Can Wal-Mart Get Any Bigger?

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Sam Walton used to visit all his stores using a propeller-driven plane. Now it takes a fleet of 20 jets just to keep management in touch. Its headquarters force, 10,000 strong, lately includes a group of artists whose sole function is to design logos and labels and fulfill other graphic needs. That's quite an indulgence for a company so comically cheap that it still puts tin coin boxes next to its coffee pots, demanding 10¢ a pop.

Wal-Mart's Supercenters are able to underprice their supermarket competitors about 15%, according to analyst Kalish, in part because they are more efficient but also because the discount giant uses nonunion labor. Wal-Mart matches the union pay rate in union markets, but the average wage at Wal-Mart nationally is less than $10 an hour before bonuses.

The two most frequent complaints made by Wal-Mart employees to TIME--low wages and morale-killing store managers--recently factored into a labor case the company lost in Oregon. A jury found Wal-Mart guilty of requiring associates to work unpaid overtime--even locking them inside stores. The company plans to appeal the verdict and says workers were locked into stores only late at night, for security reasons. Some 40 other lawsuits are pending, most of which similarly accuse Wal-Mart of requiring hourly employees to work "off the clock." Since September 2001, Wal-Mart also has been the defendant in 28 complaints brought by the National Labor Relations Board (NLRB) over alleged antiunion activities, including firing employees suspected of being friendly to organized labor. "The company is dragging wages and benefit levels back to 19th century standards," says John Sweeney, president of the AFL-CIO, which is sponsoring an organizing effort at the company's stores.

That campaign has borne little fruit, in part because Wal-Mart's wages are competitive with those paid by rivals such as Kmart and Target. Wal-Mart offers health benefits, and its stock plan has been a wealth builder for many lower-level employees, at least until the market crashed. Still, Wal-Mart is regarded as offering ample opportunities for advancement. Charlyn Jarrells Porter, who heads the Wal-Mart division that deals with personnel issues, says two-thirds of its managers come from the ranks of store associates, which is what Wal-Mart calls all employees. This year the company will enroll 5,500 people in its management-training program. "If the jobs are so bad," she asks," why are so many people working for Wal-Mart?" The company denies any of the wrongdoing alleged in the lawsuits and NLRB complaints and insists that managers who violate policy are disciplined. Being viewed as a good place to work is vital to Wal-Mart, because it will need to add some 800,000 employees in the U.S. alone over the next five years.