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US: Teflon Target

by Chris SerresStar Tribune
May 22nd, 2005

It was the fall of 2001, and a chorus of boos erupted at Target's annual sales meeting when a senior executive at the company flashed Wal-Mart's name and logo on an enlarged screen.

"This," he said, pointing at the logo, "is the evil empire."

For years, Target has cultivated an image of itself as the "anti-Wal-Mart," a retailer that refuses to sacrifice workplace standards in the pursuit of higher sales and stock prices.

But now, after a decade of meteoric growth at both Target and Wal-Mart, labor groups say the two retailers are no longer very different in the way they treat their workers.

Entry-level hourly workers in Target stores earn roughly the same pay and have more difficulty qualifying for health care coverage than their peers at Wal-Mart. Both retailers oppose unions and have taken steps to prevent organizing efforts in stores. And both have outsourced jobs overseas to save costs.

But while Wal-Mart is perceived as a corporate giant that will do just about anything to maximize sales and profits, Target -- thanks to its hip advertising campaigns and its longtime contributions to a variety of civic and cultural causes -- is seen as a model corporate citizen and benevolent employer.

Accurate or not, Target's image is a key advantage as it races to build more stores.

In "blue state" markets, such as the Twin Cities, Chicago and New York, Target is often welcomed with open arms by city leaders. Wal-Mart, meanwhile, faces community opposition at almost every turn, which has prevented it from expanding in many key markets, including New York City.

In West St. Paul, virtually no one challenged Target's recent proposal to convert a new store to a SuperTarget. Yet 30 miles away in Ham Lake, Wal-Mart has spent more than a year trying -- without success -- to persuade city leaders to allow it to build a Supercenter.

"Some people, their hackles just go up when you mention Wal-Mart," said Joseph Beaulieu, a retail analyst at Morningstar. "You could tell them that Wal-Mart pays more [than Target], but they would still be convinced that Wal-Mart is evil."

But as Target continues its aggressive expansion -- it plans to add more than 600 stores by 2010 -- the company's labor practices will come under more scrutiny from union groups, consumer advocates and local zoning boards, labor experts predict.

"Unless Target moves to improve its wages and benefits, it's only a matter of time before it is seen as just another big-box retailer," said Brendan Cummins, a Minneapolis labor attorney for the Miller O'Brien firm.

Already, Target is beginning to get some unwanted attention from labor groups that have been struggling to reform Wal-Mart's workplace practices for nearly two decades.

Chief among them is the United Food and Commercial Workers union, the largest union of retail workers in the nation. The UFCW has been trying to organize Target workers for years, without success. This week, about a dozen members of the UFCW tried to call attention to Target's wages and benefits by protesting outside the company's annual shareholder meeting in Minneapolis.

One of Target's newest critics is its main competitor, Wal-Mart. At a recent media conference in Bentonville, Ark., Wal-Mart executives accused Target of offering a less attractive benefit package and challenged reporters to conduct a comparison of their own.

Asked to respond to Wal-Mart's criticisms at Target's annual meeting, CEO Bob Ulrich said he "didn't really know what Wal-Mart pays" its workers but said that Target conducts regular wage surveys in all its markets to ensure it pays competitive wages.

"We believe Target is a great place to shop and to work," Ulrich said. "We have no difficulty attracting terrific team members."

Ulrich also defended the Target's antiunion stance, saying that the company "simply doesn't believe that third-party representation would add anything for our customers, our employees or our shareholders. We just do not believe it's productive and adds value."

Few differences

Target declined to disclose details about its compensation and benefits, but labor groups and former and current employees of Target in the Twin Cities say the retailer sometimes pays less than Wal-Mart.

Target pays between $6.25 an hour to $8 an hour for entry-level, hourly positions in its Twin Cities stores, according to a recent survey of local Target workers by the UFCW. That's in line with what Wal-Mart pays in this market, though some starting-level Wal-Mart workers can earn $9 to $10 an hour, the UFCW said.

Both companies offer health care insurance to employees, but Target's is considered more restrictive. Two years ago, Target dropped health care insurance coverage for all part-time workers. By contrast, Wal-Mart makes its medical plan available to all workers, full- and part-time.

Union groups that have analyzed the two companies' policies maintain that Wal-Mart's also is more equitable.

All Wal-Mart's employees, from store cashiers to chief executive Lee Scott, are covered under the same medical plan. All employees can choose from the same four deductible options and receive unlimited coverage for catastrophic expenses -- such as organ transplants or cancer treatments -- that can financially ruin an employee.

Target, however, offers multiple health care plans to its employees that vary by geographic location, according to the company's employee handbook. At Target, store employees do not receive catastrophic coverage and deductible levels vary, according to former and current employees.

Wal-Mart estimates that 56 percent of its employees receive health care coverage. Target declined to disclose its percentage of insured workers, but the UFCW estimates based on surveys of Twin Cities employees that less than half the company's workers receive coverage under its plan.

Target declined to contribute wage and benefit information for this article but said the data cited by others were inaccurate.

"Target has one of the best health care and benefits packages in the industry," company spokeswoman Carolyn Brookter said in a prepared statement. "We are an industry leader in providing a wide array of excellent benefits that allow us to attract and retain the best team members."

