November 8, 2005

ALP In BusinessWeek

ALP is featured in the UpFront - Blogspotting section of the November 14th, 2005 edition of Businessweek. Scanned print edition below the fold:

ALP_BW.jpg

Posted by Kevin at 2:49 PM

November 5, 2005

Big Media (Part II)

The day-after brings more big-media reporting, much of it very diverse in subject matter an conclusions. As expected, the press accounts go straight to many of the pro and con findings, but fail to note just how tentative the results are.

Stephen Greenhouse of the NYTimes announces a mixed report card:

With critics hammering Wal-Mart day after day, the company sponsored an unusual conference on Friday about its impact on America's economy, and it got some good - and a few not so good - grades.
Amy Joyce of the WaPo talks about two things that I, personally, did not experience:
The event was a strange hybrid of academics and public relations at which attendees toted around registration information in plastic Wal-Mart shopping bags. A room full of people asking questions was reminded -- after a journalist asked about a statistic in a paper -- that reporters were not allowed to take part in the Q&A.

[KB: The reporter was Steven Greenhouse of the Times; he asked David Neumark to try to reconcile competing datapoints, and since the question was very good, nobody in the audience really cared that he's not an academic.]

Outside, Wal-Mart critics greeted attendees. About a dozen demonstrators with the United Food and Commercial Workers union and its Wake Up Wal-Mart organization gathered outside the J.W. Marriott to protest the conference, some arrayed behind a large Wake Up Wal-Mart banner. A few others handed out fliers headlined "Research Confirms: Wal-Mart Needs to Change" that touted some of the more critical findings of the academic papers.

Security guards checked attendees' identification before allowing them to the registration table.

Strange hyrbid, yes. But I did not even see the UFCW folks, because I entered using the Pennsylvania Avenue entrance, while the union folk were on the other side of the building. I hadn't even known that they protested until I was talking to some people after the conference. Also, I was NOT asked to ID myself when I registered, and very, very few people toted around plastic bags, although they were offered when you picked up the symposium materials.

Reporters were asking for opinions from economics Ph.D's. For the most part, I had to hold my lips sealed. But others could talk more. Alison Vekshin wanted responses to Global Insight's paper:

One academic at the conference expressed doubts about the study's methodology.

"I think it's a nice, good effort, but some of the analysis is not valid to what they studied," said Vishal Singh, assistant professor of marketing at the Graduate School of Industrial Administration at Carnegie Mellon University in Pennsylvania.

"They ignored the competition," he said. "But competition has to come into play, in the late 80s and 90s certainly, looking at what Kmart is doing or what Target is doing when making the location decisions."

Holling said the retailer created 210,000 jobs last year.

"When Wal-Mart moves into a county there is higher overall retail employment, but, yes, there is disruption in the retail sector," he said. "Wal-Mart does displace other employment."

Disposable income is 0.9 percent higher than it would be if Wal-Mart did not exist, according to the report.

The researchers also concluded that Wal-Mart has contributed to lower prices.

Thankfully, Wal-Mart did not even try to form a final, coherent message from the studies. I should add that Wal-Mart insisted that it will be a more transparent company, and is very interested in its own economic impact. To that end, it will make data available to economists who want to perform economic impact analysis...

Here's an earlier installment of Big Media Reports.


UPDATE: Maria Halkias of the Dallas Morning News was kind enough to quote me. :

Kevin Brancato, management scientist for Rand Corp., said the conference was billed as an event that would point to an overall trend. Nine independent studies were also presented at the daylong session.

"No one disagrees that Wal-Mart has lowered prices," he said. "But what impact on the economy in total does Wal-Mart have? I don't think the conference answered that."

Still, he said, the work presented by Global Insight was sincere and honest.

"The work Wal-Mart has done in the past was propaganda. This is a big first step."

That most certainly is representative of what I said, though the exact words aren't mine, which is perfectly fine, since I was talking off-the-cuff. Also, I think there is a consensus on some issues, but certainly not the hot-button ones of wages and benefits. The propaganda I was referring to were many -- not all -- local economic impact assessments...

I think that the question I want answered is, "If we let a Wal-Mart into Queens, what's the probability that wages in competing stores will decrease?" We're nowhere near that type of resolution, and I doubt we'll ever get there...

I should note that ALP is NOT affiliated with RAND, and that I have performed no RAND work involving Wal-Mart. My use of the RAND label was unwise...

Posted by Kevin at 6:28 AM

November 4, 2005

Big Media on the Economic Conference

Annie D'Innocenzio writes for the AP:

The all-day session, the latest effort by Wal-Mart to repair its reputation, included rosy findings from a Wal-Mart-commissioned report and mixed results from studies done by other economists. It was attended by about 100 people in the media and academia.

The seminar may have raised more questions than answers on Wal-Mart's impact on jobs, earnings and individual communities, but in the end the company appeared to make progress toward its goal of appearing more open to change.

Bloomberg has an interesting take on corporate sponsorship:
Several conference participants said while the corporate sponsorship was unusual, they welcomed the chance to share their findings. ``Any time a conference is not purely academic, one worries that the conference sponsor may try to influence the discussion,'' Basker said in an e-mail. ``I am hoping that the exchange of ideas will be free and open, and the more academics participate, the better the chance of that.''

Hicks said in an e-mail that he was reassured by Global Insight's reputation for ``unbiased high quality work.''

The sponsorship did dissuade one academic, whose paper on Wal-Mart's effects on local businesses was submitted and will be presented by a co-author.

In an e-mail, a retired Iowa State University economics professor, said he was boycotting the event, calling it ``rather self-serving for Wal-Mart.''

Emily Kaiser at Reuters has the data takeaway:
Wal-Mart Stores Inc. lowers consumer costs and adds jobs but has also led to a decline in wages and an increase in the number of people relying on government aid for health care, studies released on Friday show.

At a conference sponsored by Wal-Mart to examine its impact on the U.S. economy, researchers found that the world's biggest retailer accounted for some 210,000 net jobs last year while driving nominal wages down 2.2 percent.

The world's biggest retailer also lowered consumer prices by 3.1 percent, and real disposable income was 0.9 percent higher than it would have been in a world without Wal-Mart, researchers at Global Insight concluded.

The LA Times Abigail Goldman gets in a few good words:
When the scholars delivered, some of their findings didn't exactly cut in the company's favor. At the conference Friday in Washington, billed as "An In-Depth Look at Wal-Mart and Society," the retailer will be stuck with them anyway.

