The Wall Street Journal reports that Wal-Mart Stores (NYSE: WMT) is warning its store managers against an Obama victory in November. Why? because Wal-Mart executives worry that Obama will boost the power of unions and that unionized Wal-Mart stores will lead to higher worker pay -- and higher prices for Wal-Mart customers.
I can understand why Wal-Mart executives would want to keep President Bush's policies in place for another four years. After all, those low taxes on the top 1% help enrich Wal-Mart brass. I am not suggesting that all Wal-Mart customers are Republicans, not at all, but I do believe that most people who shop at Wal-Mart cannot afford to buy their shoes at Neiman Marcus. And these middle- and lower-income Wal-Mart shoppers are the natural beneficiaries of Democratic policies such as Obama's plan for a middle-class tax cut.
Wal-Mart is clearly trying to be on both sides of this election. The Journal reports that it's reduced its share of contributions to Republican candidates from 98% in 1996 to 52% in 2008 -- giving 48% of its $2.2 million in political contributions to Democrats this year. It also has directors who have been big Clinton supporters, including Hillary Clinton herself who served on its board from 1986 to 1992 and Aida Alvarez, who worked in Bill Clinton's cabinet from 1997 to 2001 and has been a Wal-Mart director since 2006.
Meanwhile, it's not clear why Wal-Mart thinks an Obama win automatically means unionized Wal-Mart workers. It clearly fears the Employee Free Choice Act (EFCA), which "companies say would enable unions to quickly add millions of new members," according to the Journal. If EFCA did pass under an Obama administration, would all Wal-Mart stores suddenly become unionized? And if some of them did, would that really be so bad for Wal-Mart's business? Its workers would then have higher incomes, meaning they could buy more at its stores.
I think Wal-Mart needs to sort out its political strategy. Its stock did much better under Clinton -- up 257% during his presidency -- than under Bush -- up 15% so far. And most of Wal-Mart's stock price gain has come in the last year as credit crunched consumers flocked to Wal-Mart's lower prices; since last August the stock has risen 27.6%. Thus it's the failure of Bush's weak dollar, high debt policies that have most benefited Wal-Mart's bottom line.
Wal-Mart's stock price prospered under Clinton and suffered under Bush. Its pattern of political contributions and board membership suggest an openness to Democrats. With its latest anti-Obama warnings, Wal-Mart's executives seem to be at war with its customers. And that's not good for its business or its shareholders.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter
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Reader Comments (Page 3 of 3)
8-05-2008 @ 9:21PM
Rob said...
"Clinton was successful in financial policies because for a short while we actually had a Congress that cut spending and debt. "
Congress had to cut spending. Clinton wouldn't approve their budget and even shut down the government,
8-05-2008 @ 9:20PM
Rob said...
"Why are those with hateful comments Demos or Libs? The writer of this article certainly did not hide the fact for whom he stands. By the way, every terrorist State and its leaders desire a victory by Obama. From Iran to Hamas to Chavez? Does that tell you something? "
Every Europeon nation also desires an Obama victory.
8-06-2008 @ 7:04AM
HARRY said...
IT'S QUITE OBVIOUS THE WRITER IS A LEFTWING LOON. I LOVE THE LOGIC THAT EMPLOYEES COULD AFFORD TO BUY MORE.. IS THE WRITER THINKING EMPLOYEES PURCHASE MORE THAN CUSTOMERS DO?
8-06-2008 @ 7:45AM
Mike said...
Can you guys explain why you think Target is so much better? According to everything I read, they offer lower wages, worse work-rules, a more onerous healthcare plan, no retirement...
I don't understand "Target Fever"
8-07-2008 @ 4:11AM
Jan said...
Talk about A_ _'ole Republicans...In Ohio, our former govenor, Taft, allowed to pass a law that if you own a home and you have to go into a nursing home and then go on Medicaid to pay for your nursing home stay, that after you die the home must be sold and then this money goes to the state! Therefore; no money to will to your children! If you live long enough to use up the amount your house is worth, your kids get nothing! So, wow...big deal about increased capital gains taxes"smc341"; in Ohio nothing is left from your house to give to your kids after paying tons of taxes on it! Last I heard, Ohio is the ONLY state that does this, all though I heard other states are considering it. So, watch out you all that live in republican run states! You might be next!
8-07-2008 @ 2:28PM
jpandre said...
I think that this writer is way off base. First the top 1% pay the majority of the taxes in this country even with the Bush tax cuts. The poorest Americans pay no taxes at all even though they recieve the benefits of public assistance, food stamps and a host of other goverment programs. If the so called fair choice act passes and is made law then employees will no longer have a choice. The whole point of the bill is to do away with the a the abilility of a companies workers to vote and decide for themselves if they want to pay a union to represent them. Unions are in decline for a reason. The reason is that American people are smart enough to understand that the Unions are a business and do not fully represent their interests. They are interested in gaining more dues paying members.
