CHICAGO, May 24 (UPI) -- Whether Wal-Mart should be allowed to build two stores in predominately minority Chicago neighborhoods was the talk of black talk radio two days before a scheduled City Council vote on zoning changes to permit the discount stores.
The main debate was whether it's better for working-class people to have low-paying jobs that average $18,750 a year than no jobs at all. Wal-Mart's average yearly wage is just $25 above the $18,725 a year the government says a family of four needs to avoid poverty.
Hourly workers at Wal-Mart average $9.64 an hour, one-third of what some unionized workers are paid for similar work. Many work part time, and more than half of Wal-Mart's 1.2 million employees have no healthcare, according to Business Week.
Workers at regional distribution centers are paid slightly better.
A national report released Monday by Good Jobs First, a Washington-based non-profit, at a news conference by a coalition of Chicago community and public-interest groups, suggested aldermen should reject both proposed Wal-Mart stores. Voters in Inglewood, Calif., said no to Wal-Mart in an April referendum, 60 percent to 39 percent.
The study details how the global retailer received more than $1 billion in economic development subsidies from state and local governments to build 160 U.S. stores and 84 of 91 distribution centers in 35 states as it expanded from a regional Arkansas-based discount chain to No. 1 on the Fortune 500 list of corporations.
The town of Olney, Ill., handed out $48 million in subsidies to get a Wal-Mart regional distribution center.
"In some areas they are desperate," said Greg LeRoy, executive director of Good Jobs First. "Some of the distribution centers for example are in rural areas without much investment with a relatively high unemployment rate.
"That a company with $9 billion in profits can wrest job subsidies from state and local governments shows that the candy-store game has gotten out of control," he said. "The subsidies to Wal-Mart are particularly troubling, given that the company uses taxpayer dollars to create jobs that tend to be poverty-wage, part-time and lacking in adequate healthcare benefits."
The 1.3-million-member United Food and Commercial Workers union says allowing Wal-Mart to set up shop in Chicago will undermine wages and benefits of its 40,000 members at retail groceries.
"A key justification for using taxpayer dollars for corporate subsidies is the idea that a large project will expand overall business activity in an area," the report said. "Many analysts argue, however, that new retail stores do little more than take revenues away from existing merchants and may put them out of business and leave their workers unemployed. It's quite possible that a new Wal-Mart store will destroy as many (or more) jobs than it creates -- and the Wal-Mart jobs may pay less, meaning that they do less to stimulate the local economy."
Wal-Mart officials have been actively challenging the arguments of unions and activists, seeking grass-roots support among parents at inner-city high schools, churches and community centers. Alderman Emma Mitts, whose West Side ward has one of the city's highest jobless rates, defends Wal-Mart's planned 11-acre development at an empty factory site as a potential economic engine for the blighted area.
Unions fear what they call "The Wal-Mart Effect."
They warn the coming of non-union Wal-Marts will lead to the destruction of small businesses and the existing tax base where Wal-Mart locates its stores because local businesses can't compete with the chain's "low everyday prices" and pay their employees decent wages and full benefits.
Critics say the world's largest retailer produces downward pressure on wages because of its anti-union policy and substandard employee benefits.
The economic ripple effects are upstream in China and other foreign countries that are major Wal-Mart suppliers, not downstream where the low wages are, said LeRoy.
The crime-ridden Austin neighborhood has an annual average household income of $33,000 and is dotted with fast-foot restaurants, corner groceries and dollar discount stores.
Mitts says minority and low-income citizens already work and shop at Wal-Mart -- they just have to leave their neighborhoods and travel miles to do it. "If our money is good to spend in the suburbs, it's good to spend here," Mitts told the Chicago Tribune.
Wal-Mart has had stores in suburbs for several years. The two Chicago stores would be the first built inside the city limits. Retail industry analysts say Wal-Mart must penetrate urban areas if it is to keep growing.
Wal-Mart has received $145.7 million in tax and other subsidies in Illinois, according to Good Jobs First.
Chicago Jobs With Justice, a coalition of community groups, wants Wal-Mart to sign a precedent-setting covenant to help community-development efforts. They want Wal-Mart to open accounts at community banks and promise to hire minority contractors to help build the stores.
Wal-Mart does not want to sign any agreement that would jeopardize its competitiveness.
A Supercenter proposed for a 50-acre site in the South Side Chatham neighborhood would create about 250 jobs but could hurt area stores, supermarkets and groceries.
Wal-Mart received subsidies for more than 90 percent of its huge warehouses, the study found. Distribution centers received an average subsidy of $7.4 million; retail outlets averaged $2.8 million in subsidies.
The subsidies included free or reduced-price land, infrastructure like access roads and water/sewer lines, tax increment financing (a tax break for new development), property-tax abatement, state corporate-tax credits, sales-tax rebates or exemptions, enterprise-zone status, job training and recruitment funds, tax-exempt industrial revenue bond financing and outright cash grants.
Wal-Mart is not accused of doing anything illegal. Enterprise zones were created to lure businesses to economically depressed areas, and many retail competitors like Kmart and Target have similar labor policies and received government subsidies.
A Wal-Mart spokeswoman told The New York Times the 3,586-store chain had paid more than $4 billion in local property taxes and $192 million in taxes to local governments. Wal-Mart's 530 Sam's Club warehouse stores and about 70 Neighborhood Markets were not part of the study. Wal-Mart also has 1,499 stores outside the United States.
"We think the point they make about sales-tax collection is a bit of a red herring because there's so much documented history of Wal-Mart and other 'big box' retailers simply diverting sales from mature downtowns and old business districts to the new facility. But you're just moving people's buying power around. Having more places to shop doesn't give people more buying power and therefore doesn't create more sales and therefore more sales taxes," said Philip Mattera, research director of Good Jobs First.
"Wal-Mart presents itself as an entrepreneurial success story, yet it has made extensive use of tax breaks, free land, cash grants and other forms of public assistance," he said.
--
(Please send comments to [email protected].)