"To us it's worth the risk to have a real healthy discussion," said Robert McAdam, vice president of corporate affairs for the Bentonville, Ark., retailer. "We start out with a bias because we think we have a positive economic impact. If the results come back and they show that we don't have a positive economic impact, that will be a disappointment, but at least it's an honest look."

Wal-Mart critics say the company's willingness to hear dissent at the conference will be meaningful only if its executives decide to make changes.

Jennifer Waters of Marketwatch touches on what this conference wasn't:
Elizabeth Cohn, a Takoma Park, Md.-based consultant and professor at the conference, criticized the Global Insight study because it didn't include the indirect impact Wal-Mart has on people, suppliers, and other companies.

"The Wal-Mart business model is very good for consumers, but what does it do for workers and other companies?" she asked. "This study has a limited usefulness."

For example, she said, displaced workers may eventually find work at Wal-Mart, but the study doesn't take into account the disruption to their lives and their income.

Bob McAdam, vice president of corporate affairs for Wal-Mart, said the conference wasn't about the human effect.

"This wasn't a sociological conference," he said. "It was an economic conference and to that extent, the economic issues were what mattered.

"But I don't think the human factor was ignored," McAdam added. "When you talk about how much savings consumers get on an average day, that's a significant impact, not just for the people who shop at Wal-Mart, but those who shop at some of our competitors too.

Posted by Kevin at 9:31 PM

September 22, 2005

White Hats and Clean Souls

BusinessWeek and the Motley Fool (rr) have excellent articles on WM.

(Sorry for the low rate of posting; my paying job has kept me away...)

Posted by Kevin at 9:50 AM

September 20, 2005

Tierney on Wal-Mart: WEMA

Behind The New York Times ($$$) new firewall, John Tierney insists that H. Lee Scott could should be leading FEMA:

I don't think Washington needs any more czars. But if President Bush feels compelled to put someone in charge of rebuilding the Gulf Coast, let me suggest a name: Lee Scott.

Scott is the chief executive of Wal-Mart, one of the few institutions to improve its image here after Katrina sent a 15-foot wave across the north shore of Lake Pontchartrain. If you mention the Red Cross or FEMA to people in Slidell, you hear rants about help that didn't arrive and phone lines that are always busy. If you mention state or national politicians, you hear obscenities.

But if you visit the Wal-Mart and the Sam's Club stores here, you hear shoppers who have been without power for weeks marveling that there are still generators in stock (and priced at $304.04). You hear about the trucks that rolled in right after the hurricane and the stuff the stores gave away: chain saws and boots for rescue workers, sheets and clothes for shelters, water and ice for the public.

Posted by Kevin at 5:29 PM

September 9, 2005

Rejected, Again!

scott_houston.jpgALP was recently (and understandably) rejected by The NewsMarket, after I applied for journalist access to video about Wal-Mart's Katrina relief efforts -- specifically H. Lee Scott touring the Astrodome. I was ready to experiment by converting the video to web-quality and hosting some interesting snippets, but the best laid plans....

Of course, ALP is not established or mainstream journalism, and I don't begrudge the NM folks, but I would expect Wal-Mart to provide us new media folks with greater access to the information provided to broadcast stations (within reason). If we can obtain all the written press releases as the big boys, I'd argue that we should have access to photo and video archives too.

Posted by Kevin at 4:41 PM

July 25, 2005

WM Horror Stories Not True

The No Cleveland Wal-Mart folks won't like this article by Steve Maich:

Wal-Mart isn't engaged in a series of messy local zoning disputes. It's at war with a well-financed, well-organized opposition, determined to fight it on every front. From Los Angeles to the Saguenay, from Hartford, Conn., to Vancouver, a broad array of activist groups and unions have launched protests, lawsuits and ad campaigns, all aimed at discrediting Wal-Mart, halting its growth, and unionizing its workforce.

Like most wars, it's about money and power, and the first casualty is truth. Because even after all the scrutiny and analysis of the Wal-Mart phenomenon, most of what we've been told -- about worker abuse, destroyed small-town economies, crushed suppliers and greedy management -- is wrong.

And the UFCW spokesman is really classy:
"They just fuckin' destroy jobs, period, because they replace high-paying jobs with low-paying jobs."
A trifecta: Crude, internally inconsistent, and deviod of fact!

Steve Maich has politics that are hard to pin down, so he can't be accused of being a WM shill. You can read Steve Maich's blog All Business, and decide for yourself.

Posted by Kevin at 11:02 AM

June 28, 2005

Assorted Links

1) WakeUpWalMart notes that the CT attorney general wanted WM to remove allegedly illegal and dangeous fireworks from the shelves of the 28 stores that carried it, which WM did. I comment there that the firework seems be legal under state law.

2) WM downplays Eastern European expansion hyped by rumor-hungry press...

3) A failed carjacking in the parking lot of the MetroWest WM in Orlando, FL leads to a chase and capture of the assailants... more and even more...

Posted by Kevin at 2:59 PM

June 6, 2005

Links of the day

1) Wal-Mart to clean up stores:

Executives at the world�s biggest retailer said their �game plan� for this year involves targeting wealthier shoppers who may buy basics like food at Wal-Mart but look elsewhere for fashionable items like clothing and housewares.

�We aren�t where we need to be, especially in the Wal-Mart stores in the US,� chief executive officer Lee Scott told a crowd of 20,000 gathered for the annual meeting here.

2) 12 Safeway stores in Northern Ireland are bought by Asda:

William Morrison Supermarkets Plc, which bought Safeway Plc last year, agreed to sell 12 Safeway stores in Northern Ireland to Wal-Mart Stores Inc.'s Asda, Britain's second-biggest supermarket chain.

3) 72 year old Wal-Mart greeter no match for shoplifter:

A store security guard was chasing shoplifting suspect Bradley Chapman out of the door when the security alarm sounded. The greeter got the suspect on the ground, but officials say Chapman got free and got into the car with his wife and son.

4) H. Lee Scott wants WM to go organic:

Scott proclaimed he is "excited about organic food, the fastest growing category in all of food, and at Wal-Mart." He said people in all income brackets want organic food products for their family, and lower-income families should not be denied such goods due to high prices.

