is wal-mart good for america? [home]
one, two, three, four ... we don't want your superstorehome
watch online
secrets
transforming
discussion

Across the country communities weigh the costs and benefits of opening their doors to the nation's largest discount retailer.

Wal-Mart has made billions selling toaster ovens and polo shirts for pennies less than its competitors; after all, the company motto is "Always low prices." And who wouldn't want cheaper goods? Yet some communities are fighting to keep the retail giant out of their neighborhoods, claiming that Wal-Mart's low prices could damage their quality of life. In Vermont, Wal-Mart's opponents argue that the state's economy and culture would be damaged by the retailer's presence. In California, opponents say the company has cost taxpayers millions by shortchanging its employees on healthcare. Here is a roundup of some instances of community backlash against Wal-Mart and the company's response.

Superstore vs. small business

Activists regularly argue that competition from Wal-Mart destroys small businesses, particularly the "mom and pop" stores that they say make their communities unique. This criticism has become even more vocal since Wal-Mart began moving into additional retail areas, such as groceries, opticals and flowers. In an article in the Los Angeles Times, one small businesswoman, Bonnie Neisius, owner of a UPS franchise in Las Vegas, Nev., described how she has watched surrounding businesses close and her own business decline since Wal-Mart moved in down the road. "I'm probably down 45 percent," Neisius said. "I just don't get the foot traffic anymore."

More recently, the retailer has come under attack in Vermont, where preservationists say the character, culture and economy of the entire state is under threat from an influx of superstores, particularly Wal-Mart. In May 2004, the National Trust for Historic Preservation put Vermont on its "endangered" list amid fears that Wal-Mart was planning a big expansion in the state. Wal-Mart already has four stores in Vermont; three of them are moderate-sized buildings -- 75,000 to 80,000 square-feet -- that have been designed with the input of the community and are situated in the heart of downtown areas. The fourth, built in the town of Williston in January 1997, was the first large, 150,000 square-foot Wal-Mart store in Vermont. Not long after, Williston saw other "big-box" stores -- Home Depot, Toys "R" Us and Bed Bath and Beyond -- move in next door.

Richard Moe, president of the trust, told the New York Times, "We know the effects that these superstores have. They tend to suck the economic and social life out of these downtowns, many of which whither and die as a result. I think it will drastically affect the character of Vermont, which I think is quite unique."

Mia Masten, a spokeswoman for Wal-Mart, told the Times that Wal-Mart often tries to work with communities and is not "just coming in and bulldozing our way in." "We've also heard from a lot of Vermonters who want a Wal-Mart closer to their communities," Ms. Masten said, "And customers have told us they like a larger store. It enhances their shopping experience that there's a wider selection and the aisles are larger."

In St. Albans, Vt., where Wal-Mart has announced plans to build in 2005, some local residents are excited. "I thought it was wonderful news," David Giroux, a lifelong resident, told The Burlington Free Press. "You can't buy a set of sheets in this town. We've needed this for a while now."

Wal-Mart and the "health" of communities

Another charge that local communities have made against Wal-Mart is that the company provides inadequate benefits and that local taxpayers are forced to pick up the burden. Critics say Wal-Mart's healthcare benefits are often so poor and the coverage is so expensive that many employees chose to go without it and instead get their coverage through state programs like Medicaid and or hospital charity.

A November 2004 New York Times article cites a study in Georgia that found 10,000 children of Wal-Mart employees were in the state's healthcare program at a cost to taxpayers of $10 million a year. The same article describes a hospital in North Carolina that found that 31 percent of its 1,900 patients were Wal-Mart employees on Medicaid, and an additional 16 percent were Wal-Mart employees with no insurance at all. And in California, a study released in August 2004 by researchers at the University of California at Berkeley determined that the healthcare expenses of uninsured Wal-Mart employees were costing the already economically-strapped state $32 million a year in taxpayer funds. Wal-Mart has disputed findings that the company encourages its employees to apply for public assistance and called the California study "biased," noting that the researchers at Berkeley did not contact the company for facts and statistics.

Wal-Mart officials claim that 90 percent of its employees are insured either through the company's policies or elsewhere. Wal-Mart spokeswoman Sarah Clark told FRONTLINE that over 500,000 of the company's 1.2 million U.S. employees are insured by Wal-Mart and that the company insures a total of 900,000 employees and their dependents. According to Clark, 29 percent of Wal-Mart associates are ineligible for coverage. Stringent eligibility requirements and the employee turnover rate may account for that 29 percent: Full-time employees must work for six months before they can be covered, and part-time employees must work for at least two years. Wal-Mart's labor turnover rate is 44 percent per year -- close to the retail industry average.

Wal-Mart's healthcare premiums are also high for the average associate's salary. Currently, Wal-Mart's employees must pay 33 percent of their healthcare costs: $30.50 a month for an individual or between $132.50 and $230.50 a month for families. Wal-Mart argues that its associates are a different demographic base than most companies' employees. "One of the most significant facts is that about two-thirds of Wal-Mart associates are senior citizens, college students or second income providers, which also means that many of our associates receive their healthcare coverage from a parent, spouse or even Medicare," Wal-Mart spokeswoman Clark wrote in an e-mail to FRONTLINE. But Wal-Mart spokesperson Mona Williams admitted to the Los Angeles Times that Wal-Mart might not be the right job for a family breadwinner: "Wal-Mart is a great match for a lot of people," she said. "But if you are the sole provider for your family and do not have the time or the skills to move up the ladder, them maybe it's not the right place for you."

