Wal-Mart may be evolving into a model corporate citizen, says a retired dean of the Twin Cities business community.
Chuck Denny is a well-regarded "servant leader" who led ADC Telecommunications over two decades until his 1991 retirement. He analyzed America's largest and sometimes-controversial retailer as part of a yearlong research fellowship at the Humphrey Institute at the University of Minnesota. In his 49-page analysis, he also concludes that business should focus on business and not health insurance.
"I started off with a bias against Wal-Mart," conceded Denny. "But the savings Wal-Mart accrues for its shoppers, mostly the less-paid portion of our society, are significant. And they pay as well as Target. And they have improved their medical benefits [for employees]."
Wal-Mart has been both hailed and derided over the years as a commercial miracle and big-box monster.
Labor unions have decried its anti-union stance and low wages, sales of hundreds of billions annually in cheap, imported goods. Small-town merchants have claimed the huge retailer put them at jeopardy, if not out of business.
The national average wage for retail workers in 2006 was $11.51 and Denny found that Wal-Mart paid slightly below average, partly due to the preponderance of stores in the lower-paying South. Yet Denny, in his review of independent research, found that the average Wal-Mart shopping family saved about $2,300 annually in its low-price, no-frills stores.
Liberal economist Robert Reich, a Clinton Cabinet secretary, says Wal-Mart has played hardball but mostly by the rules in building clout among suppliers, cutting prices and importing -- even as it directed low-wage employees to government-subsidized health plans. If we don't like that, we should change the rules, Reich said.
Recently, Wal-Mart expanded health insurance coverage, improved employee relations, soared as an environmental/energy-conservation leader and otherwise responded to critics. Denny expects the company "will become a world leader" in categories that will improve its business and reputation.
Denny also concluded that it may be time to remove health care as a business obligation. He notes that dwindling ranks of employers provide health insurance and only half of America's private-sector workers are covered by medical benefits, disability insurance or a pension. Meanwhile, government provides medical insurance for the elderly, regardless of wealth, through Medicare, and to the poor through Medicaid. Denny observes there is less obligation to the struggling working class, and that's wrong.
"There was ample reward in the system even when tax rates were higher for Chuck Denny," he said. "The rewards have been immense for successful business people and the professionals. The [after-inflation] income of those at $50,000 or below has not increased one whit in 25 years."
He says society breaks faith with working folks without insurance who end up at emergency rooms for their basic medical care or chased by hospital bill collectors. We should move toward universal health care, perhaps financed by payroll taxes and delivered by business, nonprofits and government, he said. After all, he added, America pays twice as much of its economic output for a hodgepodge system that doesn't deliver better health than other industrial countries.
Denny, a successful CEO who also has criticized swelling executive compensation, concludes that most companies are well-run and ethical. The energetic 77-year-old also tutors working-poor adults trying to earn their GEDs.
Denny's study, titled "The Corporation in American Society," is available at www.hhh.umn.edu/pdf/HillFellowship2008.pdf
Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com
