The wealth of Wal-Mart naturally has freed the Waltons from having to worry about making a living. Rob, despite being chairman of Wal-Mart, spends ample time racing bicycles, collecting and racing sports cars, and flying his corporate jet. Alice, who dabbled in finance and economic development when younger, now concentrates on raising horses on her ranch in Texas and on building an art museum in Bentonville. In recent years, Alice has emerged as a major buyer of American paintings at the New York auction houses of Sotheby’s and Christie’s, causing quite a stir in the spring of 2005 by paying more than $35 million for a single work by Asher B. Durand. The Walton museum, the Crystal Bridges Museum of American Art, is expected to open in 2009 in a $50-million building designed by the celebrated architect Moshe Safdie.
Although the Waltons keep their distance from Wal-Mart’s day-to-day operations, they maintain close contact with one another, and they do not hesitate to exert control over Wal-Mart’s direction and its culture. Sam Walton remains a venerated figure to his children, who gather at Helen’s house three times a year to discuss his legacy—the family business. Their thoughts on the stores—about where to expand, what kinds of customers to target, when to invest more in growing the company, and how to treat employees—are relayed to the board of directors and to senior managers through Rob. Their thoughts about the other businesses, the banks, and the newspapers pass to Jim, who is directly in charge. Their thoughts on philanthropy, an increasingly important focus over the last decade, were communicated through John, who has yet to be replaced in this role.
All of the Waltons’ decisions are guided by their religious beliefs as devout Presbyterians. Helen Walton was chairwoman of the Presbyterian Church (USA) Foundation and is still a trustee emeritus; she regularly attends services at First Presbyterian Church in Bentonville. 6 When John died, his local house of worship, the Presbyterian Church of Jackson Hole, held a memorial service. John and Jim both attended the College of Wooster, a small liberal arts school in Wooster, Ohio, because their mother approved of its Presbyterian affiliation. (Jim left after two years and graduated from the University of Arkansas, closer to home.) The family, through its private charitable foundation, has given generously to Presbyterian charities, including $500,000 to the Dwight Presbyterian Mission, which ministers to Indians in Oklahoma, and $400,000 to Presbyterian Church USA.
The Walton Family Foundation is one of three bountifully endowed charities that the family influences or controls. In addition to the family foundation, which is funded by and directly controlled by the Waltons, there is the Wal-Mart Foundation, which is funded primarily by the company, and the Walton Family Charitable Support Foundation, which is funded by the family but includes outsiders on its board. Each has tens or hundreds of millions of dollars in assets, and doles out the money in grants as small as $500 (for example, to the Benton County Historical Society and the Oklahoma Safe Kids Coalition in 2004) or as large as $300 million (to the University of Arkansas in 2003, the biggest gift ever to a public university). In 2004, the Wal-Mart Foundation distributed $170 million to more than 100,000 groups, while the Walton Family Foundation gave away $107 million to more than 800 groups.
Much of the family’s personal philanthropy, as expressed by the family-directed foundation, has been used to encourage the expansion of publicly funded but privately run charter schools and the use of school vouchers in fostering alternatives to traditional public education. In 2004 alone, according to documents on file with the Internal Revenue Service, the family foundation gave about $3 million just to one charter school group, the Knowledge is Power Program. Millions more were given to individual charter schools, including Aspire Public Schools in Oakland, California, and Harborside School in San Diego, as well as to groups promoting them, including the Colorado League of Charter Schools and the Charter School Resource Center. The Waltons’ increasingly assertive sponsorship of a conservative educational reform agenda has antagonized many of the same critics who object to Wal-Mart’s business practices. In their view, the Walton family is funding initiatives that are undermining public school systems across the country by shifting money to private schools while opening the door to public funding of religious schools. 7
More broadly, critics complain that much of Wal-Mart’s charitable giving—well-publicized grants of a few hundred to a few thousand dollars to local Girl Scout troops or libraries—has coincided with its efforts to open new stores, wrest zoning changes from cities, or press local governments to pay for sewers, roads, or other improvements to properties where it wants to build. “The Waltons’ and Wal-Mart’s philanthropy deserves more scrutiny than praise,” said Jeff Krehely, deputy director of the National Committee for Responsible Philanthropy, a watchdog group in Washington.
