How Wal-Mart Keeps Unions at Bay

Organizing the nation's No. 1 employer would give labor a lift

Sam's Club store No. 6382, Spring Mountain Rd., Las Vegas--epicenter of a critical battle between labor and management. On one side, employees were trying to bring in the United Food & Commercial Workers (UFCW) to represent 5,000 Wal-Mart Stores Inc. (WMT ) workers around the city. Aided by 15 organizers, a Web site, and a weekly radio call-in show just for Wal-Mart workers, the union won enough support to petition the National Labor Relations Board for a vote last fall among the 200 workers at Club 6382. On the other side, the retailing behemoth, which mounted a blistering counteroffensive. It parachuted in a dozen labor-relations troops from its Bentonville (Ark.) headquarters, instructing local managers in a fierce anti-union campaign, including surveillance of employees and the firing of several union sympathizers, the union claims. Wal-Mart denies it did anything illegal.

It was a fight that would end in stalemate--for the time being. Even so, it illustrates just how hard is for unions to organize in today's workplace--and how hard employers are resisting. In the case of Sam's Club, the union concluded that workers were too intimidated to proceed with a vote. Instead, it filed dozens of unfair labor practice complaints with the NLRB, effectively postponing the election indefinitely. Even today, says Mary Lou Wagoner, an employee organizer at the Spring Mountain store, "people are just afraid." On Wal-Mart's side, Coleman Peterson, executive vice-president of the company's People Div., says there's no corporate support for illegal tactics. But he's clear that Wal-Mart doesn't want a union. "Where associates feel free to communicate openly with their management, why would they need a third party to represent them?" he asks. Wal-Mart has won all but one of seven union votes in the U.S.

Despite the current impasse, the stakes continue to be high for both sides. Wal-Mart faces the first serious unionization threat since its founding in 1962. For decades, the company's strategy of placing stores in small towns and rural areas kept it largely free of exposure to unions. But in recent years, Wal-Mart has been pushing into the heavily unionized supermarket industry, as well as into big cities where workers are more familiar with organized labor. Even though the company has prevailed so far in Las Vegas, the UFCW has an even more ambitious plan to sign up Wal-Mart workers elsewhere, starting with 117,000 in Michigan, Ohio, Indiana, and Kentucky. If the UFCW gets help from auto workers and other labor groups in those states, it has a shot at eventually unionizing at least parts of mighty Wal-Mart for the first time.

For its part, the UFCW is fighting to protect the $30,000-a-year wages and benefits of its 800,000 retail members, mostly in the grocery business. Already, it's getting demands for benefit cuts from big unionized chains such as Kroger Co. (KR ) and Safeway Inc. (SWY ), which shoulder labor costs at least 20% higher than Wal-Mart's, analysts estimate. "We have no choice but to [unionize Wal-Mart] if we want to survive," says William A. Meyer, the UFCW staffer who's heading up the Las Vegas effort. A win at Wal-Mart, the country's No. 1 employer, with more than 1 million workers, also could give the entire labor movement a lift.

Yet for all the drama at the Sam's Club in Vegas, the labor battle there could also be a proxy for many unionization attempts around the country. And the picture isn't pretty for the future of unions. Interest in unionization has surged in the U.S., in part as a result of corporate scandals and the troubled economy. Fully half of all nonunion U.S. workers say they would vote yes if a union election were held at their company today, up from about 40% throughout the 1990s, according to polls by Peter D. Hart Research Associates Inc. Yet unions lose about half of the elections they call.

One big reason: Over the past two decades, Corporate America has perfected its ability to fend off labor groups. True, unions themselves bear some blame, since most run poor sign-up campaigns and don't spend anywhere near 30% of their budgets on recruitment, as AFL-CIO President John J. Sweeney has long exhorted them to do. Still, companies facing labor drives routinely employ all the tactics Wal-Mart has used to get workers to change their minds. Many of these actions are perfectly legal, such as holding anti-union meetings or inundating workers with anti-union literature and videos.

Those that are illegal carry insignificant penalties, such as small fines or posting workplace notices about labor rights. Firing activists--as companies do in fully one-quarter of union drives, according to studies of NLRB cases--is difficult to prove and takes years to work through the courts. That's long after a drive has lost steam. Workers may want unions, "but the question is whether [labor] can overcome the fear generated by an employer's campaign to get them to take the risk," says Kate Bronfenbrenner, a Cornell University researcher who did the studies.

Indeed, the extraordinary challenge of winning a union election today is told chapter and verse in the Sam's Club story. Take the tactic of intimidation. Sandy Williams, a five-year Wal-Mart veteran, says that even the clearly legal actions taken by her managers scared workers away from interest in the union. Last fall, managers held mandatory employee meetings every week to express their anti-union sentiments. The corporate labor experts who jetted in stressed such messages as "you can speak for yourself," and "the union only wants your money." An us-vs.-them atmosphere quickly took hold, and employees sported buttons that boasted: "I can speak for myself." Executive Vice-President Peterson says Wal-Mart sends in labor experts to "educate associates about how these [union election] processes work."

Store managers also began to harass union supporters, says Williams and other colleagues. Wagoner, 53, a part-timer at the store, believes she has been "blacklisted" from better-paying full-time jobs because of her pro-union stance. A couple of times, her paperwork was conveniently "lost," she says, and she also was passed over for a worker who shouldn't have been eligible because of a disciplinary action. "They've done just about anything they can to get me to quit," she says.

Sandra L. Mena, a cashier at the Club, says she was fired after three years--officially because of mistakes at her register. But she believes it was because she was pro-union. She says her alleged errors, which employees have no way to verify on their own, surged only after she became active in the union. Peterson declined to comment on either woman's allegations.

Some former Wal-Mart managers say the hardball tactics are standard company policy. Jon M. Lehman says he left Wal-Mart on good terms last fall after 17 years as a store manager but now works for the UFCW. He recounts how he called a Bentonville hotline in 1997 after finding a flyer that said: "This store needs a union" in a bathroom at the store he managed in Hillview, Ky.

The response was a mini version of what occurred in Las Vegas four years later. Three labor experts swooped in from Arkansas to show anti-union videos at mandatory employee meetings, says Lehman, and scoured personnel files for dirt to use against union supporters. The labor experts grilled him and other Hillview managers about potential troublemakers, and the store trained surveillance cameras on suspect workers, he says. Now, as a union organizer, he recently noticed that a store in Scottsburg, Ind., sprouted a multitude of cameras after he began talking to workers there in July. Wal-Mart declined comment on Lehman, although a spokesman says that the 15 cameras installed in Scottsburg have "nothing to do with union activity."

So far, Wal-Mart has been able to stave off unionization, and, given its superior firepower, it may be able to do so for years to come. In that, the country's No. 1 company has a lot in common with most other U.S. employers.

By Wendy Zellner in Las Vegas

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