If the Democratic Party is able to control Congress and the White House they will advance their platform and agenda - bigger government - more government intrusion into our lives - more liberal judges who are willing to re-write the constitution to their narrow views.
8-11-2008 @ 4:25AM
mouse said...
@smc341
You should know, if McCain wins, Wal Mart will not be unionized. If Obama wins, Wal Mart might get unionized, if the EFCA passes. That's how it is these days.
Cap gains will probably be tiered, so the gains below 250k will be taxed at 15%, and the portion above will be taxed at 30%, so, ease up. You'll pay 20% on 150k only. Be glad you have cap gains at all. Wal Mart victims are struggling to make the rent.
Obama is one of the most fiscally conservative characters to come out of the DLC in a while. He doesn't know the New Deal and doesn't come from that tradition. He's at least as conservative at Clinton.
@allie
Profit can be a sin, if it's excessive. Suppose you made someone work for $1 an hour, and you sold their labor for $10 an hour. That's wrong.
@mike
Target sucks too.
@jpandre
Of course the rich should pay taxes - they have the money. The poor need freebies, because they lack money, and we don't want to see shanty-towns in the city.
The rich got rich because there are so many people working to make the rich even richer. The people working are, often, poor people.
So, look at any company: each one produces stuff, or services. Everyone contributes to profitability. Yet, in some companies, people are paid kind of the same - the owner makes more, but not that much more. In other companies, the owner takes all the money, leaving little for the workers. Yet, both businesses provide similar services at the same prices. What is fair?
Well, the business creating the poverty-level jobs is going to create problems that the general public has to pay for: slums and all their problems, lack of health insurance, workers holding down two jobs. So, who should be taxed to pay for these problems? How about the guy who got rich!
8-13-2008 @ 11:08PM
Kate Peterson said...
How sick and sad some of you people are. YOU want!! Well get off your duff and do! Walmart helps a lot of people make it each month. They do not come and get you and force you to work for them. Many are happy with their pay at walmart it helps them get by. As for the rest who do nothing but complain about what you dont get. GET Real - Get a top paying job. In addition if you bring in the Union you won't be getting any job. they will all be over seas. Looks like you would learn! But I guess NOT!
8-14-2008 @ 11:07PM
mark said...
bobbenson you are a f'n moron and a liar!!! low and middle class have NEVER been better off with republicans. how stupid are ya bob? reagan quadrupled the deficit. plus under reagan we had republicans plundering savings and loans. NEIL BUSH bankrupted one. silverado savings and loan. ever wonder why you dont hear about him? CLINTON BALANCED THE BUDGET DUMBASS!!!! no republicans have lately. now bush jr F'D it up big time. cut taxes in favor of the rich and create the largest deficit in american history. EVERYONE STOP LISTENING TO LYING REPUGS LIKE BOB.
8-15-2008 @ 5:24PM
gofer said...
How funny...Wal-Mart workers are victims. I work with Wal-Mart as a vendor and I know a lot of employees. A lot of workers are part-timers for all kinds of reasons they chose. It's terribly thoughful of you libs to be so concerned about their workers. Just what is a "living wage?" There is a limit on people's worth and all the workers I know are as satisfied as any other retail worker. They all will tell you it's much worse at Target. Wal-Mart also hires a lot of retirees and olders folks. I'm sure they would tell you and the union to stop worrying about them and mind your own business. Because they employe so many people, they are going to have their gripers. Unions are long outdated for the most part, except in certain fields such as construction and the skilled trades.
It's harmful to the workers because instead of improving their education and lot in life, they hunker down in their little job, stocking shelves, and expect the union to forever take care of them. Unions suck the life out of companies...with GM. They are leechs.
Obama has over a TRILLION $ in new spending, so get off this fantasy he is fiscal conservative. He is nothing but a media-created image and can't form a sentence away from the teleprompter
How does anybody support a man who was just endorsed, in a glowing article, by the Communist Party, USA?? His supporters are the most shallow people and can't give a single, solid reason to vote for him. Read the book, "Obamanation" by Dr. Jermone Corsi, and if you can still vote for him, then you know for sure you are a Marxist socialist. He is following the "Rules for Radicals" book of Saul Alinsky to letter. His dispicable support for killing babies, born alive, from botched abortions is another reason. He voted 3 separate times to allow murder.
BTW, my cousin went to work for Wal-Mart right out of high school. He worked his way up to management just like many others and he's financially set for life. They offer tremendous opportunities and don't need a union to tell them they can't fire a lazy cashier.
