Eight months into their union, ModCloth and Walmart are showing signs of an unhappy marriage.
The 300 employees of ModCloth’s Pittsburgh warehouse are the focus of a public advocacy campaign that asks customers not to buy ModCloth products until parent firm Walmart offers workers better health insurance. That strikes a chord with ModCloth’s customer base of women once inspired by the indie clothing company’s origin of celebrating individuality, diversity and body positivity.
Walmart workers, with support of ModCloth employees, launched the #ByeModCloth campaign on Cyber Monday, says Daniel Schlademan, co-director of OUR Walmart, the Organization United for Respect at Walmart. More than 100,000 people have signed a petition seeking fair treatment of women and Walmart employees in the campaign also centered on health insurance, he says.
“Our hope is that the company will see that being an honorable employer will get these customers and more back,” says Schlademan.
Erica Jones, a Walmart spokeswoman, says the company “put a lot of thought into creating a total package, including both compensation and benefits, that offers more than what we’ve had in the past. This includes new benefits that were previously unavailable to associates at our acquired brands, such as a 401(k) plan with a six percent company match, performance bonuses, an associate stock purchase plan and, in some cases, equity opportunities.”
With annual revenue of $486 billion, Walmart employs 2.3 million people worldwide, paying full-time U.S. workers an average hourly wage of $13.38 and part-timers, $10.58.
Walmart has acquired online brands Bonobos, Hayneedle, Jet.com and ModCloth, which was founded in 2002 by two Carnegie Mellon University students. Proposed health care packages for the e-commerce employees will increase their out-of-pocket medical costs in 2018 through higher monthly premiums and deductibles.
“You could say this is happening to everybody, but does it have to happen?” says Schlademan. “Walmart is the largest private employer in the country. It dominates our economy. And Walmart is the pacesetter” for retailers.
Says Jones: “We understand that in creating consistency across the business, certain benefits changed. We regularly benchmark with other companies to ensure we remain competitive, and we are confident that our overall offering will continue to make Walmart, ModCloth and our full family of brands an attractive place to work for people interested in redefining the future of retail.”
ModCloth employees have been paying biweekly premiums ranging from $6.65 for an individual to $144 to cover a spouse and children. They paid no deductible and a small co-pay for doctor visits. Under the 2018 plan Walmart is offering Pittsburgh employees — a UPMC HMO — biweekly premiums would be $74.70 for an individual and $311.60 for family coverage.
Walmart also offers high-deductible, consumer-driven plans, where employees pay medical costs through a health savings account. That means some ModCloth workers might pay thousands of dollars a year, and Walmart would contribute several hundred dollars to the account to offset those costs.
Many customers were outraged when ModCloth co-founder Susan Gregg Koger announced the company’s sale in March on ModCloth’s blog. She praised its growth and accomplishments, saying, “Together, we’ve built an incredible culture and community,” but noted that ModCloth had recent layoffs and said joining Walmart would “give us the necessary resources and support that we need as a business to grow.”
Schlademan says many ModCloth employees and customers dislike Walmart’s business practices that have led to gender discrimination lawsuits and frequent criticism regarding low pay. Walmart associates aren’t unionized but OUR Walmart, formed in 2011, reaches 4,000 of the 5,000 stores in all 50 states, helping people with problems.
Public pressure certainly can effect change, Schlademan says.
“We changed Walmart’s pregnancy policy. We’ve won thousands of victories at the store level, and we raised Walmart’s wages,” says Schlademan.
In 2015, Walmart CEO Doug McMillon announced changes in hiring, training and compensation, starting with a $9 an hour minimum wage, noting, “Our associates make the difference.”
The #ByeModCloth campaign will continue through the holiday shopping season, or until the company makes changes, says Schlademan. OUR Walmart reaches out to potential ModCloth customers through Facebook, its partners’ email lists, and word of mouth.
“There’s no magic timeline,” he says. “We’re seeing that ModCloth customers are learning, they’re getting involved and signing the pledge and talking with other customers. Our sense is that this will continue to grow.”