Thursday, November 27, 2003 2:05:07 PM
Long article but well worth the read imo. Amazing impact this empire has and what it will have as it converts more stores to food items also.
Wal-Mart's empire reshaping workplace
By Abigail Goldman and Nancy Cleeland
Los Angeles Times
GENARO MOLINA / LOS ANGELES TIMES
Kelly Gray, a mother of five, lost her job as a Raley's supermarket clerk after Wal-Mart's expansion into the grocery business in Las Vegas contributed to Raley's decision to shut 18 stores and cut 1,400 workers.
First in a series
LAS VEGAS — Chastity Ferguson kept watch over four sleepy children late one Friday as she flipped a pack of corn dogs into a cart at her new favorite grocery store: Wal-Mart.
The Wal-Mart Supercenter, a pink stucco box twice as big as a Home Depot, combines a full-scale supermarket with the usual discount mega-store. For Ferguson, the draw is simple.
"You can't beat the prices," said the hotel cashier, 26, who makes $400 a week. "I come here because it's cheap."
Across town, another mother also is familiar with the Supercenter's low prices. Kelly Gray, 36, the chief breadwinner for five children, lost her job as a Raley's grocery clerk in December after Wal-Mart expanded into the supermarket business here. California-based Raley's closed all 18 of its stores in the area, laying off 1,400 workers.
Gray earned $14.68 an hour with a pension and family health insurance. Wal-Mart grocery workers typically make less than $9 an hour.
"It's like somebody came and broke into your home and took something huge and important away from you," she said. "I was scared. I cried. I shook."
Wal-Mart gives. And Wal-Mart takes away.
From a small-town five-and-dime, Wal-Mart Stores has grown over 50 years to become the world's largest corporation and a global economic force.
It posted $245 billion in sales in its most recent fiscal year — nearly twice as much as General Electric and almost eight times as much as Microsoft. It is the nation's largest seller of toys, furniture, jewelry, dog food and scores of other consumer products. It is the largest U.S. grocer.
Wal-Mart's decisions influence wages and working conditions across a wide swath of the world economy, from the shopping centers of Las Vegas to the factories of Honduras and South Asia. Its business is so vital to developing countries that some send emissaries to the corporate headquarters in Bentonville, Ark., almost as if Wal-Mart were a sovereign nation.
The company has prospered by elevating one goal above all others: cutting prices relentlessly. U.S. economists say its tightfistedness has not only boosted its own bottom line, but also helped hold down the inflation rate for the entire country. Consumers reap the benefits every time they push a cart through Wal-Mart's checkout lines.
Yet Wal-Mart's astonishing success exacts a heavy price.
By squeezing suppliers to cut wholesale costs, the company has hastened the flight of U.S. manufacturing jobs overseas. By scouring the globe for the cheapest goods, it has driven factory jobs from one poor nation to another.
Wal-Mart's penny-pinching extends to its own 1.2 million U.S. employees, none of them unionized. By the company's own admission, a full-time worker might not be able to support a family on a Wal-Mart paycheck.
Anti-union stance
Glenn Miraflor used to chide his wife for shopping at Wal-Mart.
As a member of Ironworkers Local 416, the 50-year-old father of four is well aware of the retailer's anti-union stance. But when the family's credit-card debt topped $10,000, Wal-Mart's deals suddenly looked irresistible.
"Where else are you going to find a computer for $498?" he asked, looking for a PC with his wife, Debbie, at the Supercenter on Serene Avenue, far from the glitz of the Las Vegas Strip. "Everyone I work with shops here."
Surveys by the Teamsters and the United Food and Commercial Workers — the two unions most threatened by Wal-Mart — show that many of their own members shop at the discounter.
After making their way through the groceries, the Miraflors turned to the housewares section, picking up a 20-inch box fan for $10.
"You can't beat that," said Glenn Miraflor. "That's why we come here."
The fan was made 1,700 miles away in Chicago at Lakewood Engineering & Manufacturing Co. A decade ago, the same fan carried a $20 price tag.
But that wasn't low enough for Wal-Mart. So Lakewood owner Carl Krauss cut costs at every turn. He automated production at the red-brick factory built by his grandfather on the city's West Side. Where it once took 22 people to put together a product, it now takes seven. Krauss also badgered his suppliers to knock down their prices for parts.
In 2000, he took the hardest step of all: He opened a factory in Shenzhen, China, where workers earn 25 cents an hour, compared with $13 in Chicago. About 40 percent of his products now are made in China, including most heaters and desktop fans. The Miraflors' box fan was assembled in Chicago, but its electronic guts were imported.