Posted by Kevin at 9:28 AM

May 24, 2005

Buffalo Needs Wal-Mart

Well, I think even Wal-Mart's opponents should recognize that, even by their own view of WM's regional impact, having a new Wal-Mart is better than the status quo in Buffalo, NY. MARY KUNZ GOLDMAN opines

Yes, to many folks, Wal-Mart is the Giant Shop of Horrors. Organized labor, angry that the store isn't unionized, warns that it pays low wages. Citizens are happy to take up the cry. "Wal-Mart is pure evil," reads one typical rant on the Internet.

So let me offer Wal-Mart a word of advice: You can pack up those $8 camisoles and $13 swimsuits and take them to the City of Buffalo!...

We could get a Wal-Mart and still keep the Elmwood clothes shops and the Hertel antique shops. Remember the flap a few years ago over Starbucks possibly driving Spot Coffee out of business? It didn't happen.

So let's talk turkey. What about a Wal-Mart in our downtown AM&A's building? If $500 dresses didn't sell there, $10 skirts might. Or, how about one of those old warehouses in Black Rock?

Posted by Kevin at 12:24 PM

May 13, 2005

Always Low Thoughts, Always

Regardless of your view of Paul Krugman's ideology, you must recognize that he is perhaps the most divisive and unhelpful economic commentator in mainstream media. In fact, his latest editorial leads me to wonder if Krugman actually knows that he is using data dishonestly.

The average full-time Wal-Mart employee is paid only about $17,000 a year. The company's health care plan covers fewer than half of its workers.
The first statement cannot be correct; I'd love to see Krugman's source. In 2001, the annual earnings of all full-time hourly employees were $18,609 for men and $17,459 for women (a weighted average of $17,802 for all). So Krugman is $800 short -- and four years behind. If you add in the salaried full-time employees, the annual wages figure is substantially higher. If you move forward to the present, you'd note that Wal-Mart's nominal hourly wages have increased, probably above $18K.

The second statement is true, of course, for full-time associates, but not for all of Wal-Mart's full-time workers. (86%*56%)=48.2% of Wal-Mart's hourly associates were covered by Wal-Mart's plan. If you add in the salaried workers, this number is probably higher than 50% (though not by much). I have no idea where Krugman got the idea that "workers" equals "hourly associates"; he probably didn't think about it.

True, not everyone is badly paid. In 1968, the head of General Motors received about $4 million in today's dollars - and that was considered extravagant. But last year Scott Lee Jr., Wal-Mart's chief executive, was paid $17.5 million. That is, every two weeks Mr. Lee was paid about as much as his average employee will earn in a lifetime.

Not that many of them will actually spend a lifetime at Wal-Mart: more than 40 percent of the company's workers leave every year.

I'm not trying either to romanticize the General Motors of yore or to portray Wal-Mart as the root of all evil. GM was , and Wal-Mart is, a product of its time. And there's no easy way to reverse the changes.

WM and GM are products of their times, but more importantly, WM and GM are products of the cost structures of their industries (which technology has changed over time). They are also products of very different labor markets -- and the inability of unions to increase the costs of big-box retail while dominating the auto industry. When GM didn't have to worry about Japanese and Korean competition, it could afford its wage policies by extorting the domestic consumer; GM has made itself uncompetitive today by making promises it can't keep. Wal-Mart has intense domestic and international competition in retail with corporations, like Target, that are little different from it. It is not making foolish promises to its employees.

Indeed, a growing number of working Americans have turned to Medicaid. As the Kaiser Family Foundation points out, that's why children have for the most part have retained health coverage, despite a sharp decline in employer-based health insurance since 2000.
Surely, Paul Krugman knows that Kaiser itself has data that shows there have been ups and downs in employer-based health insurance since 1996, and currently the share of firms offering health coverage is higher than it was in the 1990s. Way to choose your base-year!

The attack on the safety net is motivated by ideology, not popular demand. The public isn't taken with the vision of an "ownership society"; it seems to want more, not less, social insurance. According to a poll cited in a recent Business Week article titled "Safety Net Nation," 67 percent of Americans think we should guarantee health care to all citizens; just 27 percent disagree.
What the public wants, and what the public is willing to pay for are two separate things, and the latter is very dependent on the incentive structures put into place by policy.. For an economist to ignore both willingness to pay and incentives is a betrayal of his calling.

The question is whether the public's desire for a stronger safety net will finally be seconded by corporations that haven't yet adopted the Wal-Mart model of minimal benefits and always low wages.
Exactly what is Krugman's justification for believing that the compensation policies of the largest company in the retail industry will determine the compensation policies of other companies in other industries? Please show me the evidence of Wal-Mart's effect on compensation policies outside of its direct effect on unionized grocers. Are the wages and benefits paid by Wal-Mart jobs lower than 1) a few, 2) some, 3) most, or 4) almost all jobs eliminated by the competition? If you answered either 1,2,3, or 4 then you did so by guessing, since as far as I've seen, there's little or no data about the wages of mom and pops compared to the wages of Wal-mart.
Posted by Kevin at 2:46 PM

May 3, 2005

Beating Wal-Mart

Both Businessweek (ht: BP) and Business 2.0 ($)have recently focused on how to beat Wal-Mart.

The skinny: YOU CAN'T BEAT WAL-MART BY BEING A WAL-MART CLONE:

From the former:

Jungle Jim's might well be America's wackiest supermarket, but there is method to Bonaminio's madness. Instead of trying to beat the big chains at their price-squeezing game, Bonaminio has built a funhouse maze of a store north of Cincinnati that draws 50,000 shoppers a week from as far away as Indianapolis and Lexington, Ky. "The Jungle" is not all fun and frivolity; its other defining trait is a huge selection of specialty foods from 75 countries. Sales totaled $63.5 million in 2004, up from $29.8 million in 1995 -- not bad for a college dropout who got his start in 1971 selling produce from a roadside stand. (Bonaminio says he turns a profit, but he won't disclose numbers.)

From the latter:

COSTCO is whipping Wal-Mart by targeting different customers: people who have cash and want cachet on the cheap.

VITAL SIGN: Costco sales per store, 2004: $115 million. Sam's Club: $67 million.
...

DOLLAR TREE attacks Wal-Mart's strength with simple pricing and a less painful shopping experience.

VITAL SIGN: Dollar Tree operating margin, 2004: 9.7 percent. Wal-Mart: 5.9 percent....

