US: Teflon Target

Publisher Name: 
Star Tribune

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.

AMP Section Name:Retail & Mega-Stores
  • 184 Labor