"My father was dead set against it," Krauss said of the move overseas. "I have the same respect for American workers, but I'm going to do what I have to do to survive."
All the retailers Krauss supplies — including Home Depot and Target — drive a hard bargain with manufacturers. But none is as tough as Wal-Mart, Krauss said.
Twice a year, his sales representatives travel to Wal-Mart headquarters to pitch their products. There, competitors sit side by side, waiting to be ushered into one of 60 glass-sided cubicles — a space some call Vendors' Alley.
Then the haggling begins. "You give them your price," Krauss said. "If they don't like it, they give you theirs."
The suppliers are at a disadvantage. The Wal-Mart buyer can always go out to the waiting room and find someone who will go lower. "Your price is going to be whittled down like you never thought possible," Krauss said.
Wal-Mart's culture of cheap emanates from Bentonville, a town of 20,000 tucked into the low green hills of northwest Arkansas, where a young Sam Walton opened his first five-and-dime in 1950. Even then, Walton had a vision of a different kind of retail.
Rather than charging a little less than his competitors, Walton wanted to slash prices as much as he could and still make a profit. Other stores would use price breaks from manufacturers as a way to boost their bottom lines, paying less at wholesale while leaving retail prices untouched.
Walton passed such savings on to his customers as his discount business evolved into Wal-Mart stores in 1962. He figured he would make up the difference in volume. He was right.
By the mid-1980s, Wal-Mart's success had catapulted Walton to No. 1 on the Forbes list of richest Americans. Still, he drove an old pickup to haul around his bird dogs, refused to fly first class and shared hotel rooms with colleagues on business trips.
The Home Office in Bentonville occupies an industrial-looking hodgepodge of windowless work spaces, connected by bunker-like hallways. The drab gray-and-blue walls display the visage and sayings of Sam Walton, who died in 1992:
"Listen to your associates. ... They're the best idea generators."
"To succeed, stay out in front of change."
"Swim upstream. Go the other way. Ignore the conventional wisdom."
Lists abound. The best-performing stores. The worst-performing stores. Under a picture of the founder asking, "Who's taking your customers?" is a roster of competing retailers, including Costco Wholesale, Circuit City Stores and Target, with the name and picture of each company's chief executive.
It's all part of the Wal-Mart culture: a zealous attention to competition, customers and costs.
GENARO MOLINA / LOS ANGELES TIMES
A Wal-Mart Supercenter in Las Vegas combines a supermarket and a discount mega-store. Wal-Mart carefully manages the flow of goods, from factory floor to store shelf. Wal-Mart's business is so vital to developing countries that some send emissaries to the corporate headquarters in Bentonville, Ark.
The company's meticulous management of the flow of goods, from the factory floor to the store shelf, has shaved shipping and inventory costs to a degree that retailing experts say is unprecedented.
"You could argue that some of what Wal-Mart does to cut costs has been win-win," said Richard Tedlow, a professor of business administration at Harvard Business School. "What's being squeezed out is waste."
The company is so efficient that 4 percent of the growth in the U.S. economy's productivity from 1995 to 1999 was due to Wal-Mart alone, researchers at the McKinsey Global Institute estimated last year. No other single company had a measurable impact. Wal-Mart also has forced competitors to become more efficient, driving the nation's productivity — output per hour of work — even higher.
No limos or luxury
Walton, who still is referred to as Mr. Sam throughout the corporation, worked in a ground-floor office barely big enough for a conference table. The current occupant, Chief Executive H. Lee Scott Jr., is the keeper of Mr. Sam's vision. Like all Wal-Mart executives, he empties his own trash and shares budget hotel rooms when traveling. Everyone flies coach.
"We do not have limousines," said Scott, who certainly could afford one, having made nearly $18 million last year in salary, bonus and stock, plus options with an estimated value of $11.3 million. "I drive a Volkswagen Bug."
Wal-Mart's stinginess reaches from the executive suite to the loading dock.
Some truckers complain that they must unload their own cargo — or pay Wal-Mart to do it. Other big retail chains absorb that cost themselves. "They're awful," said independent driver George Hauschild of Palm Springs, Calif. "They don't even let you use the bathroom."
Such measures seem mild compared with what Wal-Mart has done to cut payroll costs. In one case, a jury in Oregon last year found that company managers had coerced hundreds of employees to work overtime without pay.