SAVE-A-LOT grocery stores bring back the bygone Main Street feel and focus on underserved neighborhoods.

VITAL SIGN: Save-a-Lot profit margin, 2004: 3.5 percent. Wal-Mart (groceries only): 2.6 percent....

DICK'S SPORTING GOODS has created a sales team with true expertise that coddles customers.

VITAL SIGN: Dick's revenue growth, 2004: 34 percent. Wal-Mart (sporting goods only): 16 percent.

Granted, it's easy to pick and choose statistics to make one side look better than it is...

Posted by Kevin at 3:37 PM

St. Louis Post Dispatch on WM

Patrick Grote sends in two articles from the St. Louis Post-Dispatch by Mary Jo Feldstein. The first sprawls between discussion of low prices, competition, and union opposition:

After the grocery strike here in 2003, union officials and grocers said they needed to fight the big-box retailers, such as Wal-Mart, that were nipping at sales.

Wal-Mart hasn't faced much opposition in the St. Louis area so far, Horn said. But union officials say that's about to change.

A union seminar this week in St. Louis will be devoted to Wal-Mart, said Jim Dougherty, president of United Food and Commercial Workers Local 655. Paul Blank, director of the union's Wake-up Wal-Mart Campaign, will speak on how to combat the retailing giant. The national union hired him to lead a new movement targeting the retailer.

The second is a discussion of a Wal-Mart success story:

Cindy Galati was facing money problems in November 1981. Her husband had been laid off, and she needed a job.

Galati applied for what she thought would be a temporary job as a cashier at the Belleville Wal-Mart.

She still works for Wal-Mart, but now she's a district manager overseeing 3,000 employees and stores with sales of about $400 million a year. Her territory is the Interstate 70 corridor in Missouri.

The woman realized that Wal-Mart's health benefits were "good" only when she needed to cover catastrophic costs....

Posted by Kevin at 3:25 PM

April 21, 2005

IBD: WM Shouldn't Have Bothered

This editorial from Investor's Business Daily, while defending Wal-Mart, makes the more important point that Wal-Mart shouldn't have bothered with its 2-day media event:

Outside a clear-eyed editorial in Monday's USA Today, Wal-Mart has gotten little from its media junket. And even that positive press was offset by a USA Today op-ed article by United Food and Commercial Workers President Joe Hansen; he portrayed the company as a vicious monster in need of shackles.

The grievance list against Wal-Mart fits neatly into any 500-word newspaper story or two-minute TV report: It pays low wages, offers lousy health-care benefits, forces its people into public assistance, resists unionization, and so on.

We weren't invited to Bentonville, Ark., for the media event, so we can set the record straight without feeling bought....

Wal-Mart is big and successful. We doubt it will find friends or defenders in the media it has courted � or among the activist groups that have vilified it. It'll just have to be satisfied doing what it does: selling people goods they want at prices they can afford. You know, what businesses are supposed to do.

It also reminds people that Wal-Mart has a right not to have unions...

Posted by Kevin at 6:48 AM

April 20, 2005

Teflon Target

I'm glad people will be noticing that Target's compensation policies are little different from Wal-Mart's:

Finally, Wal-Mart's critics lambaste the retailer's pay and health benefits policies, alleging that the retailer doesn't adequately pay or provide medical coverage for its non-managerial employees.

Oddly, these same critics confess that they can't prove Target's wage and benefits are significantly better. And Wal-Mart maintains that its wage and benefits are comparable to Target.

"We think that Target and Wal-Mart are both guilty of wage suppression," said Bernie Hess, the union organizer with the United Food and Commercial Workers (UFCW) Local 789 chapter in St. Paul, Minn....

The St. Paul union office estimates that Target's hourly employees typically make around $6.75 to $7.25 and that less than half the company's workers are covered by its health insurance plan.

Target's defense is the same as Wal-Mart's -- "We regularly complete wage surveys in all of our markets to ensure that we pay competitive wages."

I haven't seen any reporter try to explain that there's a fundamental difference in the way that Wal-Mart & Target figure out appropriate wages versus the way that unions determine appropriate wages. WM and T figure they're paying enough when enough people of the required quality can be found to work at the store. Unions figure that workers deserve X amount based on some a multitude of considerations, none of which equates supply and demand.

Posted by Kevin at 8:23 PM

April 19, 2005

Two Links

I'd like to point to two articles I haven't had time to read.

Wal-Mart: the $288 billion welfare queen

Watt to light up Wal-Mart private label:

And now, after a hiatus of almost two years -- during which he left his namesake firm and relinquished the prized Wal-Mart account -- he's back full force, ready to revamp the U.S. chain's Great Value house brand.

Posted by Kevin at 7:36 AM

April 17, 2005

Gettin' Political

Mark Albright has a nice roundup if recent Wal-Mart events and views in The Ledger:

Perhaps the ultimate company town for the 21st century, Bentonville has lost its bucolic charm since Sam Walton opened the first Wal-Mart discount store in 1962. Today, the place looks more like any sprawling edgecity suburb lined by strip shopping centers and overcrowded roads.
Does Bentonville have a downtown or a Main Street?

Posted by Kevin at 9:36 AM

April 15, 2005

VOA on WM

The Voice of America's Mandarin service had a report about the history and controversy over Wal-Mart, which it put into a multi-part English series online (1, 2, 3) With audio in mp3 and realyplayer format.

Posted by Kevin at 3:35 PM

April 4, 2005

Pow Wow in Bentonville

Expect a plethora of articles this week as the company has a meeting with journalists to help boost its image:

As part of a national image-polishing campaign, Wal-Mart Stores Inc. will play host to nearly 100 journalists this week for meetings with top executives and tours of its Bentonville, Ark., home office.

The two-day conference is intended to help "set the record straight" on issues such as employee benefits and global factory standards, said Wal-Mart spokesman Gus Whitcomb. After struggling with bad press for several years, the world's largest retailer also hopes to create something less tangible � a bond with reporters.

"We want people to have the opportunity to meet [Chief Executive] Lee Scott, to learn that we're human beings and to see firsthand what is the Wal-Mart story," Whitcomb said. (The Times was invited and is participating.)

Posted by Bob at 5:49 AM

March 31, 2005

What's Good for WalMart is Good for America?

ALP correspondent Dave Meleney sends in a link to a debate about Wal-Mart entitled What's Good for WalMart is Good for America? on April 6, 2005 in Manhattan . It features top speakers:

A battle of ideas between two of the world's most respected weekly magazines.