My friend, a Wal-Mart pharmacist, told me he had never been told how to vote or did he know if anyone else. If a person makes themselves valuable to the company, they don't need union protection. It's only the lazy, incompetent that want to coast along having their "nanny" union to care for them against the "evil" company. I'm strictly speaking of the service and retail industry, not in skilled areas where unions play a role.
EVIL excess profit????? Who determines "excess"? The oil companies pay 3 dollars in taxes for every dollar of profit, about 9% margin. If you buy Obama's "only taxing the rich" plan, you are ignorant. They already pay over 60%+. How much more you think they will shell out before they stop investing, taking risks, expanding business, etc. Stop the class warfare crap. Who cares how much they make? ALL the rich, rich are democrats anyway, Gates, Buffett, Winfrey, Rockefeller, Turner. Where are all the rich, rich republicans?? Nothing more disgusting than a hypocrite! Obama will bankrupt this Nation and return us to the misery of the Carter years, which his entire platform is a mirror image. Nothing new about this man, except his radical pals and his Marxism.
8-16-2008 @ 10:06AM
mary said...
I read through all the comments to actually see if one of them would be infact the truth. Walmart hires in at above the minimum wage they have good health/dental plans. The employees (the little people) recieves a quarterly bonus if sells/profits are met for that quarter (more often then not they are met). If you work hard and apply yourself you can make in the double digits per hour and I'm not talking about managment. Some might be surprised that the door greeter you pass by might be pulling in $17 an hour. I'm not saying every peeon makes well but I'm saying that it is possible for the lowest on the totem pole to make a healthy living at Walmart if they apply theirself. I have even seen people hire in as a cashier or sales floor associate get into management within a year of hire date. I could go on and on but I think that I've made my point that if you actually think millions of people work at Walmart for less then minimum wage/no health or dental/no incensive bonuses/no 401/ no probfit sharing then we must not be talking about the same walmart or some of you have no clue what your are talking about.
9-25-2008 @ 2:27AM
James said...
First, let me address what Mary said.
Wal-Mart has capped wages in each department, so that the top pay for any worker will be about $13 per hour depending on department. $17 per hour door greeters are a thing of the past. (if they ever existed) Sadly, the 401k and health insurance are often illusions which cannot be contributed to on such a measly hourly wage, and reduced hours per week.
Let me clarify this argument a bit. We are not talking about whether workers are treated decently, whether they are happy, or even whether they can pay their bills. The answer to all the above is generally, a resounding no. I have worked for the company for seven years and know quite a bit about this.
The question at the root of this discussion is whether or not Wal-Mart, or even shoppers are in any part responsible for the low quality of employee lives, and if so, what should be done?
Many say no, and cite what for many years was known in the U.S. Supreme court as "The Liberty of Contract Docterine". This was the view in the late 1800's, that employment was a voluntary contract between the employer and the employee, and that the employee was free to accept or reject the terms of employment. The docterine was overturned when FDR threatened to add justices to the Supreme court in order to tip the balance in favor of worker rights, prompting the justices to scrap their pro-business viewpoint and admit that the employee is at a distinct disadvantage when being contracted for employment, rather than on equal footing as the docterine had supposed. This was known as "The switch in time that saved nine."
This was the basis for our modern understanding that workers are vulnerable, and subject to exploitation due to the necessity of being employed.
The government used this as the basis for the few wage and hour laws on the books today, such as the 40 hr. workweek. The right to join a Union was also protected, and collective bargaining agreements (union contracts) were intended to be the primary source of worker protection, while the government maintained relatively little direct intervention.
So, what happens in the absence of government protections, and when union contracts are becoming rare? exploitation
If you still agree with "The Liberty of Contract Docterine", this is ok, and exploited workers deserve being treated like battered wives, because they should have left right? The husband is not wrong for the abuse right? Wrong
Given that the less powerful party should be protected, we have three options:
1. The government should take a hands on approach and pass extensive labor laws requiring employers to act responsibly for the well being of workers.
2. Workers should exercise their right to join a union, and in doing so, demand a piece of the prosperity, leveling the power differential.
3. Educated customers should demand that the company pay a living wage, offer an affordable retirement program, and health benefits or risk losing their sales.
Only one is really a good solution.
Customers are often too uneducated or self-interested to be inconvenienced on behalf of the workers, making it unlikely that this will be the answer.
And the strangle-hold that business interests would have on the passage of extensive labor protection legislation in congress makes adequate Federal Government intervention unlikely.
This makes the only viable option to right this wrong protecting workers' right to unionize and negotiate a contract granting them better conditions of employment.
I choose the last of the three and encourage it. We must make the few jobs left in this country which cannot be outsourced worth something!