The managers were driven by intense pressure from Bentonville, witnesses said. Managers whose labor costs were considered too high were singled out during the company's weekly in-house satellite broadcasts. In response, managers tampered with electronic time cards or bullied employees to work off the clock, according to trial testimony.
The Oregon jury found in December that Wal-Mart's behavior was illegal and willful. A separate trial to determine damages for the 290 plaintiffs is set for early next year.
Wal-Mart settled similar overtime suits in Colorado and New Mexico for undisclosed amounts. More than 40 other cases are awaiting trial.
The company says it prohibits off-the-clock work and blames the problems on a small number of rogue managers.
Last month, Wal-Mart ran into trouble because of another cost-cutting practice: using dirt-cheap janitorial services.
A grand jury is investigating whether Wal-Mart knew that janitors provided by subcontractors were illegal immigrants cheated out of overtime pay. Federal agents raided 61 Wal-Marts across the country and seized boxes of documents from the Bentonville headquarters. Wal-Mart has denied wrongdoing.
Scott, the CEO, lauded Wal-Mart's employment record. Even in tight labor markets, he said, the company never has trouble finding workers.
"It is not forced labor," he said. "The truth is, I go to the stores and shake hands with the associates, and they like working at Wal-Mart."
Fast track to management
Aaron Rios liked working at Wal-Mart so much that he decided to make his career there.
Like two-thirds of Wal-Mart's store managers, Rios started off as an hourly worker — in his case, stocking shoes on the graveyard shift at the Wal-Mart in his hometown of Hanford, in California's San Joaquin Valley.
After two years, Rios was recommended for management training — the company's fast track — leading him to quit community college and pursue a climb through the Wal-Mart ranks.
"There's just something about a Wal-Mart environment," said Rios, who at 26 became manager of the Serene Avenue Supercenter in Las Vegas. "It changed who I am, where I was going and what my career goals were."
Wal-Mart store managers earn about $95,000 annually, including bonuses, according to the company. Supercenter managers earn $130,000.
A management position requires long hours — as many as 80 a week — and, often, a willingness to relocate. Rios worked at six California Wal-Mart stores before taking the helm at Serene Avenue.
"It doesn't come free," said Rios, a divorced father who shares custody of his 2-year-old son.
Still, he said, the benefits outweigh the sacrifices.
"I have an open opportunity. I could go into real estate for Wal-Mart. I could do systems, analysis, accounting. It's endless," Rios said. "If I wanted to go to Germany or Japan or Brazil or any of the markets we have, I believe I could go."
A few weeks later, Rios snared another promotion, moving back to California as a district manager in the high-desert region north of Los Angeles. He now oversees seven stores.
Larry Allen had his own dreams of climbing the Wal-Mart ladder.
BRIAN VANDER BRUG / LOS ANGELES TIMES
Sam Walton opened his first five-and-dime in 1950 in Bentonville, Ark. Wal-Mart has grown from that start into the world's largest corporation, with $245 billion in sales in its most recent fiscal year.
In the fall of 2001, he and his wife, Jacque, left Portland, where the economy was sputtering, and headed to Las Vegas. He was an executive chef and she worked in catering. They looked forward to a fresh start in unionized casino jobs, making more than $15 an hour, with health insurance and pensions.
But their timing was lousy. Recession and terrorism were hitting the gambling industry hard, and work of any kind was scarce.
Just before their money ran out, the Allens lowered their expectations and took jobs at the Serene Avenue Wal-Mart. Jacque, then 43, worked the counter at the in-store restaurant, Radio Grill. Larry, 46, stocked produce. They each earned $8 an hour.
Despite the letdown, Larry Allen said he attacked the job with enthusiasm. Inspired by tales of well-paid Wal-Mart managers who had started out as hourly employees, such as his manager Aaron Rios, he figured on working his way up. That was Sam's way, he said.
"I've been following Sam Walton since the 1970s," he said. "He's the American dream."
The glow faded quickly. At his 90-day review, Allen said, he received an unenthusiastic write-up and an hourly raise of 35 cents. His supervisor told him that if he continued working hard, in two years he might make his way up to $10 an hour.
Allen thinks he knows why he received such mediocre marks. For one thing, he was prone to question company policy. Then, Allen committed the ultimate act of disloyalty: He openly promoted unionization.
For decades, Wal-Mart has tantalized and frustrated union organizers. But the company's move into the grocery business — a labor stronghold — has raised the stakes dramatically.