Co-sponsored by The Economist, The Nation and the New York Society for Ethical Culture.

Featuring

Ben Edwards, US Business Editor, The Economist

Steve Malanga, Contributing Editor, City Journal and a Senior Fellow at the Manhattan Institute

Liza Featherstone, Contributing Editor, The Nation

Jonathan Tasini, President, Economic Future Group

Moderated by

WNYC's Brian Lehrer, of The Brian Lehrer Show

I cannot attend -- I'm in DC and cannot travel to NY on that day -- but maybe some of you can, and will send in notes or reviews.

Posted by Kevin at 8:19 PM

March 28, 2005

Tim Noah - Where's Your Evidence?

Via Freiheit und Wissen, founder of the Carnival of the Un-Capitalists, we find an absolutely infuriating article -- snarkily accusive, ill informed, and smug -- by Timothy Noah of Slate:

I'd thought it was a settled matter that Wal-Mart had achieved its miraculously low prices by squeezing its employees. Not so, said Scott
Settled by whom?

Just who has written a comprehensive, comparative analysis of the wages and benefits among all retail chains -- revealing that WM is the cheapest of them all? Who has demonstrated that Wal-Mart sqeezes its employees -- pays lower wages and benefits than the mom and pop stores it replaces? The UFCW? The AFL-CIO? Writers at The Nation and Alternet?

I had thought that Wal-Mart's low prices were demonstrated to be a result of a complex of factors: paying -- like everyone does -- low but competitive wages for low skilled work, large investment in information technology (which permits keeping far less inventory in its stores than competitors), opening stores in seemingly empty rural areas with only small retailers as competitors, low-cost design of facilities, cramming as much into a store as humanly possible, owning and operating its own distribution capacity, pushing suppliers to make goods cheaper, dumping suppliers who can't lower the cost of production, and a willingness (despite alleged public resistance) to import 3/4 of its goods from China -- not to mention a no-frills executive lifestyle (they fly coach and double up in standard rooms).

Mr. Noah, who did the hard work of eliminating all but "squeezing its employees" as relevant factors in the formation of Always Low Prices?

OK, well, about about those contested wage statistics?

Wal-Mart's average wage is around $10 an hour. [ - H. Lee Scott]

As Tom Geoghegan, a labor lawyer in Washington (and author of Which Side Are You On?: Trying To Be For Labor When It's Flat On Its Back) points out, the relevant number isn't the average, which would be skewed upward by the large salaries of relatively few highly-paid company executives�Scott, for example, receives, by one reckoning, 897 times the pay of the average Wal-Mart worker�but the median. In the Dec. 16 New York Review of Books, Simon Head, director of the Project on Technology and the Workplace at the Century Foundation, stated, "the average pay of a sales clerk [italics mine] at Wal-Mart was $8.50 an hour, or about $14,000 a year, $1,000 below the government's definition of the poverty level for a family of three." That the current minimum wage of $5.15 per hour leaves families even farther below the poverty line is a depressing topic for another day. [Emphasis added --ALP]

Note now that 2.9% of the hourly workforce earns the minimum wage (or less -- think waitresses), because this not so depressing data point will probably not be noted on that other day.

Anyway, I agree that the median is the relevant statistic -- if the distribution is heavily skewed. If it isn't, the mean and the median are close enough for all but nit-picking purposes. But Mr. Noah hasn't demonstrated that Wal-Mart's hourly wages of full time employees form a skewed distribution. I agree that if salaried employees wages were included, the distribution would probably be highly skewed, and the median would be a better choice. But salaried employees wages were NOT included; H. Lee Scott was talking about HOURLY wages of full time HOURLY employees.

Again, H. Lee Scott's own wages were not included in the near $10 an hour figure; neither were the wages of any other full-time salaried employee. Obsessing about the relative size of their pay to the hourly worker is unwarranted here.

(Let's play devil's advocate anyway. Assuming Mr. Scott worked 40 hours a week [he works more] for 52 weeks, his annual wages of $10million come to $4800 an hour; but if included as an hourly wage, it would bias upward the mean hourly wage of all 1.2 million U.S. employees by about $0.004 an hour. Adding in all other highly paid employees would have the same effect proportional to their salaries. Would the total mean bias sum to a dollar an hour? I'll figure it out later, but I repeat, THIS BIAS IS NOT PRESENT IN H. LEE SCOTT's figures).

Why doesn't Timothy Noah link to the Drogin report's hourly wage table? Perhaps because Wal-Mart's opponents don't use the median when discussing WM hourly wages, and perhaps because the data support H. Lee Scott's claims. It shows wages for all full time hourly WM employees in 2001. The average hourly wage was $9.26 -- in 2001 -- according to the expert used by the lawyers of the plaintiffs suing WM for sex discrimination.

Wal-Mart claims that full time hourly associates are paid $9.68 an hour (circa 2004). This makes sense, since a ($9.68-$9.26)/$9.26=4.5% increase is not unreasonable over a time period of a few years.

Also, Mr. Head rightfully claims that the average wage for a SALES CLERK is about $8.50 an hour, but of course, a sales clerk is the lowest paying full-time job at WM; why would neither he nor Tim Noah not mention this???

And Simon Head's extrapolation from hourly wages to annual salaries is incorrect. In fact, there is no need to extrapolate; actual data -- data that compensate for actual weekly hours worked (see below)-- are available. Anyway, in $2001, according to Wal-Mart opponents, sales clerks made an average of $15,500 -- not $14,000. This is absolutely dishonest on Mr. Head's part; the salary is actually $500 ABOVE the poverty threshold for a family of three. Nice try, play again.

What's next. Oh, yes, work-week:

Few people realize that about 74 percent of Wal-Mart hourly store associates work full-time, compared to 20 to 40 percent at comparable retailers.

Yes, but what exactly is a "full-time worker"? Typically, full-time is defined as 40 hours a week or more. At Wal-Mart, it's defined as 34 hours a week. So of course Wal-Mart has more "full-time" workers.