It is not clear how such criticism affects the Waltons, because their reflexive secrecy makes them difficult to read. But like the second generations of other dynastic families, Sam’s heirs face challenges different from any their father did. He started with virtually nothing and built the world’s biggest publicly traded company; they inherited unimaginable wealth and must reconcile the company’s red-in-tooth-and-claw culture with the broader social role that success has forced upon it.
Playing hardball with suppliers, squeezing employees, and scrapping with local governments is one thing for a small or midsized regional retailer in small rural towns happy for a low-cost shopping opportunity. It is something else entirely for a company whose decisions set the wage-and-benefit standards for an entire industry and result in turning venerable manufacturers into shell companies that merely import what they used to make in order to meet your price demands. Corporations with enough power to materially affect the world’s largest economy need to think and act differently than a small-town five-and-dime just trying to make a living by saving a neighbor a nickel.
These are the challenges that have confronted the current generation of Waltons for more than a decade. But whether because of their loyalty to Sam’s legacy, their steadfast paternalism, their Protestant work ethic, or naked self-interest, they have so far failed to rise to meet them.
CHAPTER FIVE
WAL-MART’S WAR AGAINST THE UNIONS
After nine years of working at a Wal-Mart store in northern New Jersey, Donna DiIenno was totally fed up. It really wasn’t so much the low pay and the lousy benefits that finally got to her, though naturally she could have used more money. DiIenno, who had just turned forty, was tired of getting pushed around by her bosses. In August 2003, DiIenno’s job as a support manager at the Washington Township store was eliminated, and she was offered a choice of new positions at the same pay and hours. Angered by what she considered a lack of respect and appreciation, DiIenno made use of Wal-Mart’s open-door policy to write a letter of protest to her store manager.
A few days after posting the letter, DiIenno was summoned without explanation to the office of her store manager’s boss, the local Wal-Mart district manager. Twice she was told to sit down. Twice she refused. According to DiIenno, the rest of her truncated Wal-Mart “exit interview” went like this: “He said, ‘Why are you being insubordinate?’ I said, ‘I’m not being insubordinate for refusing to sit down.’ He pushed the door shut and said, ‘You’re not leaving until you sit down.’” DiIenno replied that she had to get back to her job and left. The district manager shouted after her, “You don’t have a job.”
Incensed by her firing, DiIenno called Local 1360 of the United Food and Commercial Workers union and volunteered her services in its drive to unionize area Wal-Mart stores. Soon, she was working a 7 P.M. to midnight shift for the union, sitting in her car in the parking lot in front of the store where she once worked. Periodically, managers would come out and tell her to shove off. Less frequently, a former co-worker would stop by to surreptitiously pick up a union authorization card. Said DiIenno, who was five months pregnant at the time: “Somebody needs to fight the fight.” 1
In Washington Township, as in most places, the UFCW got nowhere in its
attempt to organize Wal-Mart. If every unhappy and demoralized worker in the store had signed a card, the UFCW would have easily reached the 30 percent threshold required to force a union representation vote, DiIenno said. The problem was that many of her former colleagues lived paycheck to paycheck and were scared silly that any pro-union display would get them demoted or fired. They had reason to be afraid. Every worker soon learns there are two unforgivable sins at Wal-Mart: stealing from the company and consorting with a union. “In my 35 years in labor relations, I’ve never seen a company that will go to the lengths that Wal-Mart goes to, to avoid a union,” said Martin Levitt, a consultant who helped the company perfect its anti-union tactics before writing a memoir called Confessions of a Union Buster. “They have zero tolerance.” 2