Union organizers say the high wages and benefits of their members are at risk, as Wal-Mart expands its Supercenters beyond the South and Midwest. The company recently established a beachhead in Las Vegas, with five centers.
Wal-Mart has 10 stores in the Puget Sound region, and plans to add more. The company also has announced that it will expand its store in Marysville to a Supercenter.
Next stop: California, where Wal-Mart plans to open 40 Supercenters starting early next year. In a sense, it has already arrived. Wal-Mart's low wages are a central factor in the labor dispute between California's three major supermarket chains — Ralphs, Vons and Albertsons — and the United Food and Commercial Workers.
"They are the third party now that comes to every bargaining situation," said Mike Leonard, director of strategic programs for the UFCW.
From their first day on the job, Wal-Mart employees are advised to avoid unions and to report any organizing activities to their supervisors.
Company policy prohibits any union talk in work areas, and organizers say they routinely are asked to leave stores. The retailer sought, and last year received, a court order keeping organizers out of all of its stores in Arkansas. The state Supreme Court nullified the order in July.
At the first hint of union activity, Wal-Mart managers are supposed to call a hotline, usually prompting a team visit from Bentonville.
Wal-Mart spokeswoman Mona Williams said the intervention was meant to help store managers respond effectively and legally.
"Our philosophy is that only an unhappy associate would be interested in joining a union," she said, "so that's why Wal-Mart does everything it can to make sure that we are providing our associates what they want and need."
But dozens of times in the past four years, attorneys for the National Labor Relations Board have claimed that the company infringed on the supermarket union's legal right to organize.
Although some of those claims have been thrown out, others have been upheld by administrative-law judges, who have ruled that Wal-Mart illegally influenced employees with offers of raises, promotions and improved working conditions just before they were to vote on whether to join a union.
Judges also have found that Wal-Mart illegally implied that workers could lose benefits such as insurance and profit sharing if they unionized.
What's more, managers illegally confiscated union literature, threatened to close down a store if workers voted to join the union, fired several union supporters and failed to promote others, according to rulings from Minnesota to Florida.
Larry Allen got his first glimpse at a union pamphlet last year as he carried it to the garbage at the Serene Avenue Supercenter. He was hooked, and began advocating for an election to bring in the union.
"Somebody has got to step up and fight for what is right," Allen said.
Health-care burden?
Wal-Mart's costs to the community may show up in subtler ways.
In an informal survey in the late 1990s of people who used Las Vegas emergency rooms for routine medical care, patients who said they were employed but uninsured were asked where they worked.
"Wal-Mart came up more than any other," said Dr. Raj Chanderraj, a Las Vegas cardiologist and chairman of the Clark County Health Care Access Consortium, a group that works to provide medical services to the uninsured.
The reason, say critics: Because Wal-Mart pays such low wages, many employees can't afford the health insurance the company offers. And those who do have health coverage through the company often can't afford deductibles that run as high as $3,000 a year.
"Their employees are ending up at the county hospital and become the burden of the county," said Clark County Manager Thom Reilly.
Wal-Mart disputes that. Williams, the company spokeswoman, said that 48 percent of employees are covered by Wal-Mart's health-insurance plan. Among those who aren't, 26 percent have coverage from another source such as a spouse's employer or Medicare, Williams said.
The notion that Wal-Mart doesn't provide adequate health coverage is "just rhetoric," she said. "It's simply not true."
Those who accuse Wal-Mart of shortchanging its employees, Williams suggested, don't understand the modern service economy. "Retail and service wages are what they are," she said, "whether you look at a department store, a discount store, the local dry cleaners, the bakery or whatever.
"Wal-Mart is a great match for a lot of people," Williams added. "But if you are the sole provider for your family and do not have the time or the skills to move up the ladder, then maybe it's not the right place for you."
Larry Allen spent about a year advocating for the supermarket union while working at Wal-Mart.
In August, Allen was fired. NLRB attorneys said it was because of his union activities and filed a complaint against Wal-Mart, seeking his reinstatement.
On a recent afternoon outside the Supercenter, dozens of union members rallied to support Allen. "Larry, Larry, Larry," they chanted.
Asked about the commotion, a gray-haired Wal-Mart greeter named Robert just smiled. "They want to make the store union," he said. "But that would make the prices go up for our customers. We can't let that happen."
On some level, even Larry Allen understands. "I still believe in Wal-Mart," said Allen, who now is on the union payroll as an organizer. "I like the idea of it — give a quality product at a low price. It's what the American public wants."
