February 28, 2002
CHICAGO (March 1)–Neighborhood activists, labor unions and taxpayers’ watchdog groups here are reacting with skepticism and suspicion following an announcement by the nation’s largest and richest business corporation that it wants an $18 million subsidy from Chicago taxpayers to help it pay for a new store in a reviving inner-city neighborhood.
Wal-Mart Stores, Inc., which currently has no outlets inside the Chicago city limits, claimed it needed the subsidy because the 6.6-acre site it has selected on Chicago’s Near South Side comes with higher real-estate taxes and greater site-preparation expenses than the cheaper suburban and rural land on which most of the chain’s previous stores have been built.
Myron Louik, a consultant assisting Wal-Mart in developing the property,was quoted in the February 21 Chicago Sun-Times as saying that if a city subsidy is not forthcoming, “I could almost guarantee it won’t happen.”
But citizen activists retorted that a deep-pockets company like Wal-Mart should be able to build and operate the store without government assistance.
“They make a gazillion dollars every year and we’re supposed to pay them for the privilege of messing up our neighborhood?–said Barbara Lynne, executive director of the Near South Side Planning Board in the same edition of the newspaper. Another activist, Greater South Loop Ass’n. VP Steve Ward, suggested that if the city was going to subsidize commercial development it should try to bring in a more upscale retailer such as Ikea or Target.
“Many of our members have expressed a lot of concern about Wal-Mart, andI haven’theard any positive comments yet,” Ward said.
Although each of the public-interest groups criticized the Wal-Mart project from a different perspective, one element was common to all the critiques–the idea the Wal-Mart business practices may in some ways be unfair.
Ms. Lynne, for example, may have been over-dramatic in her statement that Wal-Mart makes “a gazillion dollars every year,” but she is essentially correct in suggesting the company is too rich to deserve a government subsidy. On February 19 Wal-Mart’s Annual Report disclosed 2001 profits of $6.7 billion, up 6 percent over the previous year, on sales of $217.8 billion, up 14 per cent over 2000.
“The sales figure nudged Wal-Mart past Exxon Mobil Corp. as the No. 1 company by revenue,” said Sun-Times reporters Fran Spielman and David Roeder. In fact, Wal-Mart’s sales and earnings make it one of the richest business corporations in the world.
Mr. Ward’s criticism implied unfairness of another sort–that Wal-Mart was exploiting fears that a new retail venture in the area might be subject to excessive risk because the area until recently was known as a “bad neighborhood.” In reality, the South Loop area long Roosevelt Road between the Chicago River and the Dan Ryan Expressway has been undergoing an urban renaissance in recent years, with loft conversions and expansionof the nearby University of Illinois campus bringing new middle-class residents into the area. Other businesses, including a new Dominick’s supermarket at Roosevelt and Canal, have flourished without subsidies.
But the most severe and persistent criticism of Wal-Mart has come from the United Food and Commercial Workers Union, which for years has charged the giant chain with using unfair tactics to prevent its workers from joining a labor union and engaging in collective bargaining.
Wal-Mart has made no secret of its anti-union stance since the company opened its first store in 1962,” writes Ron Powell, president of UFCW Local No. 881 and vice president of the international union. “Nearly forty years have passed and today Wal-Mart is among the largest employers in the nation. Yet bare-bones benefits combined with meager wages are the norm–not the exception–at Wal-Mart.
“Wal-Mart will do almost anything to stop its employees from organizing,” Powell said, noting that when meat-cutters at the Wal-Mart store in Jacksonville, Tex., voted to join the UFCW, Wal-Mart simply stopped selling meat at that location and sacked all of its meat-department employees. The company’s anti-union policy recently was extended to store construction, with a new store in downstate Highland, Ill., being built by non-union labor. Powell says the construction job was riddled with problems, delays and work that has been described as “shoddy” and “dangerous.”
The entrance of a large, non-union chain selling groceries, as Wal-Mart now does, could be particularly destablizing in a market such as Chicago, where the major supermarket chains have long been unionized. The UFCW fears that discounting pressure from Wal-Mart could force the union shops into wage givebacks or other concessions.
Despite its low-wage policy, Powell says, Wal-Mart’s lower wage costs seldom are shared with customers.
“They often charge consumers the same as union stores for groceries, pay their employees lower wages and offer fewer benefits, then send the profits back to Bentonville, Ark.,” he says. “It is little wonder that four of the ten richest people in America are heirs to the Wal-Mart fortune.”
Powell also notes that Wal-Mart’s labor practices are directly in conflict with the patriotic image the company paints of itself in its flag-waving television commercials.
“Why, despite years of airing patriotically themed commercials, does the chain remain the largest importer of foreign goods in the entire nation,” he asks in the union newsletter, alleging as well that some of Wal-Mart’s imported merchandise is purchased from sweatshops that employ child labor and in some cases “forced labor, with employees paid “poverty-level wages…that would never be tolerated on U.S. soil.”
Powell says the UFCW plans to counter the threat with a strong organizing drive at any Wal-Mart opened in Chicago. The union also says it will conduct an information campaign to let shoppers know the truth behind Wal-Mart’s labor practices.
Even 2nd Ward Alderman Madeleine Haithcock, who supports some level of city subsidy to help launch the project, says she won’t approve it unless Wal-Mart agrees to pay employees there the same wages as their counterparts earn in union stores.
