But where Wal-Mart has come under deserved scrutiny from labor, community, and feminist activists for its exploitive “big-box” business model and miserly wages, Whole Foods, the world’s largest natural foods retailer, enjoys a reputation as a progressive trendsetter at the forefront of a “green lifestyle revolution” in American life. After all, a slogan like “Whole Foods, Whole Planet, Whole People” conjures up more ennobling vistas of planetary progress than, “We Sell for Less.”
Indeed, as you walk through the store, you can see that a lot of care goes into the Whole Foods ambience. This is shopping as experience, food merchandising as a gallery show. But more than the aesthetics or products of the “authentic food artisans” on display, what’s being sold here is Whole Foods itself. This is shopping for those market-branded Americans known in the “socially responsible” business community as the Lifestyles of Health and Sustainability (LOHAS) crowd. These are the millions of so-called cultural creatives who apparently want some personal development and social justice with their blue-corn tortilla chips and echinacea.
Whole Foods has been aided in its marketing by supporters of “green living” in the media and elsewhere who, at times, treat the company as more of a movement cause than the newly arrived Fortune 500 corporation it is. Seattle’s progressive Evergreen Monthly, for example, offered in its August 2004 “news” section a report on the opening of a new Whole Foods store in suburban Bellevue. The magazine’s editor informed readers who like to use reusable canvas grocery bags that they could now “follow their bliss” to Bellevue for all things natural. Other “news” included reporting that the Bellevue store, in its first weeks of operation, was already drawing “rave” reviews not only from customers, but even from corporate headquarters!
Both the New York Times Magazine and the business magazine Fast Company have offered flattering portrayals of Whole Foods CEO and founder John Mackey, who was described as something akin to a world-changing prophet of organica, a corporate “hippie” subverting the business paradigm, one heirloom tomato and chocolate enrobing station at a time. Indeed, in his July 2004 article, “The Anarchist’s Cookbook” (that would be Mackey, the “anarchist”), Fast Company’s Charles Fishman described Mackey’s approach to running Whole Foods as “equal parts Star Trek and 1970’s flashback.” This perhaps had something to do with the fact that Mackey wears hiking shorts to business meetings while charting record-breaking growth and dreams of globalization.
Fishman seemed really, really impressed by such “unique” management innovations as making everyone’s pay public information (is he not familiar with union work environments?) or that new hires require a two-thirds vote from co-workers before being permanently hired. It’s also supposed to be delightfully innovative that Whole Foods believes in “empowered” work teams, links wages to department productivity, and limits executive pay to fourteen times the average pay of store “team members” (the group once known as workers). In a 1996 piece for Fast Company, Fishman went so far as to declare the company “one of the business world’s most radical experiments in democratic capitalism.”
Whether or not it’s truly inspiring to the $8 to $13 per hour worker to know that the CEO and other top executives at Whole Foods limit their pay to fourteen rather than forty times their own pay (excluding bonuses and stock options, of course) remains to be determined. But what such an employee might think is often beside the point in the eternally cheery public-relations (that is, management-oriented) world of most “socially responsible” businesses. In fact, this is a world where irony frequently reigns over integrity, as solid “guilt-free” returns on the dollar often matter more than whether a company pays genuine living wages or, for that matter, even produces anything socially worthwhile.
The latter observation was brought home in October 2004 when environmentalist Paul Hawken and his colleagues at the Natural Capital Institute (NCI) released a less-than-flattering study of a socially responsible investment (SRI) industry apparently as savvy in its marketing as it is lacking in general accountability. The NCI report, “Socially Responsible Investing: How the SRI Industry Has Failed to Respond to People Who Want to Invest with Conscience and What Can Be Done to Change It,” shows that under the SRI banner can be found portfolio after portfolio of corporate polluters, lobbyists for business subsidies and tax breaks, labor exploiters, junk food producers, and other members of the what’s-good-for-business-is-not-necessarily-good-for-the-rest-of-us-crowd. In fact, charges Hawken, many SRI mutual funds are barely distinguishable from conventional funds.
In response, some supporters of the Social Investment Forum, an SRI industry trade group, such as board member Joe Keefe, have accused Hawken of being a purist who prefers “grand philosophical determination[s]” to the realpolitik of compromise that is at the heart of the SRI industry. Similarly, Whole Foods founder John Mackey dismisses those who criticize the advent of mega-chain retailing in the natural foods business with the rote response that his company is in the whole foods, not “holy” foods, business. Still, Whole Foods is one of the stars of the socially responsible business community, listed among the top twenty sustainable stocks in 2004 by SustainableBusiness.com, a leading Internet site for progressive investors.