We all agree that 40 hours is a solid full-time job, and that 34 is not. Since Mr. Noah is so convinced this is a large problem, perhaps he would care to tell us how large a share of all hourly WM associates work 34 hours a week? Does he even know, or is he using the 34 hour figure in an entirely inappropriate context? (The 34 hour FT workweek is generally designed so that those working fewer hours qualify for full-time benefits). But don't take my word for the benefits problem; listen to the AFL-CIO:
In 2002, Wal-Mart raised its definition of �full-time� work from 29 to 34 hours weekly. With that change, Wal-Mart increased the number of its part-time workers to nearly 400,000, or about a third of its total workforce, and also increased barriers to workers� eligibility for job-based health care, according to a report by the minority staff of the U.S. House of Representatives Education and Workforce Committee.
In other words, the AFL-CIO used the disgusting George Miller attack paper to defend its claim that many Wal-Mart employees became part time because they worked between 29 and 34 hours... But footnote 19 of the Miller report says only that a large increase was "likely", and provides no evidence that Wal-Mart employs quasi-full-time employees. Hence, I am suggesting that there is absolutely no evidence of a large number of "full-time" Wal-Mart employees who work around 34 hours a week. Without citing any empirical evidence -- even anecdotal, or the records of a single store, or even a portion of a store (like a Tire & Lube) -- this claim is utterly worthless; repeating it is nothing but hot air. If anyone does have evidence of intentionally short work weeks, then they should show it.

Next:

Fewer hours worked, I need hardly point out, means that Wal-Mart's "full-time" employees are less likely than employees elsewhere to be able to afford premiums for any health insurance they're offered. According to Head, fewer than half of Wal-Mart's employees can afford even the company's least-expensive health plan.
Hmmm... Simon Head has no evidence of affordability, so he can't make this claim with a straight face. Wal-Mart notes:
Currently, 86 percent of Wal-Mart hourly store associates surveyed have medical insurance - 56 percent of those with coverage received health care insurance from Wal-Mart and the remainder receive health care through another source such as another employer, a family member, the military or Medicare.
Let's posit that the 14% without insurance "can't afford it", which we know is wrong, but charitable to Mr. Head's position. Mr. Head has no evidence that the 38% with non-WM coverage cannot afford the Wal-Mart plan; he has evidence that non-WM coverage is often more desirable for associates than WM's coverage, but less desirable is not the same thing as unaffordable. We can't add the 38% and the 14% because we do not know the financial situation of the 38%.

Back to Tim Noah:

In 2003, the most recent year for which I can find data, Scott sucked down $29 million (including stock-option grants). That same year, G.R. Wagoner, president and CEO of General Motors, hauled in about half that amount, $15 million. Following Scott's logic, I don't see how he can avoid knocking his own pay down to around $10 million.
H. Lee Scott does not set his own pay, so how is he supposed to knock down his own pay? (If I'm wrong, then provide evidence that Scott sets his own pay). If Tim Noah thinks that Scott is overpaid, why doesn't he contact everybody on the Wal-Mart board and tell them that they're wasting millions of dollars? He could start off like this, "Hi, I'm Tim Noah, columnist for Slate, and I know better than you how much your employees should be paid."

I'd like to hear their responses.

Posted by Kevin at 1:49 PM

February 1, 2005

Jon Stewart on WM

Thanks to reader C. Adam Mitchell who sends in a link to audio and video downloads of Jon Stewart's recent comedic report on Wal-Mart.

Mr. Mitchell found it at Boing Boing which describes the segment:

Lisa Rein has just posted a scathing and high-larious Daily Show commentary on Wal-Mart, in which Jon Stewart rebuts the latest round of feel-good PR from the retail giant.
This description is wrong. The "latest round" of PR? Even Wal-Mart's critics have noticed the lack of a formal PR response to union and activist pressure...

Still, Stewart's opinion of Wal-Mart might be considered tainted. Although it was available on walmart.com, Jon Stewart's latest book was not stocked on Wal-Mart's shelves. Hence, one might reasonably presume that personal motives could combine with left-of-center political ideology... which is all fine, since it's meant to be funny.

More later, after I get to view the show myself...

Posted by Kevin at 11:57 AM

January 17, 2005

H. Lee Scott in New York

When the CEO and CFO of Wal-Mart decide to offer interviews in New York, big media decided it would give away free adverts to the pro-WM side:

For an executive who rarely talks with the media, it was a hectic 24 hours. After granting interviews to USA Today and the Associated Press, H. Lee Scott Jr., Wal-Mart Stores Inc.'s generally low-profile chief executive, sat down for on-camera interviews yesterday with ABC, CNN, Fox and CNBC.

Anyone who somehow missed the TV blitz could have opened one of 100 newspapers across the country, from the Wall Street Journal to the Fort Worth Star-Telegram, and read a full-page advertisement bearing his signature. Or they could have visited a new Web site, www.walmartfacts.com, to read yet another statement from Scott.

I saw several of these interviews, and was dutifully unimpressed; Mr. Scott comes off to me as quiet, solid, competent, and completely toothless--which is the image he wanted.

News Hounds notes that Fox gave an extraordinary amount of time--commercial-free:

The company has been accused of such things as discrimination, human rights violations, paying miserably low wages, destroying local environments, locking employees inside its stores, invading residential neighborhoods, creating traffic congestion, noise and light pollution, contributing to urban sprawl, and censoring the books, DVDs and videos it sells.

None of that mattered until Walmart was surprised by lower than expected 2004 holiday sales numbers. Now it's hitting the road, trying to convince the public that it cares.

Fox News was happy to lend a hand on Thursday (January 13, 2005) by giving the first 13 commercial-free minutes of Your World w/Neil Cavuto to Walmart's CEO, Lee Scott....

Nonetheless, I was touched to see these two corporations working together.

Here's a partial transcript of the Cavuto interview. And here's full video of Scott on CNBC (warning, requires IE with Flash).

Also of note is a Q and A with H. Lee Scott. I think he's best here:

Q: Why do you attribute the frustration to associates?

A: They know the wage they make. They know they're full time or, if not, working the hours they want to work. They know they have health insurance. They know they have discounts. They know they have 401(k)s, profit sharing.

If anything, the negative press and the criticism take away the opportunity to feel as good as you can feel about your employment.

Yes, with 1.2 milion Americans employed by the company, it's truly shocking how few of them are vocal against the company. But he's not glossing over the difficulties a new WM can bring to a "town":
But Scott said he does not dismiss concerns that people express when Wal-Mart wants to open a new store.

"I think there's lots of questions when Wal-Mart comes to a town that need to be answered. Not all of those questions are frivolous," he said.