What distinguishes Wal-Mart from the many other large American corporations that are “union-free” and determined to stay that way is not only the depth of its antagonism toward collective bargaining, but also the steadfastness of its refusal to admit to it. Like every other bedrock tenet of the Wal-Mart Way, the company’s evasive brand of anti-unionism was Sam Walton’s doing. “I have always believed strongly that we don’t need unions at Wal-Mart….” he wrote in Made in America. “Historically, as unions have developed in this country, they have mostly just been divisive. They have put management on one side of the fence, employees on the other, and themselves in the middle as almost a separate business, one that depends on the division between the other two camps. And divisiveness, by breaking down direct communication, makes it harder to take care of customers, to be competitive, and to gain market share.” Wal-Mart’s partnership with associates “works better for both sides than any situation I know of involving unions,” added Walton, whose tightfisted, patriarchal benevolence was perfectly expressed by his “Mr. Sam” nickname. 3
Many of Wal-Mart’s corporate contemporaries—especially the southern ones—hired union-busting consultants in the mold of John Tate, who helped Wal-Mart ward off the half-hearted Retail Clerks organizing drives in two small Ozarks towns in the early 1970s. But Walton elevated Wal-Mart’s anti-union efforts to the highest level of corporate priority by creating a full-time senior executive position for Tate and installing him on Wal-Mart’s board of directors.
Walton had personally taken the lead in battling what remains to this day the drive that came closest to unionizing an entire Wal-Mart facility in the United States: a 1978 bid by the International Brotherhood of Teamsters to organize the Wal-Mart distribution center in Searcy, Arkansas—the same partially automated DC that was an important stepping-stone on David Glass’s upward climb. Nearly 200 workers suffered injuries in the DC’s first four months of operation, mainly because Wal-Mart had insisted on putting it into service well before construction was completed. Workers were even angrier when they learned that their counterparts at a newly opened DC in Texas were getting $1.50 more an hour than the $6.20 hourly wage at Searcy. After their complaints fell on deaf ears at the home office, angry workers called in the Teamsters.
In no time, 200 of the 415 workers at the Searcy DC signed cards asking the union to represent them. An election was promptly scheduled, as required under federal law, but a variety of stall tactics used by Wal-Mart succeeded in delaying a vote all the way until 1982. In the interim, Walton had met repeatedly with the Searcy workers, alternately charming, cajoling, and threatening them—first with the loss of their profit sharing and then with the loss of their jobs. “He said people could vote any way they wanted, but [if the union won] he’d close her right up,” recalled one worker. Walton also pointedly mentioned that Wal-Mart had 500 job applications on file for the DC, implying that pro-union workers were dispensable. After the vote, which was 215 to 67 against the Teamsters, many of the pro-union employees were indeed fired. 4
Since Walton’s day, Wal-Mart has honed union suppression to a fine art. Typically, the home office swings into action as soon as it learns that employees have been asked to sign union representation cards. The store’s manager is tipped, usually by an employee who has been relentlessly drilled by the company on the dangers of so much as talking about unions. Someone from the store often starts watching people suspected of harboring union sympathies—basically anyone who has pushed for a raise or resisted extra work. Wal-Mart associates who have been through the process said they have spotted their managers loitering in parking lots outside early organization meetings or have noticed that managers who rarely associated with them suddenly started taking breaks with employees. Some Wal-Mart workers have claimed that closed-circuit security cameras were installed after an organizing drive began.
At the first whiff of a union, or very quickly thereafter, Wal-Mart begins requiring employees to attend hour-long meetings at which they are lectured about how the presence of a union would poison the atmosphere inside the store by turning manager against associate while also costing employees a sizable chunk of their paychecks in dues. They are shown anti-union videos that hammer home that message. Union-busting experts from the “People Division” in Bentonville typically are flown in on corporate jets to run the meetings and to keep headquarters informed.
