast from Bentonville has never hesitated to use every trick at its disposal – including the funding of front groups – to advance its expansion efforts. Over the summer it succeeded in getting permission to build a second store in Chicago by using tactics such as creating fake community groups and hiring low-income people to pose as demonstrators supposedly eager to get a Wal-Mart job. The company also pretended to have seriously negotiated with unions on wage rates for the store.

Several years ago, Wal-Mart sought to defuse criticism of its detrimental impact on local businesses by launching an “Opportunity Zone” program that amounted to little more than bribing small firms to back its agenda. In 2006 it came to light that two blogs that appeared to be written by independent supporters of the company were actually created by Wal-Mart’s public relations firm, Edelman. That was in addition to reports that the company was cultivating real bloggers, some of whom were repeating company talking points verbatim.

The amount of money Wal-Mart’s competitors have contributed to site fights probably does not compare to what Wal-Mart has spent itself. Apart from the direct costs of those site battles, the company cultivates political support through direct means such as campaign contributions and is believed to make wide use of indirect means such as giving consulting contracts to relatives of public officials.

State and local governments end up paying for the company’s campaigning through the economic development subsidies (estimated at more than $1.2 billion) they give to Wal-Mart and the forms of tax avoidance (estimated at billions more) that the company arranges for itself.

Wal-Mart may feel that the likes of Safeway and Supervalu are violating some unspoken rule by supporting site fights, but it has broken every rule in the book itself in pursuit of endless expansion. But rather than defending those rivals, the most important thing is to be sure Wal-Mart does not exploit this issue to put shackles on community groups and unions, which are often the only forces working against the company’s quest to take over everything.

Haiti: Corporate Charity or Reparations?

Friday, January 22nd, 2010

After the New Orleans region was struck by Hurricane Katrina in 2005, Wal-Mart scored a public relations coup by delivering emergency supplies quickly while government agencies stumbled. Ignoring the fact that the company’s vast distribution network made the feat relatively easy, awestruck journalists hailed the giant retailer as a “savior” for many of the storm’s victims.

The Behemoth of Bentonville has apparently not been performing any major logistics miracles for the people of Haiti in the wake of the recent devastating earthquake. The company is working mainly through the Red Cross, initially providing $500,000 in cash and food kits worth $100,000.

Although the company’s outlays have apparently increased a bit since its January 13 press release, the amount is still in the neighborhood of $1 million. To put that number in perspective, in 2008 Wal-Mart had profits of $22 billion, which works out to some $2.5 million an hour—every day of the year.

It is hard to be impressed at a commitment of 30 minutes worth of profits to help deal with a disaster of the magnitude facing Haiti. But this is not just an abstract issue of generosity.

Over the years, Wal-Mart has earned huge sums from the impoverished nation. Haiti is one of the low-wage countries where garment contractors have produced the goods that, despite Wal-Mart’s vaunted low prices, can be profitability sold in its network of Supercenters. It’s been going on for many years. A 1996 report on Haiti by the National Labor Committee noted that Wal-Mart was a major customer of sweatshops paying garment workers as little as 12 cents an hour.

In this time of dire need, Wal-Mart should feel pressure to make a commitment to the Haitian people of a magnitude comparable to the wealth it has extracted from the country over the years.

The question of the obligation of a company such as Wal-Mart to a situation such as Haiti is particularly relevant in light of the outrageous ruling by the Supreme Court in the Citizens United case. Thanks to the High Court’s corporate shills, Wal-Mart executives are probably already fantasizing about the unlimited slush funds they will have to sway elections and pressure incumbents to do their bidding.

Now is a good time to launch a movement to push corporations to do something with their money other than buying the political system. The outpouring of support for Haiti could be the springboard for a campaign that demands that Wal-Mart—and other major corporations that have benefited from the country’s cheap labor—provide not a bit of charity but rather a substantial amount in the form of reparations.

Perhaps the way to start is to call for disclosure of an estimate of how much value Wal-Mart has extracted from the Haitian people. Rather than letting the company brag about its pittance of a voluntary contribution, it would be much more satisfying to see it have to negotiate an amount that would make a real difference for the country.