Scott said he planned meetings with a variety of groups not associated with government to help explain Wal-Mart's employment practices, environment-related policies and how it deals with its suppliers. He would not name the organizations, saying did not want the groups to feel they were being used to garner media attention.

Personally, I think Mr. Scott is being had by organizations he has no chance of swaying; do the union sharks smell blood?

Posted by Kevin at 11:37 AM

January 7, 2005

WM Newspaper Ads Successful

Editor & Publisher gleefully notes that WM's print advertising yielded good results:

Wal-Mart's belated strategy of advertising in newspapers to boost sales appears to have worked.

In rare interviews granted to The New York Times, Wal-Mart executives said they saw immediate results when placing ads in newspapers after a bleak Black Friday.

Posted by Kevin at 2:03 PM

December 31, 2004

How the Press Treats WM...

Dave Friedman links to ALP (thanks!), and writes the following excellent commentary:

Wal-Mart is famous for protecting its image and its brand and it no doubt is well aware of the existence of this blog. Wal-Mart has also been attracting a lot of scrutiny in recent years from all manner of press, both pro and con. When some big event or controversy occurs (and it undoubtedly will, despite Wal-Mart's attempts to control its destiny) the event or controversy will get wide play in the press and the blogosphere will react quickly to publicize the issue. How does Wal-Mart, or for that matter, any company handle the prospect that bad press is instantaneous, and the uncontrollable cauldron of the blogosphere is largely responsible for the speed with which information travels from conventional media? Conventional media, of course, will contact Wal-Mart, and Wal-Mart will have its spin faithfully recapitulated in the mainstream media. But the further the news item gets from its mainstream media source, the less of an impact Wal-Mart's PR machine will have. The blogosphere is the radical conclusion of the premise of disintermediation upon which the internet upended scores of entrenched industries.

Which blog will bring Wal-Mart to its knees?

[Empasis Added]

To answer the last question--most likely, not this one. If WM is to be crushed by a blog, it will be one with deep connections in the Walton family, or in the WM executive hierarchy...

Wal-Mart does manage its brand name as well as it can, but in my opinion it's doing a rather poor job of getting it's "we're not evil" message across. I believe WM opponents--labor unions, environmentalists, feminists, human rights organizations--are (overall) viewed sympathetically by the press; reporters are far more sympathetic to a unique story of worker exploitation than to Wal-Mart's history of lowering the cost of living for millions.

When its opponents scream "poverty wages", quote wage statistics 5 years out of date, lie about the actual benefits available to associates, pretend that scandals at a dozen stores are representative of all 3000, Wal-Mart counters in strong words that fall on deaf ears.

In the nonbusiness press, Wal-Mart is guilty until proven innocent. The way the "Wal-Mart debate" is presented, the charges (like sex discrimination) are just assumed true. In most news stores, Wal-Mart a spokesman is usually given a chance to rebut the paragraph-long charges in a few sentences. Wal-Mart's spin is "faithfully recapitulated," it is usually given a submissive position to its opponents spin.

In short, while the business press is mostly and fairly positive about WM and its economic impact, the nonbusiness press would really like Wal-Mart to go the way of the 5 and 10--if it is not to be unionized.

This is a good place to point out that Wal-Mart corporate has never contacted me, although some store-level employees have. I think WM is smart enough--unlike some other companies--to not interfere with the operation of ALP or my 1st amendment rights...

Posted by Kevin at 10:08 AM

December 4, 2004

Promoting walmart.com in areas with no WM

I like this promotional strategy:

Wal-Mart mailed fliers in several large markets last week that do not have a Wal-Mart store, including New York, Chicago, Baltimore, San Francisco and Boston. The fliers promoted specials available only online or by calling an 800 number. "Walmart.com" appears prominently on every page of the four-page mailer but nowhere is a Wal-Mart store mentioned.

Since this year was the first time Wal-Mart offered online specials for the Thanksgiving weekend, the fliers' goal was "to inform customers who don't have easy accessibility to a Wal-Mart store that they can easily shop Wal-Mart through Walmart.com," Walmart.com spokeswoman Amy Colella said.

Posted by Kevin at 10:05 AM

December 3, 2004

More Free Advertising about WM Advertisements

WM wants you to know that its prices really are still low:


NEW YORK (Reuters) - Wal-Mart Stores Inc., hurt by sluggish sales over the Thanksgiving holiday weekend, launched Friday a rare advertising blitz focusing on price cuts in newspapers around the United States.

The No. 1 U.S. retailer took out full-page color ads in newspapers in as many as 50 markets to promote its price reductions on products ranging from portable DVD players to stuffed Elmo toys. The ad campaign follows poor November sales reported by the retailer Thursday.

Wal-Mart does not typically advertise in newspapers, preferring to promote its products in its monthly circulars and on some television spots.

Media analysts said the ad campaign could be good news for newspaper publishers, who have struggled with an unsteady advertising market, if it marks the beginning of a longer term strategy by the retail giant to advertise more regularly in print.

Posted by Kevin at 1:32 PM

December 2, 2004

More Free Advertising for WM

People just won't let up on WM's lackluster Black Friday, to the point that the AP is now giving people warning that WM will have an expanded advertising campaign to remind people of its low prices. Really:

LITTLE ROCK, Ark. (AP) -- Wal-Mart Stores Inc., stung by a lackluster start to the holiday shopping season, said Thursday it is launching a new advertising campaign to remind its customers of its low prices.

The world's largest retailer is starting the price-focused ad blitz Friday in newspapers, television and radio, said spokeswoman Mona Williams, and feature two dozen key items, mainly toys and electronics, on which the company is cutting prices. ``That's what people are buying,'' she said.

See also this Adam Christian compilation of responses to Daniel Gross' negative assessment of WM:
Of the probable causes of Wal-Mart's decline cited by Gross, the saturation model won out resoundingly among fraysters over the "limits of cheapness" theory.
Christian links to this Simon Head New York Review of Books article:
The exploitation of the working poor is now central to the business strategy favored by America's most powerful and, by some criteria, most successful corporation. With the re-election of a president as enamored of corporate power as George W. Bush, there is every prospect that this strategy and its harsh practices will continue to spread throughout the economy.
Can you guess Mr. Head's politics from this conclusion?
Posted by Kevin at 8:52 PM

November 21, 2004

WM In the News

***Updated 3x***
(here scroll down to *Update 1, 2 & 3*)

Just a quick round up of a few news items concerning or otherwise relating to Wal-Mart in one fashion or another that have come to my attention.

