Wal-Mart Touts Plans on Pay, Opportunities
Wal-Mart Stores Inc., having become a symbol of America’s low-wage economy and its related social ills, said Friday that it had launched a series of initiatives to address concerns over its pay structure and opportunities for women and minorities.
Some said the moves appeared aimed more at countering the growing criticism than at actually helping employees.
Wal-Mart has been credited with aiding the national economy by bringing low prices to consumers and increased buying opportunities to underserved neighborhoods. Nonetheless, the company has gotten more attention in recent years for what labor and community activists -- including many in California -- see as the downside of Wal-Mart’s attention to slashing costs: elimination of higher-paying jobs at the competitors that Wal-Mart drives out of business, erosion of healthcare benefits and increasing reliance on low-wage foreign manufacturers.
Chief Executive H. Lee Scott Jr. said changes at the company, which is facing lawsuits alleging gender discrimination and improper pay practices, would include reducing compensation for managers who fail to achieve diversity goals and a restructuring of hourly workers’ job classifications and wages.
Scott, who spoke at the company’s annual shareholders meeting in Fayetteville, Ark., said no employee’s pay would be cut under the new program. Some employees, he said, would be handed raises.
The company, however, declined to say how many workers would receive a wage increase or how big it would be. A Wal-Mart spokeswoman would say only that the pay changes, which will take effect June 12, were already built into this year’s costs and would not have an effect on earnings.
Based on the size of the workforce at Wal-Mart -- the nation’s biggest employer -- some said it would be difficult for the company to institute a very meaningful boost in wages without undermining its low-cost way of doing business.
“While it’s an admirable initiative, it’s probably still not enough to keep the Wal-Mart head-of-household worker above the poverty line,” said Burt P. Flickinger III, who runs Strategic Resource Group, a New York retail consulting firm.
Nonetheless, Flickinger, who figures that the average Wal-Mart worker currently receives about $9 an hour in pay and benefits, called the move “a powerful PR play.”
Friday’s announcement appears to be at least partly in response to a lawsuit filed on behalf of former Wal-Mart employees Betty Dukes and Patricia Surgeson, which claims that women constitute more than 70% of the company’s sales workforce but less than one-third of its store management.
An analysis of Wal-Mart payroll data by the Impact Fund, a nonprofit group that is coordinating the litigation, also found that women on average were paid less than men in every job category, from cashier to store manager.
Brad Seligman, the Impact Fund’s director, said the lawsuit alleged several major problems, including the lack of a meaningful job-posting system for management slots; a failure to put someone in charge of workplace diversity; and a heavy reliance on lower-level store managers to decide raises and promotions.
“All the changes that they’re touting now are changes that they only started seriously dealing with” because of the lawsuit, Seligman said. “It’s a shame that the workers of Wal-Mart had to wait until this was before a federal judge before Wal-Mart started taking steps that many of its competitors took years ago.”
The plaintiffs are seeking for the case to proceed as a class action on behalf of about 1.6 million women who allegedly were denied promotions and pay raises at Wal-Mart because of their gender. The U.S. District Court in San Francisco is expected to decide the matter soon.
For years, Wal-Mart tried to stay out of the public spotlight by shunning the media and keeping mum about its policies.
But of late, the Bentonville, Ark.-based company has had little choice but to become more vocal. In April, voters in Inglewood defeated the retail giant’s high-profile proposal to build a supermarket-plus-general-merchandise Supercenter without city oversight. The setback was significant for Wal-Mart, which has pledged to build 40 Supercenters in California over the next few years.
This year, CEO Scott began responding to media accounts about the company by writing letters to the editor. Wal-Mart, which last year rang up more than $256 billion in sales, also has stepped up what a spokeswoman described as “reputational” advertising spots, which tout the company’s good works in the community.
Scott’s speech was “definitely part of doing a better job of telling our story,” Wal-Mart spokeswoman Mona Williams said. “These are things we’ve done over the past year. We feel good about them.”
At Friday’s annual meeting, more than 15,000 people packed the University of Arkansas basketball arena by 7 a.m. to cheer and wave flags. Chief Financial Officer Tom Schoewe danced in the aisle, and former CEO David Glass -- flanked by actresses Halle Berry and Susan Lucci -- did the twist to the Wal-Mart cheer.
Robert F. Buchanan, a retail industry analyst with A.G. Edwards & Sons who attended the meeting, said Scott’s speech clearly was directed more at Main Street than Wall Street. In New York Stock Exchange trading, Wal-Mart shares dropped a penny Friday to $56.59.
“I don’t think today’s announcement is anything seismic,” Buchanan said. “To some extent, they want to make it look like they’re taking care of the employees better, and I think that’s true.”
Among the steps Scott highlighted that Wal-Mart has taken in the last year: sending an alert that reminds cashiers it’s time to take their meal breaks.
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Reuters was used in compiling this report.
