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Why Wal-Mart's CEO Didn't Stand By While Arkansas Attacked Gay Rights

Andrea Morales/Getty Images

Wal-Mart has recently dived into unfamiliar water as an advocate for progressive sexual politics. To understand why, look first at where its headquarters sits. A state as small as Arkansas isn't assumed to contain a polyphonic multitude; it's no California, Florida, or even, say, Dallas. A state of 3 million souls gets to play one or two notes in the public consciousness. For too long, that note was the 1957 Central High integration crisis, when the National Guard had to protect nine black students who were enrolling in an otherwise all-white public school. As Wal-Mart rose to world domination, the behemoth retailer was Arkansas's main tune. Listen closely and you'll hear the whole state softly humming along with it.

That shifted somewhat during Bill Clinton's presidency; the capital, Little Rock, owes much of its downtown transformation over the past decade to Clinton's presidential museum and the investments it attracted. Today, with Clinton at his apogee, the public impression of Arkansas and Wal-Mart are as connected as any state and corporation in America. The state has a GDP of around $124 billion; Wal-Mart's market capitalization is more than double that. Berkshire Hathaway is a more valuable company in a state (Nebraska) with a smaller economy than Arkansas's, but Warren Buffett's footprint, both physical and human, can't match Sam Walton's shadow. Wal-Mart, the largest employer in the country, has 5,167 stores in the United States. Its home state contains 131 of those, giving Arkansas a per-capita concentration of stores almost triple the national average. The stores are big, and they're everywhere.

Retail capitalism and crimson-red Christianity define Benton County, where Wal-Mart's billions have nonetheless, over the years, transformed jerkwater Bentonville into a destination for high culture and yuppie creature comforts. Case in point: Crystal Bridges, Alice Walton's brash pièce de résistance, is the largest American art museum built this century and has been made free to all via the Walmart Foundation's ducats, nestled like an alien ship in a creek valley. The tractor beam of a company approaching half a trillion dollars in annual sales has brought the trappings of the coasts to flyover country.

With that, inevitably, has come a dash of cosmopolitanism. Still, the shockwaves rebounded when the company tweeted this response to Arkansas's state legislature aiming to enable discrimination:

Notably the statement Wal-Mart offered in response to the shame burbling out of Little Rock was not purely a company statement. It was attributed directly to the CEO, Doug McMillon, who took the royal "we" in nudging Arkansas Governor Asa Hutchinson to veto the bill. Whether this is a fight McMillon has chosen to pick or whether it may reflect a broader philosophy by a traditionally conservative corporation, at day's end, may be academic. In this case, what's good for people is also likely to protect profits.

"Wal-Mart really does a lot in terms of inclusion and diversity," said Denise Natishan, a corporate recruiter who specializes in staffing the myriad offices of companies who set up offices in Bentonville just to mingle with Wal-Mart. "While this may seem like a surprise to many, it's really at the core of what Wal-Mart does. And I'm not trying to defend Wal-Mart all the time, God forbid. It's a smart business decision. You're going to exclude shoppers?"

Talent is still reluctant to move to Arkansas. I'm from there, a half-hour south of Bentonville, and can vouch that most young folk tend to look for a way out. Bringing people into that orbit from Seattle or Minneapolis requires cajoling, despite the cracking art museum and the new music venues—Wal-Mart sponsored, natch—and the modest cost of living, the kickass floating rivers, the anemic winters. "There's still a stigma," Natishan said. "There's still a, 'You're sending me to the back woods.' You still think of hillbillies and hicks." Bringing in brand managers—the brightest lights in their companies, sent to tango with the world's largest retailer—to Northwest Arkansas remains a fickle errand. "They still come kicking and screaming," Natishan told me.

When McMillon put his considerable thumb on the scale in the debate over HB 1228, a "religious freedom restoration" bill whose not-so-veiled purpose is to let a tantrum-prone subset of Christians feel morally superior to people of different sexual orientations, I thought of this difficulty the state has in appealing to outsiders.

Picking the wrong side of a civil rights fight lingers forever, as George Wallace proved in Selma. A global corporation with 2.2 million employees does not want to have to explain retrograde politics to Stanford Business grads. McMillon needs to convince bright young things that Bentonville trumps Chicago or New York City as a place to build a life.

One of the best political writers in Arkansas, John Brummett, hit on a similar thought in his column last week:

[T]here are a lot of people around the country—powerful people—who do not approve of that kind of discrimination and who will now view Arkansas as unreconstructed from 1957.

I remember when I was a boy, a strange one. I'd study an atlas that, beyond the maps, listed Census data for all the cities and counties and states. And I remember wondering why my Arkansas was the only state to lose population from 1950 to 1960.

I now understand that it happened because we discriminated famously in that decade and people around the country eschewed us, and we lost business, and our people had to flee.

Once in a while, big business bothers to notice human beings and to grasp that the better we all live, the more money we make, the happier we are. Then, the safer the world is, in point of fact, for business. It's a national disgrace that we even have to have this discussion, of deciding not to shame and shun gay people or transgendered people. But here we are, so we must. It's an even greater shame that when Indiana passed its ostensible hate speech into law, it took the likes of Apple, the NCAA, and Eli Lilly to stand up for basic human rights.

"During the Indiana conversation, Wal-Mart didn't step up," Charles Fishman, a reporter and the author of The Wal-Mart Effect, told me. "But they did about Arkansas. Wal-Mart considers itself emblematic of Arkansas, and I think Wal-Mart takes a kind of Arkansas patriotism."

In a sense, Fishman said, this is a recent development. Sam Walton, the company's founder and compass well after his death in 1992, was notoriously focused on the bottom line—why, he reasoned, would the company even formulate an opinion on matters that didn't directly affect sales? The company's behavior has changed, Fishman told me, though its reputation has followed more slowly. During the past decade its sustainability campaign has emboldened it to seek a higher public profile. There Wal-Mart, like so many companies, found the intersection of cold profit motive—investing in solar at its sprawling stores has allowed the company to slash energy costs—and a project whose public profile could only enhance the company's image.

The economic benefit of sticking up for LGBT folks has an iffier payoff; silence would have been the safe move. But since McMillon took over as CEO last year, the company already has publicly weighed in on two ugly bills in Arkansas. The first, SB 202, was passed earlier in the 2015 session; it restricts cities from passing ordinances that would make LGBT people a protected class, as Eureka Springs, a small resort town about 45 minutes from Wal-Mart's headquarters that brims with a gay-friendly hippie bonhomie, did in February. Hutchinson didn't even sign that bill. Instead, he waited long enough that it took effect without him having to sully his mitts. Similarly Wal-Mart waited until the 11th hour to raise a peep in protest. Not so on HB 1228. McMillon's statement, issued during a storm (fed, no doubt, from the whirlwind that Indiana kicked up), was clearly aimed at nudging Hutchinson to do the right thing: not become the Orval Faubus of 2015.

The New York Times followed with a solid business analysis of why Wal-Mart would be prone to diving in on this particular fight. In this publication, Brian Beutler has dissected the rhetorical maze that bilious conservative Christians have allowed to overwhelm them.

In the Arkansas fight, they're wrong. Eventually they will die. Their ideas will live, in ever-fainter forms, and will need to be swatted away over and over. Such is the promise of America. Wal-Mart, Lord help us, will outlive us all. Its executives know they can't idly watch a small and small-minded state punish people for being people and tar the company's reputation by association.

I cannot believe I am saying this: Thank goodness that Wal-Mart, on this count, here, now, is bigger than Arkansas.