Wal-Mart's empire reshaping workplace
By Abigail Goldman and Nancy Cleeland
Los Angeles Times
GENARO MOLINA / LOS ANGELES TIMES
Kelly Gray, a mother of five, lost her job as a Raley's supermarket clerk after Wal-Mart's expansion into the grocery business in Las Vegas contributed to Raley's decision to shut 18 stores and cut 1,400 workers.
First in a series
LAS VEGAS — Chastity Ferguson kept watch over four sleepy children late one Friday as she flipped a pack of corn dogs into a cart at her new favorite grocery store: Wal-Mart.
The Wal-Mart Supercenter, a pink stucco box twice as big as a Home Depot, combines a full-scale supermarket with the usual discount mega-store. For Ferguson, the draw is simple.
"You can't beat the prices," said the hotel cashier, 26, who makes $400 a week. "I come here because it's cheap."
Across town, another mother also is familiar with the Supercenter's low prices. Kelly Gray, 36, the chief breadwinner for five children, lost her job as a Raley's grocery clerk in December after Wal-Mart expanded into the supermarket business here. California-based Raley's closed all 18 of its stores in the area, laying off 1,400 workers.
Gray earned $14.68 an hour with a pension and family health insurance. Wal-Mart grocery workers typically make less than $9 an hour.
"It's like somebody came and broke into your home and took something huge and important away from you," she said. "I was scared. I cried. I shook."
Wal-Mart gives. And Wal-Mart takes away.
From a small-town five-and-dime, Wal-Mart Stores has grown over 50 years to become the world's largest corporation and a global economic force.
It posted $245 billion in sales in its most recent fiscal year — nearly twice as much as General Electric and almost eight times as much as Microsoft. It is the nation's largest seller of toys, furniture, jewelry, dog food and scores of other consumer products. It is the largest U.S. grocer.
Wal-Mart's decisions influence wages and working conditions across a wide swath of the world economy, from the shopping centers of Las Vegas to the factories of Honduras and South Asia. Its business is so vital to developing countries that some send emissaries to the corporate headquarters in Bentonville, Ark., almost as if Wal-Mart were a sovereign nation.
The company has prospered by elevating one goal above all others: cutting prices relentlessly. U.S. economists say its tightfistedness has not only boosted its own bottom line, but also helped hold down the inflation rate for the entire country. Consumers reap the benefits every time they push a cart through Wal-Mart's checkout lines.
Yet Wal-Mart's astonishing success exacts a heavy price.
By squeezing suppliers to cut wholesale costs, the company has hastened the flight of U.S. manufacturing jobs overseas. By scouring the globe for the cheapest goods, it has driven factory jobs from one poor nation to another.
Wal-Mart's penny-pinching extends to its own 1.2 million U.S. employees, none of them unionized. By the company's own admission, a full-time worker might not be able to support a family on a Wal-Mart paycheck.
Anti-union stance
Glenn Miraflor used to chide his wife for shopping at Wal-Mart.
As a member of Ironworkers Local 416, the 50-year-old father of four is well aware of the retailer's anti-union stance. But when the family's credit-card debt topped $10,000, Wal-Mart's deals suddenly looked irresistible.
"Where else are you going to find a computer for $498?" he asked, looking for a PC with his wife, Debbie, at the Supercenter on Serene Avenue, far from the glitz of the Las Vegas Strip. "Everyone I work with shops here."
Surveys by the Teamsters and the United Food and Commercial Workers — the two unions most threatened by Wal-Mart — show that many of their own members shop at the discounter.
After making their way through the groceries, the Miraflors turned to the housewares section, picking up a 20-inch box fan for $10.
"You can't beat that," said Glenn Miraflor. "That's why we come here."
The fan was made 1,700 miles away in Chicago at Lakewood Engineering & Manufacturing Co. A decade ago, the same fan carried a $20 price tag.
But that wasn't low enough for Wal-Mart. So Lakewood owner Carl Krauss cut costs at every turn. He automated production at the red-brick factory built by his grandfather on the city's West Side. Where it once took 22 people to put together a product, it now takes seven. Krauss also badgered his suppliers to knock down their prices for parts.
In 2000, he took the hardest step of all: He opened a factory in Shenzhen, China, where workers earn 25 cents an hour, compared with $13 in Chicago. About 40 percent of his products now are made in China, including most heaters and desktop fans. The Miraflors' box fan was assembled in Chicago, but its electronic guts were imported.