Then the real onslaught begins. The experts from Bentonville teach store managers to meet individually with every employee who might sympathize with the union and its pledges to improve wages, benefits, and work rules. The goal of these one-on-one sessions is to intimidate associates and condition them to be suspicious of outsiders. One associate who went through the process, Eric Jackson, a cashier at the Wal-Mart in Paris, Texas, said that in the early stages of an organizing drive at his store, a group of five managers summoned him into a back room and made him watch an anti-union video and participate in a role-playing exercise. “I was supposed to be a manager, and one of them was the associate who came to me with a question about a union,” Jackson recalled. “So I quoted the video. I said, ‘We do not believe we need a union at Wal-Mart,’ and they were like, ‘Good, good!’ and then I said, ‘We’re not anti-union—we’re pro-associate,’ just like I’m supposed to say.” 5
If employees persist in trying to organize, Wal-Mart has been known to transfer, demote, or even fire associates suspected of pro-union sympathies. At other times, it has reclassified suspected sympathizers as managers, rendering them ineligible to vote. Wal-Mart often has been accussed of “flooding the unit”—that is, adding many new employees shortly before a union vote, on the theory that new employees are more likely to vote with management. This tactic, though illegal, is easy for Wal-Mart to mask because of its high turnover rate: It naturally replaces half of its workforce every year as it is.
Wal-Mart’s anti-union arsenal has proven extraordinarily effective. No entire store or distribution center in the United States has so much as held a union representation vote since the Teamsters went down to defeat in Searcy twenty-four years ago. The UFCW has managed a dozen times to petition for votes by employees of individual departments within stores, mostly butcher shops and Tire & Auto Lube Express shops. With the conspicuous exception of a meat-cutting department in Texas (discussed later in this chapter), Wal-Mart has prevailed in every such vote in the United States.
Remember Joshua Noble, the epileptic who led the 2005 drive to organize a Tire & Auto Lube in Loveland, Colorado? Noble persuaded eight of his sixteen colleagues to join him in signing UFCW cards. But by the time the election was held three months later, one pro-union worker had been fired and two others had gone off to college. Wal-Mart replaced them twice over, transferring in six new workers. The five other card signers backed away, leaving Noble as the last union man standing. The vote was 17 to 1. “It wasn’t a fair fight. Every day they had two or three anti-union people from Bentonville in the garage full time, showing anti-union videos and telling people that unions are bad,” complained Noble who, at last report, was still working at Wal-Mart. 6
If you set out to translate Don Quixote into a modern setting, you could do worse than to cast its windmill-tilting protagonist as an
American union organizer. When the union movement was at its peak a half-century ago, one in three workers carried union cards in their wallets; today, barely one in ten does. That organized labor, such as it is, has been reduced to irrelevance across a vast swath of the U.S. economy is not entirely, or even mostly, the fault of union leaders. Automation and the internationalization of markets have combined to vaporize millions of high-paying jobs in the manufacturing industries that long were the pride of unionism. Since the mid-1980s, union membership also has steadily eroded in many service industries as employers have bowed to intensifying economic pressure to cut payrolls and improve productivity.
The increasing prevalence of retaliatory firings and other illegal union-busting tactics reflects the weakness of the National Labor Relations Board, a federal agency established during the New Deal of the 1930s to safeguard workers’ legal right to organize for collective bargaining. “Toothless” is the adjective favored by the NLRB’s critics and even by some of its officials. “The [National Labor Relations Act] is not being obeyed,” Leonard Page, the NLRB’s general counsel, declared in a speech in 2001. “We have a sixty-five-year-old statute and there are a percentage of rogue employers that are able to take the low road during an organizing drive.” The process of prosecuting companies resorting to unfair labor practices was too protracted and the penalties levied too weak to deter abuses, Page added. “If workers have to face this gauntlet and look at a remedy three or four years later, which amounts to posting a notice on the board for 60 days, what are we talking about? That certainly is not the rule of law.” 7
The Bully of Bentonville Page 12