Critics Unfairly Target Walmart for Bad Labor Relations, Low Pay: CSO

Walmart defends its record on labor relations and is willing to engage with critics who give the company bad marks, Kathleen McLaughlin, executive vice president-chief sustainability officer, told an environmental, social and corporate governance webinar Thursday on the retailer's “human capital.” Walmart produced the webinar as what it said was the first in a series on ESG issues.

Walmart's labor relations scores “tend to vary pretty widely, depending on the methodology and what people are focused on,” said McLaughlin. With ESG ratings “instruments” that key on policy “outcomes” and best practices, “we do pretty well.” She conceded Walmart runs into relative trouble with methodologies that measure labor relations performance through “controversies.”

Those methodologies are “challenging for a large company in general, and for us in particular,” said McLaughlin. “The controversy methodology tends to go out and scrape media mentions” that depict companies in “an unfavorable light,” she said. “So a larger company, just by virtue of its scale, is going to have a lot of mentions,” regardless of what’s happening on the ground, she said.

Walmart also finds those analyses problematic when they're “susceptible to manipulation by campaigners,” said McLaughlin. “There are lots of groups out there that have goals around social outcomes or environmental outcomes, many of which we completely agree with. But their approach is to campaign, and it’s easier and more beneficial to target a big company because you’ll get the media mentions, you’ll get the press.” Campaigns often will “gin up allegations that are false” to generate news coverage, “and then that shows right up in a controversy score,” she said.

On investors’ suggestions that Walmart should “sit down with these guys,” McLaughlin said: “We will, but litigating every single article that’s ever been written is going to take some time, so we’re working through that.”

Walmart discloses statistics on its workforce composition every six months and analyzes them for “three-year trends,” said McLaughlin. People of color were 47% of its workforce and were employed in 26% of its C-suite positions at the July 31 end of its FY 2022 first half, virtually unchanged from a year earlier, she said. Though women held 34% of executive positions, up a point from a year earlier, overall female employment at Walmart declined a point to 54%, she said.

The company is probing the decline in “women’s participation in our workforce” to see if it’s part of a national trend, and whether that might be COVID-19-related, said McLaughlin. “I haven’t seen stats for the country as a whole.” Walmart “sees signs of success” and is “making progress” in diversifying its workforce, she said. “In society in general, we all have a long way to go, and Walmart is no exception.”

Walmart became a “bridge employer for many people” during COVID-19 “to get them through,” said McLaughlin. “People who lost their jobs as other businesses closed could come to Walmart. We hired about 500,000 people last year in the midst of the pandemic. That was a really important source of work for many people, and many of those folks ended up staying.”

Critics often target Walmart for low starting wages, and much of that criticism is unfounded, said McLaughlin. “Our goal is to be competitive for specific roles in specific markets,” and sometimes higher, she said. The $12 hourly starting wage “that people often talk about for Walmart” as its average pay is the lowest for any Walmart job in the U.S., she said. Walmart has increased that starting wage 65% since 2015, while the $7.25 federal minimum wage “hasn’t budged,” she said. Walmart’s average hourly wage is $16.40 “across our whole fleet,” she said. “We do think the floor needs to go up in the United States. We’ve said that many times.”