Why wait on Washington when there's Wal-Mart?
Why wait on Washington when there’s Wal-Mart?
Wal-Mart Stores Inc., the world’s largest retailer and the biggest private employer in the U.S. with 1.4 million workers here, said Tuesday that it is rolling out a three-part plan to help jumpstart the sluggish U.S. economy.
The plan includes hiring more than 100,000 veterans in the next five years, spending $50 billion to buy more American-made merchandise in the next 10 years and helping its part-time workers move into full-time positions.
The move comes as Wal-Mart tries to bolster its image amid widespread criticism. The company, which often is criticized for its low-paying jobs and buying habits in the U.S., recently has faced allegations that it made bribes in Mexico and calls for better safety oversight after a deadly fire at a Bangladesh factory that supplies its clothes. Wal-Mart said its initiatives are unrelated to those events, but rather are meant to highlight that companies don’t have to wait for lawmakers in Washington, D.C. to fix the economy.
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“We’ve developed a national paralysis that’s driven by all of us waiting for someone else to do something,” Bill Simon, president and CEO of Wal-Mart’s U.S. business, said Tuesday at an annual retail industry convention in New York. “The beauty of the private sector is that we don’t have to win an election, convince Congress or pass a bill to do what we think is right. We can simply move forward, doing what we know is right.”
Any changes that Wal-Mart makes to its hiring and buying practices garner lots of attention because of the company’s massive size. Indeed, with $444 billion in annual revenue, if Wal-Mart were a country, it would rank among the largest economies in the world. But critics say the changes amount to a drop in the bucket for the behemoth, and they question whether Wal-Mart’s initiatives will have a major impact on the U.S. economy.
“America’s largest retailers play an important role in our nation’s economy and in the well-being of millions of lives,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union. “Retailers like Wal-Mart could provide the nation with a much needed economic boost by paying higher wages and providing stable scheduling – while still remaining profitable and continuing to offer low prices.”
The centerpiece of Wal-Mart’s plan is a pledge to hire veterans, many of who have had a particularly difficult time finding work after coming home from Afghanistan and Iraq. The unemployment rate for veterans who served in Iraq or Afghanistan stood at 10.8 percent in December, compared with the overall unemployment rate of 7.8 percent.
Wal-Mart said it plans to hire every veteran who wants a job and has been honorably discharged in the first 12 months off active duty. The program, which will start on Memorial Day, will include jobs mostly in Wal-Mart’s stores or in its Sam’s Club locations. Some will be at its headquarters, based in Bentonville, Ark. or the company’s distribution centers.
Dave Tovar, a Wal-Mart spokesman, said Wal-Mart hasn’t worked out the details but it will “match up the veterans’ experience and qualifications.” Simon, who served in the Navy, said that veterans have “a record of performance under pressure” and “they’re quick learners.”
“I think that Wal-Mart has a tremendous opportunity to leverage operational skills that today’s veterans bring,” said Sean Collins, director of G.I. Jobs, a magazine and web site that highlight employment, education and small business opportunities for veterans.
Wal-Mart said first lady Michelle Obama, who spearheaded a White House drive to encourage businesses to hire veterans, has expressed interest in working with Wal-Mart and with the rest of the business community on this initiative.
In the next several weeks, Simon said the White House will meet with the Department of Veterans Affairs, the Department of Defense and major U.S. employers to encourage businesses to make commitments to train and employ American’s returning veterans. The first lady on Tuesday called Wal-Mart’s announcement “historic.”
“We all believe that no one who serves our country should have to fight for a job once they return home,” she said in a statement. “Wal-Mart is setting a groundbreaking example for the private sector to follow.”
In addition to hiring veterans, Wal-Mart plans to spend $50 billion to buy more products made in the U.S. over the next 10 years. According to data from Wal-Mart’s suppliers, items that are made, sourced or grown in the U.S. account for about two-thirds of the company’s spending on products for its U.S. business.
Wal-Mart said that it plans to focus on buying more in areas such as sporting goods, fashion basics, storage products, games and paper products. The commitment comes as economics are changing for making goods overseas: Labor costs are rising in Asia, while oil and transportation costs are high and increasingly uncertain.
But even with the additional $5 billion that Wal-Mart plans to spend each year – the breakdown of $50 billion over 10 years – the amount that the company will spend each year on buying goods in the U.S. will only account for 2 percent of its total spending in the country. In the fiscal year that ended in January 2012, Wal-Mart bought $238.8 billion in goods for its U.S. stores.
“They sound impressive when you first hear the numbers but when you begin to look at them, it’s a very tiny scale that doesn’t add up to much,” said Stacy Mitchell, senior researcher at the Institute for Local Self Reliance, a nonprofit national research organization.
The final piece of Wal-Mart’s plan is to help part-time Wal-Mart workers transition into full-time employment if they so desire. Among the strategies, Wal-Mart said it will make sure that its part-time workers have “first shot” at the full-time job openings in the stores in their area.
Wal-Mart said the move will give part-time employees much higher earning potential. About 75 percent of its store management start as salespeople, who earn an average of $12.47 hourly. Managers, the company said, can make an average of $50,000 to $170,000 a year.
“There are some fundamental misunderstandings out there about retail jobs, and we need to do better at explaining the opportunities we offer,” Simon, Wal-Mart’s CEO, said.
AP Writers Mark Smith and Kevin Freking in Washington contributed to this report.