Wal-Mart built a global empire on the idea of “Low Prices, Always”, but the largest employer in the U.S. (employing almost five times as many people as IBM, the second largest employer in the U.S) has faced strong public criticism over low wages for its labor force.
At the same time the company has used massive scale to its advantage to pressure suppliers to cut costs to retain a competitive advantage over other retail chains, Wal-Mart has demonstrated strong anti-union policies that prevent store employees from leveraging their own “strength in numbers” to achieve common goals by negotiating wages.
These would normally be issues of interest to economists and political scientists, but the story of Wal-Mart’s labor woes are compelling from a communication perspective when viewed through the eyes of strategic issues management, which strives to ascertain and achieve corporate responsibility in ways that foster the alignment of stakeholder and state seeker interests.
In the shadow of vanishing strong traditional media gatekeepers who’ve felt pressure to indulge Wal-Mart (in order to get their share of the company’s advertising budget), critic-activists have increasingly employed social media to call attention to aspects of the company’s practices that Wal-Mart would no doubt prefer to keep obscured. Having money to run TV spots in heavy rotation gives weight to the chain’s side of the story.
Wal-Mart has responded in textbook fashion, running TV ads in which everyday men and women describe the perks of employment with an unnamed company, the second half of the commercial surprising viewers with the revelation that their employer is actually the popular retailer, thus inoculating criticism of low wages paid to some by suggesting that it isn’t as bad as others would suggest. The people who are making noise, the ad suggests, must be troublemakers wanting something for free when they ought to simply work harder if they want to get ahead.
It would normally be a highly effective response, given the sluggish recovery of the economy as companies and workers across America batten down the hatches and streamline to do more with less. People generally feel that if someone even has a job at all, they should be grateful for it, even if they can barely survive off of what it pays. Heck, get three jobs if you want to live the American dream.
However, Wal-Mart is not just any company. Four members of the Walton family, heirs to founder Sam Walton’s Wal-Mart fortune, are collectively worth more than $100 billion, according to Gawker.com. That’s more wealth than the entire bottom 40% of Americans COMBINED.
In general, prosperity within the US has become dramatically concentrated since 1979, shifting heavily toward the top earners. Americans in the bottom fifth of earners have seen their incomes increase by less than 20 percent while the top 1 percent have seen their incomes spike by 275 percent.
The morality of hoarding such vast amounts of wealth is problematic from a public image perspective when, in Wal-Mart’s case, that income is sustained via choices made by consumers who have other shopping options, at least in communities where Wal-Mart hasn’t already driven Mom & Pop competitors out of business.
This is especially risky to public image when billionaires like Warren Buffett and Bill Gates pledge to give away almost all of their fortunes to causes that benefit humanity and competitors like CostCo publicize the fact that its policies and practices are seemingly more compassionate to its employees. CostCo’s CEO makes 48 times more than the company’s median wage, whereas Wal-Mart’s CEO earns as much as 796 average employees, according to CNN Money.
Such criticisms widen the legitimacy gap between the good corporate citizen that a company portrays itself to be in its marketing and the reality revealed by investigative journalism, anecdotal experiences and negative rhetoric promoted by activists.
There’s historical precedent in the way robber barons created an aristocracy of wealth during the early years of the 20th century, followed by populist activism to reign in such monopolistic capitalism.
As Robert Heath and Michael Palenchar point out in their book Strategic Issues Management, companies must constantly address issues to satisfy consumer stakeholders who hold the leverage of purchasing power:
“Customers can affect a business by deciding to pay for goods and services. Customer goodwill is symbolic; it is earned by the moral and ethical conduct of a business. Stakes are important to an organization’s brand equity.”
So what will Wal-Mart do if customers get turned off by publicity and negative talk about how employees are treated, shifting their buying habits to a competitor like Target? Assuming the company survived such a response, would employees benefit in the long term if the company responded to the criticism by raising wages? Would the Walton clan share their piece of the income pie with those who helped them build their empire? Or would price increases simply be passed on to consumers and/or costs offset by replacing human beings with automation?
