Big Biz Still For GOP

Why can't corporate America end its perverse love affair with Republican politicians?PHOTOS
What They Got Away With
A look at the CEOs who walk off with mountains of money

Three articles from the Wall Street Journalshow the strange myopia of businesses and business groups when it comes to politics. One article detailed how big retailers (Home Depot, Wal-Mart, Lowe's, Target) are warning employees about the possibility that a Democratic sweep could give unions the upper hand (translation: vote Republican!). A second describes how the U.S. Chamber of Commerce is mounting a huge $35 million campaign—twice the amount it spent in 2006 Congressional races—to support "almost exclusively Republicans in contested Senate races." And Federal Express CEO Fred Smith gave an interview to the editorial page in which he endorsed Sen. John McCain: "Because I agree with him on trade, taxes, energy and health care."
Let's take each in turn. Big retailers such as Home Depot, Wal-Mart, and Target, the Journal reports, are freaked out that Obama and a Democratic Congress would pass the Employee Free Choice Act, "which would do away with secret balloting and allow unions to form if a majority of employees sign cards favoring unionization." Now, don't get me wrong. EFCA may be a disaster for retailers. But of all the woes facing companies—the credit crunch, crappy growth, a disastrous job market, a lost decade in the stock market—unions are the least of their problems. So far this year, legions of retailers have gone bankrupt—Steve & Barrys, Linens'n'Things, the Ponderosa and Bonanza restaurant chains—victims of excessively optimistic projections, poor expansion choices, mismanagement, and horrific capital structures. Unions had nothing to do with their failure.
Retailers that survive face a bigger challenge. We've just concluded an economic expansion in which median incomes failed to rise. The people who shop at Wal-Mart, Home Depot, and Target are basically making the same amount of money they were in 1999. There are a host of reasons why wages failed to rise in this expansion, among them: globalization, outsourcing, and a decline in the educational attainment of workers. But unions aren't one of them. What's more, long-term stock charts put the lie to the binary concept—Republican, anti-big-labor good, Democrat, pro-big-labor bad. Check out these charts of Home Depot (up about five fold in the Clinton years, down about 60 percent in the Bush years), or Wal-Mart (boom in the Clinton years and drift in the Bush years, or Target (ditto).
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Now, with consumer confidence at a record low, credit difficult to come by, and demand shrinking, retailers are facing a bleak outlook. And they're worried about the prospect of greater unionization at some point in the future?
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