Whole Foods earns wide praise for selling a higher percentage of organic foods in its stores than most supermarkets. The company’s management also travels comfortably in a kind of vaguely sixties-era “counterculture” vernacular, packaging its predatory takeover of the natural foods retail market in eco-friendly jargon that emphasizes support for a “sustainable future,” the integrity of the planet’s ecosystems, and other homages to environmental awareness. Who could object to such charmingly “holistic thinking in a conventional world?”
Actually, there is a lot to object to. A closer look at the company’s business practices and Mackey’s ideas about business and society reveals a vision not that different from a McDonald’s or a Wal-Mart. In fact, the Whole Foods business model is more or less the standard stuff of Fortune 500 ambition. This is a vision of mega-chain retailing that involves strategic swallowing up (or driving out of business) of smaller retail competitors. It is a business model that objectively complements the long-term industrialization of organics (that is, large-scale corporate farms) over small family farms. It is also a vision in which concerns about social responsibility do not necessarily apply where less publicly visible company suppliers are concerned. Subsidiaries of cigarette manufacturers (for example, Altria, owner of Kraft’s organic products) or low-wage exploiters of minority workers (such as California Bottling Co., Inc., makers of Whole Foods’s private-label water) are apparently welcome partners in this particular eco-corporate version of “the sustainable future.”
None of this should be that surprising. Mackey’s dream of a natural foods empire became possible in the late 1980s with venture capital provided by financiers Oak Investment Partners, Criterion Venture Capital Partners, and First Interstate Capital Corp., all firms with track records as profiteers in weapons manufacturing, as a Texas Observer investigation first reported in 1991. Yet marketing for socially responsible business can create the impression that there is such a thing as a clearly demarcated progressive business sector, reforming capitalism one sustainable mission statement at a time.
For the record, Mackey has not hesitated to defend McDonald’s as a contributor to the public good. Nor does he have any problem with Wal-Mart, despite its atrocious labor record or the way it drives competitors out of business and pushes suppliers overseas to pursue rock-bottom costs.
Mackey’s views on Wal-Mart became known to Hawken, author of The Ecology of Commerce, in the mid 1990s, when the Whole Foods CEO approached him about joining the Whole Foods board. The conversation was pleasant until the subject of Wal-Mart came up. Hawken mentioned that he’d been working recently to help some small towns in Vermont keep Wal-Mart out of their communities.
“What’s wrong with Wal-Mart?” asked a surprised Mackey. Hawken said that since their time was limited, maybe it would be better to ask, “What’s right about Wal-Mart?”
“Okay, what’s right about Wal-Mart?” Mackey responded.
“Nothing,” said Hawken.
“It was like a pall was cast over the table,” Hawken recalls. Mackey wasn’t interested in discussing any specific concerns about Wal-Mart, but instead recited what Hawken describes as a “pat neo-conservative libertarian argument” about how the Arkansas company’s success simply reflects the inherent wisdom of the market. For Mackey, every shopping experience at Wal-Mart was supposedly like casting a vote, a democratic choice. If the public wants Wal-Mart’s big-box discount stores, who was Hawken or anyone else to object? In fact, not only Hawken but entire communities have objected to the specter of Wal-Mart’s arrival. And Hawken has also come to object to characterizations of Whole Foods as a “socially responsible” company, criticizing its mega-chain drive to monopolize the natural foods market as disastrous to “local food webs” of small farmers and retailers.
When I spoke to Hawken, he described the natural foods business today as dominated by a “scale-up-and-sell-out” crowd of entrepreneurs. “Everybody wants to sell out to somebody who’s publicly traded and wants to consolidate earnings and sales and show 14 percent growth rates. The industry has become one dominated by people who are trying to create large businesses.”
The consequences are measurable in the steady consolidation of the natural foods economy. Since the early 1990s, Whole Foods has bought out such competitors as Bread & Circus, Fresh Fields, Bread of Life, Merchant of Vino, Nature’s Heartland, Food for Thought, Harry’s Farmers Market, Mrs. Gooch’s Natural Foods Markets, and U.K.-based Fresh & Wild. There have been buyouts of single-site neighborhood stores, such as the once thriving Oak Street Market in Evanston, Illinois. The company also owns Allegro Coffee, regional fish processing plants, and several private-label brands.
The emergence of such mega-chain retailing is simply the retail component of the larger story of corporate consolidation in the natural foods economy. Kraft, Unilever, Kellogg’s, General Mills, Nestlé, Dean Foods, Heinz, Dole, and Tyson are among multinational corporations that have entered the organic-natural foods market through acquisitions and other routes. A 2002 University of California-Davis study found that, in California, just twenty-seven growers accounted for more than half of the state’s organic sales, reported CorpWatch writer Carmelo Ruiz-Marrero.