In the past, communities would frequently indulge Wal-Mart because the idea of one-stop-shopping seemed novel, and the chain was occasionally essential to moving merchandise manufactured at factories within the towns, but today Wal-Mart is more or less a distribution center for items made overseas.
From time-to-time, activists also attempt to pressure stores like Wal-Mart to sell (and consumers to buy) more goods created in America, but such efforts have failed to gain sufficient traction because consumers are generally willing to overlook the fact that nations like China are willing to sacrifice on the environment and worker rights for low production costs for goods.
Another political component of the conversation is the campaign to persuade Congress to raise the federal minimum wage, which is presently $7.25 per hour; Wal-Mart insists legislative remedies are unnecessary because its average US hourly wage is $12.78. Congress has raised its own salary 15 times since 1988 to “reflect rising costs,” yet it has only raised the minimum wage three times during that period.
Raising the minimum wage would appear to boost economic activity, Democrats argue, by reducing income equality and stimulating the economy. Republicans and free marketers counter that raising the minimum wage would increase unemployment by increasing an employer’s costs and price unskilled workers out of the market.
Comedian Chris Rock once mentioned the minimum wage in a Saturday Night Live bit:
“You know what that means when someone pays you minimum wage? You know what your boss was trying to say? It’s like, ‘Hey if I could pay you less, I would, but it’s against the law.’”
Rock was referring to his time working at McDonalds, which is often criticized alongside Wal-Mart in the conversation about the expanding gap between rich and poor. The fast food restaurant’s “McResource Line” now offers employees advice such as selling their possessions on eBay to survive.
Stories have circulated suggesting that Wal-Mart and McDonalds want their employees to pursue food stamps and other public assistance as a means for subsidizing those low prices at the register.
This provides a new wrinkle for consumers who have been more than accommodating to turn a blind eye to how Wal-Mart keeps its prices so low because it suggests that they’re actually paying more than they think via taxes to fund social safety net programs that prevent Wal-Mart and McDonalds employees, among others, from starving to death.
Conservative political rhetoric has traditionally demonized such social programs by evoking the racially tinged images of “welfare queens” who sit around the projects all day refusing to work – rather than the working poor.
“If we force companies like Wal-Mart and McDonalds to pay their employees enough to eat, we the taxpayers won’t have to pick up the slack,” suggested comedian Bill Maher.
As we often see with social media, the emergence and participation of influential thought leaders resonates loudly, especially celebrities eager to promote social justice.
This week, an Ohio Wal-Mart got attention by taking up an employee-to-employee food charity collection “so Associates in Need can enjoy Thanksgiving dinner.” Celebrity actor/producer Ashton Kutcher Tweeted a response: “Walmart is your profit margin so important you can’t Pay Your Employees enough to be above the poverty line?”
Salon.com detailed a back-and-forth between Kutcher and the company’s @WalmartNewsroom Twitter account as he attempted to publicly shame them while Wal-Mart offered engagement and reassurances that it isn’t so bad as people might think.
The Twitter discussion could be viewed as a rhetorical Goliath vs Goliath, except Kutcher has 15 million Twitter followers compared to 13,820 for the Twitter account addressing his critique.
Critics erode acceptance of a company’s operations, policies, products, or services in a rhetorical strategy known as incremental erosion. The pertinent question now is whether the plight of low wage workers is a concern of the public interest.
John Hill of Hill & Knowlton emphasized that the job of professional communicators is “to help management find ways of identifying its own interests with the public interest – ways so clear that the profit earned by the company may be viewed as contributing to the progress of everybody in the American economy.”
Companies like Wal-Mart and McDonalds should give more than lip service to studying these issues and, if possible, correcting policies that are unsound or out of step with identifiable public interest. They do a disservice to the nation and their own long-term survival if they respond by attempting to marginalize those who work for them. We do not need to lay all evils at the doorsteps of big business, but the public may grow to lose faith in the free enterprise system if it seems so irrevocably skewed toward benefitting those at the top.