"My father was dead set against it," Krauss said of the move overseas. "I have the same respect for American workers, but I'm going to do what I have to do to survive."
All the retailers Krauss supplies — including Home Depot and Target — drive a hard bargain with manufacturers. But none is as tough as Wal-Mart, Krauss said.
Twice a year, his sales representatives travel to Wal-Mart headquarters to pitch their products. There, competitors sit side by side, waiting to be ushered into one of 60 glass-sided cubicles — a space some call Vendors' Alley.
Then the haggling begins. "You give them your price," Krauss said. "If they don't like it, they give you theirs."
The suppliers are at a disadvantage. The Wal-Mart buyer can always go out to the waiting room and find someone who will go lower. "Your price is going to be whittled down like you never thought possible," Krauss said.
Wal-Mart's culture of cheap emanates from Bentonville, a town of 20,000 tucked into the low green hills of northwest Arkansas, where a young Sam Walton opened his first five-and-dime in 1950. Even then, Walton had a vision of a different kind of retail.
Rather than charging a little less than his competitors, Walton wanted to slash prices as much as he could and still make a profit. Other stores would use price breaks from manufacturers as a way to boost their bottom lines, paying less at wholesale while leaving retail prices untouched.
Walton passed such savings on to his customers as his discount business evolved into Wal-Mart stores in 1962. He figured he would make up the difference in volume. He was right.
By the mid-1980s, Wal-Mart's success had catapulted Walton to No. 1 on the Forbes list of richest Americans. Still, he drove an old pickup to haul around his bird dogs, refused to fly first class and shared hotel rooms with colleagues on business trips.
The Home Office in Bentonville occupies an industrial-looking hodgepodge of windowless work spaces, connected by bunker-like hallways. The drab gray-and-blue walls display the visage and sayings of Sam Walton, who died in 1992:
"Listen to your associates. ... They're the best idea generators."
"To succeed, stay out in front of change."
"Swim upstream. Go the other way. Ignore the conventional wisdom."
Lists abound. The best-performing stores. The worst-performing stores. Under a picture of the founder asking, "Who's taking your customers?" is a roster of competing retailers, including Costco Wholesale, Circuit City Stores and Target, with the name and picture of each company's chief executive.
It's all part of the Wal-Mart culture: a zealous attention to competition, customers and costs.
GENARO MOLINA / LOS ANGELES TIMES
A Wal-Mart Supercenter in Las Vegas combines a supermarket and a discount mega-store. Wal-Mart carefully manages the flow of goods, from factory floor to store shelf. Wal-Mart's business is so vital to developing countries that some send emissaries to the corporate headquarters in Bentonville, Ark.
The company's meticulous management of the flow of goods, from the factory floor to the store shelf, has shaved shipping and inventory costs to a degree that retailing experts say is unprecedented.
"You could argue that some of what Wal-Mart does to cut costs has been win-win," said Richard Tedlow, a professor of business administration at Harvard Business School. "What's being squeezed out is waste."
The company is so efficient that 4 percent of the growth in the U.S. economy's productivity from 1995 to 1999 was due to Wal-Mart alone, researchers at the McKinsey Global Institute estimated last year. No other single company had a measurable impact. Wal-Mart also has forced competitors to become more efficient, driving the nation's productivity — output per hour of work — even higher.
No limos or luxury
Walton, who still is referred to as Mr. Sam throughout the corporation, worked in a ground-floor office barely big enough for a conference table. The current occupant, Chief Executive H. Lee Scott Jr., is the keeper of Mr. Sam's vision. Like all Wal-Mart executives, he empties his own trash and shares budget hotel rooms when traveling. Everyone flies coach.
"We do not have limousines," said Scott, who certainly could afford one, having made nearly $18 million last year in salary, bonus and stock, plus options with an estimated value of $11.3 million. "I drive a Volkswagen Bug."
Wal-Mart's stinginess reaches from the executive suite to the loading dock.
Some truckers complain that they must unload their own cargo — or pay Wal-Mart to do it. Other big retail chains absorb that cost themselves. "They're awful," said independent driver George Hauschild of Palm Springs, Calif. "They don't even let you use the bathroom."
Such measures seem mild compared with what Wal-Mart has done to cut payroll costs. In one case, a jury in Oregon last year found that company managers had coerced hundreds of employees to work overtime without pay.