Although most SRI firms claim to bar investments in tobacco, alcohol, gambling, or weapons manufacturing, they ignore the one issue that ought to be a defining one for anyone who claims to stand for social and economic justice—union-busting. In this, Whole Foods matches Wal-Mart in its reputation for corporate anti-unionism. It’s a hostility rooted in a management whose “core values” are intrinsically patrician and antidemocratic. The latter qualities were revealed in all their dismal hypocrisy most forcefully in 2002 when employees of the chain’s Madison, Wisconsin, store voted to unionize and join the United Food and Commercial Workers (UFCW). In a story that caught the attention of the New York Times and other media, Mackey had what might be described as a New Age temper tantrum, treating the specter of collective bargaining at one of his stores as a disaster of almost unspeakable proportions.
There were good reasons for the organizing drive. As the Whole Foods Workers Organizing Committee stated in an open letter in May 2002, rebutting the company’s claims of worker “empowerment” and explaining their reasons for mounting the organizing effort:
"The ridiculously high turnover rate, wages that are lower than the industry standard, pervasive lack of respect, constant understaffing, absence of a legally-binding grievance procedure, and other poor and unfair labor practices—all of which have led to widespread low morale—highlight the simple fact that workers ultimately have no say in the terms and conditions of their employment at any Whole Foods Market—not just Madison. Workers are not recognized or appreciated for their contributions. Instead, Whole Foods relies on worker apathy and lack of investment in their jobs to keep turnover high, and for the most part, wages, benefits, and other working conditions poor. This environment should be unacceptable for any workplace."
The business press loves the classic tale of the modest entrepreneur who turns the once humble storefront into a reigning corporate giant, and it’s not inclined to debunk inspirational folklore with impolite examinations of such issues as labor exploitation. The real story of the company’s rise to prominence trades not only on the high prices Whole Foods garners for the growing organics market but, like Wal-Mart, on an economic climate defined for more than twenty years by deteriorating work conditions for the service sector economy.
In fact, the labor environment has devolved to such an extent that Fortune magazine’s annual list of the “100 Best Companies to Work For” routinely includes firms with yearly turnover rates among full-time staff that are close to a quarter or more of the work force. What should we expect from a list in which companies can nominate themselves or that has at times included such rogues of social irresponsibility as R.J. Reynolds Tobacco, Enron, and even Wal-Mart among the great work cultures?
Companies such as Whole Foods or other non-union chain competitors are paying many of their hourly employees what in late 1960s dollars would be equivalent to the minimum wage or below. In 2002, when the Madison workers voted to join the UFCW, starting hourly wages at the store were in the $7.50 per hour range. Today, in Midwest region stores they are in the $9 per hour range.
The best anyone can say is that such wages are “competitive.” And that they are. Approximately a quarter of the U.S. work force now earns less than $9.04 an hour, Business Week reports (May 31, 2004). That translates into a bountiful full-time salary of about $18,000 a year. It also translates for many workers with families to support into life on the edge of officially defined poverty.
Paradoxically, although Mackey boasts that the disparity between executive pay and the pay of floor-level workers is comparatively less at Whole Foods than elsewhere, the Madison organizing campaign brought into relief the erratic wage differentials that tend to result in a “team system” that ties a portion of each department team’s monthly income to fluctuations in sales and productivity. “The goal is to have as few people working as possible, doing as much work as possible,” says Debbie Rasmussen, a former juice and coffee bar staffer and one of the leaders of the organizing campaign. Combined with lack of a structured seniority system, such work cultures easily become breeding grounds for favoritism and wage inequities within and from store to store. They also just tend to pay less than their unionized industry counterparts.
Indeed, the organizing drive was an object lesson in the uphill battle workers face in today’s economy. Mackey’s argument against the Madison workers was based on his assertion that because Whole Foods emphasizes a “we’re all in this together” philosophy, there was no need for unionization. “I’ve put forward a model that is cooperative,” he declared to a class of Columbia University business students, while unions advocate an “adversarial” relationship out of place in the Whole Foods culture. In Madison, union activist Rasmussen and her co-worker Julie Thayer (also an organizing committee member) learned firsthand what the company’s “we’re all in this together” philosophy really meant when, several months after the pro-union vote, they were both fired for a specious “violation” of store policy. Rather than throw it out, Rasmussen had given an incorrectly made latte drink a customer didn’t want to Thayer.