The Los Angeles Times published an interesting article within today's edition of how a WM Supercenter is changing shopping habits in the Coachella Valley, as well as -- for better or for worse -- all the implications such big box stores brings along with it of course: Wal-Mart Effect Moves Into the Grocery Aisle.

Elsewhere, the Dallas-Fortworth Star-Telegram has what is becoming within the news media lately a very common place report of how and why: Stores look to counter Wal-Mart effect over holidays.

In other news, this morning's edition of The New York Post reports (here):

Wal-Mart heiress Paige Laurie got rich off "Everyday Low Prices" � but she allegedly paid top dollar every day to hire a fellow student to do her homework.

[...]


Read the entire story, here.

In addition, for more along the same storyline, ...

..., a quick search found that Friday's (November 19, 2004) edition of the St. Louis Post-Dispatch included an article within their sports news section that reported how (here):
[emphasis mine]

The daughter of Blues owner and University of Missouri benefactor Bill Laurie paid her roommate at the University of Southern California about $20,000 over three years to write papers and complete other class assignments for her, according to a report on ABC's news- magazine "20/20."

Elena Martinez said she was Paige Laurie's roommate freshman year at the school in Los Angeles. Martinez said it wasn't long before she was writing reports and papers for the daughter of businessman Bill Laurie and Nancy Laurie, an heir to the Wal-Mart empire. In return, Paige Laurie paid Martinez hundreds and sometimes thousands of dollars at a time.

[...]


In my opinion, this particular article (above) from the Post-Dispatch is a must-read (here).

For the complete story as reported by ABC News 20/20 however, make certain to check out [emphasis mine]:

Big Cheats on Campus

Cheating Has Never Been Easier -- Especially for the Wealthiest Students

[...]

Student Says Heiress Paid Her $20,000 to Do Much of Her Coursework
[page 2]

[...]

... Paige Laurie is a granddaughter of one of the founders of Wal-Mart. Her mother has more than $2 billion. Her father owns the St. Louis Blues hockey team.

[...]


Read about it, here (jump to page 2, here).

Of course it would be good to hear from the other side concerning all of this, but they're not talking, so we may never know what truly took place or not.

If this were to prove to be true however, it sounds to me like Elena Martinez and (Elizabeth) Paige Laurie should be trading places as well as fortunes; since the former did a lot of the work and the latter got all the credit as well as the degree as a result and, of which her parents were so proud, private matter or not (of course that will never happen).

By the way, views of the Paige Sports Arena are available, here (the bottom view is a live Webcam view of the outside of the arena) [via chrysanthalbee is me, here (via Yoni @ College Basketball, here)].

While the Webcam shots (both the one frozen in time as well as the live view) are worth checking out, the one that is *most definitely* the item to check out is the excellent image or, rather, an exclusive artist�s rendering of the new facility available on the Phog Blog, here, which nails it perfectly.

As they say, a picture is worth a thousand words and, this particular one is priceless!


*Update 1*

In more current news on the subject and, in what is a rather quick turnaround -- especially given all the non-denial denials from the Lauries and their most loyal supporters, etc.: In scandal�s wake, Lauries give up naming rights for arena [via Columbia Daily Tribune (Tuesday, November 23, 2004); initial heads up (of this first item in this particular update) provided via Phog blog, here].

[...]

The family transferred the rights to the University of Missouri, the university announced late this afternoon. The Board of Curators is to meet later to decide whether to change the name and, if so, what to call it.

MU Athletic Director Mike Alden said the Lauries contacted the university today to discuss relinquishing the naming rights.

[...]

In addition, from the same article, regarding Paige Laurie's alledged cheating at the University of Southern California:

[...]

Paige Laurie graduated from USC in the spring with a bachelor�s degree in communication. USC said Monday it would investigate Martinez�s claims and said there was precedent for revoking an issued diploma.

[...]


This is also yet another quick turnaround from USC's previously reported initial stance on the matter.

Read the article in full, here.

The Kansas City Star has a brief article devoted mostly to the developing story at USC, here [requires free registration].


*Update 2*

While doing some blog searching I came across a post on FWNED that includes one of the best pictures so far of Paige Laurie, this one with her sitting with her father, here. Yet the title of the post alone is worth checking it out however.

Then I just came across a recent post blogged by Ami, a free spirit and thinker, whom reports (here):

Interesting...

I tuned into some local news tonight (I'll talk about the reason for that later, when the time is more appropriate), and saw a story about a girl being accused of cheating at USC. I wasn't paying too much attention at first, but the name sounded familiar and the face looked familiar... Paige Laurie... Yes! She was in my class! It was Sarah Banet-Weiser's Children and Media. She was the typical Mercedez-driving, Louis Vuitton-loving, dumb USC blond sorostitute (sorority + prostitute), but I didn't know she was the heiress to Wal-Mart, and she had some sports arena named after her in Missouri. She paid her freshman roommate $20,000 in 4 years to have her papers written and other projects completed. And she graduated with a 3.5 GPA.

[...]


Read her post in full, here.

It is certainly a small world, especially within the blogosphere.

Definitely interesting ..., true enough Ami!


*Update 3*

As a final update to provide both a follow-up and closure to this particular news item:

USA Today featured an Associated Press article on its Website Wednesday (November 24, 2004) reporting, prior to it actually becoming official, that: College removes name of Wal-Mart heiress on arena.

On Friday (November 26, 2004), once it was official, the St. Louis Post-Dispatch published an article announcing: Turning the Paige: It's now Mizzou Arena.


*Note*: Made several edits and changes as well as a few additions for the purposes of clarification and readability, along with providing updated as well as related information; added an update with a follow-up of more current news; added update 2 with some good blog finds, etc.; added update 3 to post a final news update: last updated on Saturday, November 27, 2004 at 1:09 PM [EST].

Posted by Morgan at 11:31 PM

November 19, 2004

Frontline: Is Wal-Mart Good For America

FYI, the PBS frontline program, Is Wal-Mart Good for America?, is supposed to be available online today, but is not up as of 3PM. (Update: It will be available at 5 PM)

Still, there are good written portions, and lots of links. (But not to ALP!)

Thanks to Joe Hill Dispatch

Posted by Kevin at 3:00 PM