The managers were driven by intense pressure from Bentonville, witnesses said. Managers whose labor costs were considered too high were singled out during the company's weekly in-house satellite broadcasts. In response, managers tampered with electronic time cards or bullied employees to work off the clock, according to trial testimony.
The Oregon jury found in December that Wal-Mart's behavior was illegal and willful. A separate trial to determine damages for the 290 plaintiffs is set for early next year.
Wal-Mart settled similar overtime suits in Colorado and New Mexico for undisclosed amounts. More than 40 other cases are awaiting trial.
The company says it prohibits off-the-clock work and blames the problems on a small number of rogue managers.
Last month, Wal-Mart ran into trouble because of another cost-cutting practice: using dirt-cheap janitorial services.
A grand jury is investigating whether Wal-Mart knew that janitors provided by subcontractors were illegal immigrants cheated out of overtime pay. Federal agents raided 61 Wal-Marts across the country and seized boxes of documents from the Bentonville headquarters. Wal-Mart has denied wrongdoing.
Scott, the CEO, lauded Wal-Mart's employment record. Even in tight labor markets, he said, the company never has trouble finding workers.
"It is not forced labor," he said. "The truth is, I go to the stores and shake hands with the associates, and they like working at Wal-Mart."
Fast track to management
Aaron Rios liked working at Wal-Mart so much that he decided to make his career there.
Like two-thirds of Wal-Mart's store managers, Rios started off as an hourly worker — in his case, stocking shoes on the graveyard shift at the Wal-Mart in his hometown of Hanford, in California's San Joaquin Valley.
After two years, Rios was recommended for management training — the company's fast track — leading him to quit community college and pursue a climb through the Wal-Mart ranks.
"There's just something about a Wal-Mart environment," said Rios, who at 26 became manager of the Serene Avenue Supercenter in Las Vegas. "It changed who I am, where I was going and what my career goals were."
Wal-Mart store managers earn about $95,000 annually, including bonuses, according to the company. Supercenter managers earn $130,000.
A management position requires long hours — as many as 80 a week — and, often, a willingness to relocate. Rios worked at six California Wal-Mart stores before taking the helm at Serene Avenue.
"It doesn't come free," said Rios, a divorced father who shares custody of his 2-year-old son.
Still, he said, the benefits outweigh the sacrifices.
"I have an open opportunity. I could go into real estate for Wal-Mart. I could do systems, analysis, accounting. It's endless," Rios said. "If I wanted to go to Germany or Japan or Brazil or any of the markets we have, I believe I could go."
A few weeks later, Rios snared another promotion, moving back to California as a district manager in the high-desert region north of Los Angeles. He now oversees seven stores.
Larry Allen had his own dreams of climbing the Wal-Mart ladder.
BRIAN VANDER BRUG / LOS ANGELES TIMES
Sam Walton opened his first five-and-dime in 1950 in Bentonville, Ark. Wal-Mart has grown from that start into the world's largest corporation, with $245 billion in sales in its most recent fiscal year.
In the fall of 2001, he and his wife, Jacque, left Portland, where the economy was sputtering, and headed to Las Vegas. He was an executive chef and she worked in catering. They looked forward to a fresh start in unionized casino jobs, making more than $15 an hour, with health insurance and pensions.
But their timing was lousy. Recession and terrorism were hitting the gambling industry hard, and work of any kind was scarce.
Just before their money ran out, the Allens lowered their expectations and took jobs at the Serene Avenue Wal-Mart. Jacque, then 43, worked the counter at the in-store restaurant, Radio Grill. Larry, 46, stocked produce. They each earned $8 an hour.
Despite the letdown, Larry Allen said he attacked the job with enthusiasm. Inspired by tales of well-paid Wal-Mart managers who had started out as hourly employees, such as his manager Aaron Rios, he figured on working his way up. That was Sam's way, he said.
"I've been following Sam Walton since the 1970s," he said. "He's the American dream."
The glow faded quickly. At his 90-day review, Allen said, he received an unenthusiastic write-up and an hourly raise of 35 cents. His supervisor told him that if he continued working hard, in two years he might make his way up to $10 an hour.
Allen thinks he knows why he received such mediocre marks. For one thing, he was prone to question company policy. Then, Allen committed the ultimate act of disloyalty: He openly promoted unionization.
For decades, Wal-Mart has tantalized and frustrated union organizers. But the company's move into the grocery business — a labor stronghold — has raised the stakes dramatically.