Conveniently, the dismissals came in the midst of the war of attrition that Whole Foods management was waging to undermine unionization. After the union vote, company lawyers stalled for months on contract negotiations, claiming they were “too busy” to pencil in a meeting. When negotiations finally began, management rejected all union proposals while refusing to bring any of its own to the table. Inside the store, managers portrayed the arrival of the union as a “tragedy” manipulated by “outside organizers” from the UFCW.
The months of delayed negotiations by the company eventually segued, according to union supporters, into an effort by a small group of new employees, tacitly encouraged by managers and the lure of quick promotions, to organize a union decertification petition. But the UFCW soon charged that store managers were illegally involved in the petition drive, causing the National Labor Relations Board to delay a new vote on unionization. The company responded to the UFCW charges by announcing its decision to cease recognition of the union, based on the petitioners’ signatures, thus sidestepping the decertification election. The union was now a closed chapter in Madison, declared Whole Foods management.
In August 2004, Whole Foods accepted an NLRB ruling that allowed for continued formal recognition of the union, as well as resolution of some back pay grievances. But it was now nearly a year later, and the company’s steadfast refusal to negotiate seriously with the UFCW had paid off. The single union local in the Whole Foods chain (in a university town with a young, transitory part-time student work force) was barely recognizable as a union. Several weeks later, the NLRB issued another ruling regarding the petition’s misconduct charges, ruling in the company’s favor. The union had now legally ceased to exist at Whole Foods.
Consider what that free market has produced. If wages had kept pace with productivity increases since 1968, most working Americans today would be earning close to $30 an hour. The minimum wage would be closer to $19 an hour, not $5.15 an hour. Yet it is a paradox of our age that many so-called socially responsible corporations can celebrate record sales growth and profits, boast about how they’re making the world “a better place,” and there is barely a murmur of the fact that they’re paying the bulk of their floor-level “team members” salaries in the roughly $20,000 a year range. Where is the public discussion of these issues?
“‘Sustaining’ McDonald’s requires a simple unsustainable formula,” wrote Hawken in an earlier exchange on socially responsible investing in Green Money Journal (March-April 2003). “Cheap food plus cheap non-unionized labor plus deceptive advertising equals high profits.” Hawken’s critique took aim at the Domini Social Equities Fund’s holdings in McDonald’s stock. It could be applied equally to Whole Foods, substituting only the reference to high priced (natural) food for cheap (junk) food. Were it not for the gloss of green marketing, the false vision of sustainability associated with the Whole Foods business model would be seen for what it is: the metamorphosis of the organic foods movement into another seized property of concentrated corporate power.
What such “green” corporate capitalism represents is old-fashioned avarice neatly repackaged now for a post-consumer world of “shop your values” sensitivities. But while the partisans of “conscious commerce” marvel at how the “lifestyles of health and sustainability” market is evolving from a “hippie granola” thing to a “sexy cool” thing in the eyes of the buying public, the more happening reality for millions of working, largely stock-market-free Americans is job insecurity, long work hours, debt, and fears for the future.
If “sustainability” as a social vision is to be more than a marketing banner for liberal corporations, it will have to find its way into activism and confrontation with the concentrated corporate power that now acts as the greatest brake on society’s democratic future. The old dream of socialists and early union pioneers remains a good one: Society should be guided in its essentials by human needs, not corporate profits. Our economy needs fewer millionaire and mega-chain “success” stories and more economic democracy. Our economy needs more employee power.
I left the store to explore the city’s hilly, unfamiliar streets. The rain clouds had cleared, and some sun was now shining on this too-gray town. The fresh air also cleared my head of the disquieting thought my stroll through Whole Foods had stirred, of how once lively values of environmental activism, protest, and vision have been gradually transformed for commercial gain into so much shallow “shop your values” hucksterism.
It’s a bleak commentary on the current social climate when a management team that spews some of the most backward anti-union rhetoric this side of the last 150 years is still considered socially responsible by liberal investors and others spellbound by any company that combines talk of all things sustainable with record profits. In 1998, when the United Farm Workers (UFW), an early campaigner against the dangers of pesticides in food production, asked grocery retailers to endorse a pledge to support humane work conditions for California’s strawberry workers, Whole Foods notoriously refused, making clear it was a matter of principle that the company would not cooperate with the UFW or any union.
Such retrograde thinking under the environmental banner is a disgrace. It might be a simple step toward progress if those who support the organic foods movement or the concept of socially responsible business returned to values some of their grandparents once held. These are the values that say crossing a union picket line or scabbing on social justice for the sake of a dollar is a shameful act. Instead of being a side issue, union-busting should be a cut-in-stone marker of which side of the social responsibility equation a company has chosen.
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