UC Berkeley News


Chain reaction
Thinking outside the ‘big box’ buys two researchers a taste of media fame — and the wrath of Wal-Mart

| 26 August 2004

Why is this woman smiling? Wal-Mart's underpaid workers place a burden on California's tax-supported social services.
Love it or loathe it, Wal-Mart is something of a sociopolitical Rorschach test, evoking responses that may say more about the beholder than about Wal-Mart itself. To its boosters, the world’s largest retailer (#6 on the Forbes 500) is a fount of cheap consumer goods, plentiful jobs, and badly needed tax revenues. To detractors, it looms as a big-box monster, despoiling landscapes, swallowing up local merchants, and driving down wages wherever it rears its head — which, it seems, is just about everywhere.

To a pair of Berkeley researchers embarked on a study of the chain’s bottom-line impacts, it’s been the portal to strange new worlds, from broadcast news to hardball corporate politics. The experience, they admit, was a bit more than they bargained for.

“It just kind of exploded,” says Ken Jacobs of the UC Berkeley Center for Labor Research and Education. “It’s been fascinating to watch.” Earlier this month, Jacobs and Arin Dube, of the Institute of Industrial Relations (the labor center’s parent research unit), released a report bearing the modest title “Hidden Cost of Wal-Mart Jobs: Use of Safety Net Programs by Wal-Mart Workers in California.” Among their findings: Reliance by underpaid Wal-Mart employees on food stamps, Medicare, subsidized housing, and other forms of public assistance costs the state’s taxpayers an estimated $86 million a year. They estimated that families of Wal-Mart workers use 40 percent more publicly financed healthcare than the average for families of all large-retail employees, and 38 percent more in non-healthcare-related services.

Within days, the report — or, more precisely, the hefty (and hitherto uncalculated) price tag it pinned on discount shopping — was making headlines in papers from The Miami Herald to the Toronto Star and Taiwan’s China Post. Triggered by a campus press release, the Associated Press, the Los Angeles Times, and the San Francisco Chronicle were among the first to publish stories. Scores of papers worldwide picked up the wire service article, leading to a second wave of interest from news outlets hunting for fresh quotes. Dube fielded the majority of interview requests from print reporters, while Jacobs handled more of the electronic media, led by CNN and the “CBS Evening News.”

Thanks to Wal-Mart, Ken Jacobs (left) and Arin Dube are Berkeley's biggest media stars since William Hung.
For the two Berkeley scholars, sudden celebrity was a crash course in the ways of the 24-hour news cycle. Their study, they explain, built on a body of previous work that explored the question of public support for Wal-Mart employees — now numbering more than one million nationwide — as well as on their own earlier study of the hidden costs of low-wage jobs generally. Related work by Dube had been presented on PBS by Bill Moyers and in a variety of other venues.

To Dube, the new work “was an incremental increase, and I expected an incremental response.”

Instead, the study had the effect of a match in a powder keg. Which, in a way, it was. Where earlier studies dealt with models of possible behavior, Jacobs notes, “We put a number on it.” The new report wasn’t theoretical. “It was, ‘Here’s what we estimate the actual cost really is.’ It hit a certain nerve.”

And nowhere was that nerve more sensitive than in Bentonville, Ark., Wal-Mart’s corporate headquarters. The company, whose more than 3,000 stores nationwide are mostly in rural and suburban areas, is looking to expand into more densely populated locations like Los Angeles and Contra Costa County, sparking fierce civic debates over whether to put out the welcome mat or send the chain packing. With billions of dollars in the balance, Wal-Mart viewed the news from Berkeley as anything but academic. And when that news became a blizzard of bad publicity, the giant hit back with a vengeance.

“Clearly, Wal-Mart’s response was to just throw everything and see what sticks,” says Jacobs.

Initially, the firm attacked the methodology of the study — which relied on statistics disclosed via a sex-discrimination lawsuit brought against the retailer in 2001 — and faulted the researchers for failing to contact Wal-Mart to verify their data. Instead of 44,000 workers, the figure on which the researchers based their conclusions, Wal-Mart said it now employs 60,000 Californians. Jacobs and Dube replied that if 44,000 Wal-Mart workers were costing the state $86 million a year, another 16,000 employees translated to an even larger taxpayer subsidy.

Yet they concede that the chain scored some rhetorical points with journalists, who may have viewed the data they used as “old information,” and whose ethos demands that they give the subject of an unflattering story the opportunity to respond.

“I’m a labor economist,” Dube says. “I was very interested in engaging with people on the merits of the study, on the methodology, and on some of the larger issues it touched on. But most of the issues that came out were more basic: Did you talk to Wal-Mart?” As a researcher, he adds, the “vetted public information” Wal-Mart provided the court was “a gold mine,” and actually helped prompt the new study. As for the way the issue would cut in the popular press, however, “That’s just not something I’d really thought of. I was a little surprised.”

Nearly a week after the data flap, Wal-Mart struck again with a press release calling the study “biased and flawed” and citing the labor center’s “ties to organized labor.” (The center receives about 10 percent of its funding from union groups, which goes mostly for training.) More ominously, the firm promised to file a Freedom of Information Act request with the University, ostensibly to learn more about the center’s finances and the researchers’ sources of information. Jacobs dismisses the request as “a fishing expedition.”

Still, he admits to being “a little taken aback by Wal-Mart’s attempt at intimidation,” even as he’s encouraged by it. “They want to send this signal that if you mess with us, or put out anything publicly — in this case, analyze already available public data — then, you know, you’re going to hear from us. On the one hand, it’s outrageous that they’re doing it. On the other hand, it’s a sign that we’ve sparked a discussion.”

That discussion, the researchers agree, has been heartening. Among the countless calls and e-mails they’ve received was a message from a self-avowed conservative who, somewhat painfully, acknowledged the study’s importance: “I’m a Republican from Southern California and went to UCLA, and I hate to give Cal credit for anything.”

Without a doubt, the study is deepening the debate in California, where Wal-Mart plans to build dozens of 200,000-square-foot “superstores” over the next several years. State Controller Steve Westly, for example, has sent copies to city councils in a number of large cities, and Jacobs and Dube were asked to testify at a hearing of the Los Angeles City Council, which was then considering an ordinance to ban or restrict such stores. (The council later passed a law requiring retailers to do economic-impact studies for any proposed superstores.)

“People are asking good questions, including questions critical of our study,” Dube says. “How many jobs are created? What kinds of jobs are created? Should we care about what kinds of jobs are created? These are the right questions to ask…. I do wish some of the debate was more on the substance, and less, as I see it, on ad hominem attacks.”

“Walmartization,” Jacobs explains, “is bringing about a substantial change to our local economies, to our communities, and it’s important that we understand what’s happening, and that policymakers and communities are able to make informed decisions.” And while he wryly notes that the mass media “is not a place for nuance,” he’s confident the policy questions are being addressed in other venues.

“It’s just been very interesting to see the whole process,” Dube says. “Like every world is a different logic — you know, the world of the policymakers, and the advocates, and the academics. This touched on so many at the same time.”

Adds Jacobs, laughing heartily: “It’s been fun.”