Another argument from Wal-Mart's critics is that the company encourages its employees to apply for public assistance programs. Jon Lehman, a former Wal-Mart manager now working to unionize Wal-Mart stores, tells FRONTLINE that he actively encouraged and assisted his staff with applying for public assistance. "I thought I was doing a good thing at the time, he said. "Now, when I look back, I think, 'Wow, that's incredibly poor that the company doesn't care enough about its workers to pay them a living wage and to help them with their medical costs, to pay their medical expenses and things like that'."

Wal-Mart's McAdam told FRONTLINE, "The accusation that we somehow direct our people to public assistance is just not true." "… When we have people in need, we're going to reach out to them and try to help them," he said. "… But we are not trying to offload our burden on somebody else." McAdam argued that Wal-Mart's benefits for its employees is similar to the industry standard: "I don't accept the premise that we are different from any other business in how we offer and provide health care coverage for the people that work for us," McAdam said. "We do offer a substantial and comprehensive benefits package to both full and part-time people with a reasonable waiting period for those who are in transition into our company." He reiterated that 90 percent of Wal-Mart's employees are covered "under one healthcare coverage or another," and concluded, "…Is there someone in our work force that's taking public assistance? Probably. But I don't think that's any different than any other business."

In November 2004, activists in California went to the ballot with Proposition 72, a statewide initiative that would require big employers, such as Wal-Mart, to offer adequate, affordable healthcare coverage to all of their employees or else pay into a state insurance fund. Wal-Mart campaigned strongly against Proposition 72 and stated, "Wal-Mart believes companies should have the opportunity to provide benefit choices that both they and their employees can afford." On Nov. 2, 2004, California voters rejected the proposed initiative 50.9 percent to 49.1 percent.

The communities decide

In 2002, Wal-Mart unveiled plans to introduce 40 new Wal-Mart Supercenters in California. It also announced it was planning a combination Supercenter and Sam's Club to be located in the Los Angeles suburb of Inglewood, a middle-income, predominantly black community. "We looked at Inglewood … there were not a lot of discount retail options," Wal-Mart Vice President Bob McAdam told FRONTLINE. "… We thought it would be a great location for a store that would serve people close to home." Wal-Mart argued the project would bring 1,000 jobs to an area that had been economically depressed in recent years, but local groups vigorously lobbied the city council to stop the project, claiming that it would be a net-loss for the community.

Citing independent studies by the Orange County Business Council and the San Diego Taxpayers Association, Inglewood activists argued that if Wal-Mart entered its community, good-paying union jobs would be replaced by low-wage, low-benefit Wal-Mart jobs. McAdam strongly disagrees with these claims. "I can look where we actually have caused jobs to be created in addition to the ones we bring," he argued, citing a location in Panorama City, Calif., that has been revitalized since Wal-Mart moved in. "When we came into that location, the mall that we're associated with there was basically boarded up and closed," McAdams said. "Every storefront is full today with little business that are adjacent to the Wal-Mart store."

But the Los Angeles City Council refused to consider Wal-Mart's proposal, and instead, adopted an emergency ordinance specifically designed to keep out large retailers. The ordinance requires that before a large-scale building project can be approved, planners would have to examine how the proposed superstore would affect the community. Undeterred, Wal-Mart garnered 9,250 signatures to take its proposal directly to Inglewood's voters in a referendum. McAdam explained Wal-Mart's decision to FRONTLINE: "It's really important to remember that the council specifically said they wouldn't consider [the project]…. Our belief was that [an initiative] was the only way the voters were going to have their say."

Elsewhere in California, a dozen other communities like Oakland and Contra Costa County have passed zoning laws to keep out retailers like Wal-Mart. In Bakersfield, homeowners and union workers successfully fought Wal-Mart's building plans by arguing that the superstore would destroy local business. But in other urban areas, Wal-Mart has been allowed in -- even invited. In May 2004, after intense lobbying by both supporters and opponents of the superstore, Chicago's city council voted to allow Wal-Mart to build one of its discount stores on the West Side. And in Derby, Vt., 1,500 citizens have signed a letter to CEO Lee Scott asking the retailer to open a store in their community.

When Inglewood voters went to the polls in April 2004, they voted to oppose Wal-Mart's initiative by an overwhelming margin of 60.6 percent to 39.3 percent. Though that decision may keep Wal-Mart out of Inglewood, it will not stop the company's growth elsewhere, McAdam says: "The results were certainly not what we had hoped for, but we don't view Inglewood as some major setback. ... Just while everybody was talking about Inglewood, a number of other Wal-Mart Supercenter projects were being approved elsewhere in the state."

SUPPORT PROVIDED BY

NEXT ON FRONTLINE

Losing IraqJuly 29th

FRONTLINE on

ShopPBS