Union organizers say the high wages and benefits of their members are at risk, as Wal-Mart expands its Supercenters beyond the South and Midwest. The company recently established a beachhead in Las Vegas, with five centers.
Wal-Mart has 10 stores in the Puget Sound region, and plans to add more. The company also has announced that it will expand its store in Marysville to a Supercenter.
Next stop: California, where Wal-Mart plans to open 40 Supercenters starting early next year. In a sense, it has already arrived. Wal-Mart's low wages are a central factor in the labor dispute between California's three major supermarket chains — Ralphs, Vons and Albertsons — and the United Food and Commercial Workers.
"They are the third party now that comes to every bargaining situation," said Mike Leonard, director of strategic programs for the UFCW.
From their first day on the job, Wal-Mart employees are advised to avoid unions and to report any organizing activities to their supervisors.
Company policy prohibits any union talk in work areas, and organizers say they routinely are asked to leave stores. The retailer sought, and last year received, a court order keeping organizers out of all of its stores in Arkansas. The state Supreme Court nullified the order in July.
At the first hint of union activity, Wal-Mart managers are supposed to call a hotline, usually prompting a team visit from Bentonville.
Wal-Mart spokeswoman Mona Williams said the intervention was meant to help store managers respond effectively and legally.
"Our philosophy is that only an unhappy associate would be interested in joining a union," she said, "so that's why Wal-Mart does everything it can to make sure that we are providing our associates what they want and need."
But dozens of times in the past four years, attorneys for the National Labor Relations Board have claimed that the company infringed on the supermarket union's legal right to organize.
Although some of those claims have been thrown out, others have been upheld by administrative-law judges, who have ruled that Wal-Mart illegally influenced employees with offers of raises, promotions and improved working conditions just before they were to vote on whether to join a union.
Judges also have found that Wal-Mart illegally implied that workers could lose benefits such as insurance and profit sharing if they unionized.
What's more, managers illegally confiscated union literature, threatened to close down a store if workers voted to join the union, fired several union supporters and failed to promote others, according to rulings from Minnesota to Florida.
Larry Allen got his first glimpse at a union pamphlet last year as he carried it to the garbage at the Serene Avenue Supercenter. He was hooked, and began advocating for an election to bring in the union.
"Somebody has got to step up and fight for what is right," Allen said.
Health-care burden?
Wal-Mart's costs to the community may show up in subtler ways.
In an informal survey in the late 1990s of people who used Las Vegas emergency rooms for routine medical care, patients who said they were employed but uninsured were asked where they worked.
"Wal-Mart came up more than any other," said Dr. Raj Chanderraj, a Las Vegas cardiologist and chairman of the Clark County Health Care Access Consortium, a group that works to provide medical services to the uninsured.
The reason, say critics: Because Wal-Mart pays such low wages, many employees can't afford the health insurance the company offers. And those who do have health coverage through the company often can't afford deductibles that run as high as $3,000 a year.
"Their employees are ending up at the county hospital and become the burden of the county," said Clark County Manager Thom Reilly.
Wal-Mart disputes that. Williams, the company spokeswoman, said that 48 percent of employees are covered by Wal-Mart's health-insurance plan. Among those who aren't, 26 percent have coverage from another source such as a spouse's employer or Medicare, Williams said.
The notion that Wal-Mart doesn't provide adequate health coverage is "just rhetoric," she said. "It's simply not true."
Those who accuse Wal-Mart of shortchanging its employees, Williams suggested, don't understand the modern service economy. "Retail and service wages are what they are," she said, "whether you look at a department store, a discount store, the local dry cleaners, the bakery or whatever.
"Wal-Mart is a great match for a lot of people," Williams added. "But if you are the sole provider for your family and do not have the time or the skills to move up the ladder, then maybe it's not the right place for you."
Larry Allen spent about a year advocating for the supermarket union while working at Wal-Mart.
In August, Allen was fired. NLRB attorneys said it was because of his union activities and filed a complaint against Wal-Mart, seeking his reinstatement.
On a recent afternoon outside the Supercenter, dozens of union members rallied to support Allen. "Larry, Larry, Larry," they chanted.
Asked about the commotion, a gray-haired Wal-Mart greeter named Robert just smiled. "They want to make the store union," he said. "But that would make the prices go up for our customers. We can't let that happen."
On some level, even Larry Allen understands. "I still believe in Wal-Mart," said Allen, who now is on the union payroll as an organizer. "I like the idea of it — give a quality product at a low price. It's what the American public wants."
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