However, the UFCW and others interviewed for this story stand by their information. "The only difference between Target and Wal-Mart is that Wal-Mart is six times their size," said Bernie Hesse, a union organizer with UFCW Local 789 in St. Paul.

Target flexible with workers

Wages and benefits are not the only criteria of a good workplace, and many employees at Target insist it's still a much better place to work than Wal-Mart.

The company is flexible with employees who want to work part-time and spend time with their families. Its 401(k) retirement plan is considered among the best in the retail industry; it matches, dollar for dollar, up to 5 percent of all contributions made by employes. And all new workers receive a 10 percent discount on most merchandise purchased at Target.

"As far as its flexibility, Target was a wonderful place to work," said Jennifer Clark, who worked at a Target store in Mission Viejo, Calif., before moving to Reno, Nev., last year to become an executive recruiter. "If I told the manager that my daughter was receiving an award at school and I needed to leave early, he'd say, 'Sure, go ahead. Take care of your family first.' "

Mary Murphy, 39, of Chanhassen said she was proud when Target hired her as a cashier.

She liked working for a company that gives 5 percent of its federally taxable income to the communities where it does business, which amounts to about $2 million a week.

And she was impressed by Target's "Take Charge of Education" program, through which credit-card holders can donate 1 percent a year of their Target Guest Card purchases made at Target to a school of their choice. Target also donates 0.5 percent of all Target Visa purchases made everywhere Visa is accepted. Through this program, Target has donated about $138 million to schools nationwide since 1997.

Working at Target's main rival, Wal-Mart, was out of the question, Murphy said. She never liked the store's crowded aisles, fluorescent lights and "all-around messiness." The mother of four also was turned off by reports that the company had violated child labor laws and discriminated against women by paying them less than men for many of the same jobs.

"I can't stand shopping at Wal-Mart, much less work there," Murphy said.

Yet Murphy is no longer convinced that accepting a job at Target was the right decision.

Hired as a cashier at $7.50 an hour, Murphy was told that she could receive a 50-cent raise, but she was expected to meet Target's quota of selling at least nine credit cards a week to shoppers.

Managers would hover near the checkout lanes to make sure cashiers were pitching the cards with "the proper enthusiasm," Murphy said. They were required to vary how they pitched the cards so they wouldn't annoy repeat customers, but Murphy said she found the quota impossible to attain.

"I hired on to be a cashier, but they wanted us to be telemarketers," she said. "I didn't want to be known in the community as the 'Target Red Card pusher.' "

Murphy resigned after nine months without ever receiving the raise, yet she still considers herself more fortunate than many of the other cashiers at the store.

Her husband, an electrical engineer, has health care coverage for the entire family through his employer. And her pay, though low, was about 25 cents higher per hour than some starting-level workers in the Chanhassen store.

Murphy said that between 25 to 30 cashiers worked at the Chanhassen store at the same time she started. After nine months, she said she was the only one remaining.

"If there was a union and a sense that things were going to improve, people might have stayed longer," Murphy said. "Right now, there is absolutely no incentive to stay there for any length of time."

John Hayden, 59, of Oconomowoc, Wis., lasted just six months loading and unloading boxes at a Target distribution center near his home.

Hayden said he liked his co-workers and managers, but he said the work was simply too difficult for the wage -- $11 an hour. Hayden said he occasionally had to unload tractor trailers full of 75-pound boxes. Target encouraged employees to request help with heavy boxes, but the loading deadlines were so strict that Hayden often had to load them himself.

A year after leaving the company, Hayden learned that he had a hernia and had to undergo surgery, which he blames on the stress of lifting up to 700 boxes a day. "There were some nights, I could barely move," Hayden said.

To motivate its warehouse workers, managers often offered employees small gifts, such as coasters or flashlights with the Target logo, if they beat their goals. "They treated us like third-graders, like we wouldn't work hard without gifts," he said. "It was insulting to older workers."

Hayden considered applying for work at a Wal-Mart store in nearby Delafield, Wis., after hearing from colleagues that it paid 50 cents to $1 more per hour.

"Two years ago, I'd say it doesn't matter, Target or Wal-Mart, I'd work for either one," Hayden said. "But now, after working at Target, I'd choose Wal-Mart."

Wal-Mart No. 1 target

For the time being, however, Wal-Mart remains the No. 1 target for union organizers, largely because of its size. The company employs 1.7 million people worldwide and is the nation's largest private employer. Its sales totaled $285 billion in 2005, more than the combined revenue of Target, Sears and Costco.

Two national groups have sprouted up over the past nine months that have a single purpose -- to reform Wal-Mart.

One, "Wake-Up Wal-Mart," is funded by the UFCW and is run by Paul Blank, the former political director of former Democratic presidential candidate Howard Dean. In less than two months, the group has amassed 50,000 members, an army of people that can distribute information about Wal-Mart's labor practices and to oppose new stores.

Union groups have to focus on Wal-Mart because until the nation's largest retailer alters its labor practices, companies like Target will have no incentive to change, Blank added.

"No one here is excusing Target or anyone else for failing to live up to its responsibilities to its workers," Blank said. "But how do you change these very large companies? You have to go after the source of the problem, and that's still Wal-Mart."

Chris Serres is at cserres@startribune.com.





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