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Airbags

Wal-Marts are undoubtedly the most popular retailers in the United States. Using a blunt strategy of volume, volume, volume, they have become insanely successful and have changed the face of American retail forever. Their enormous stores create hundreds of jobs in the communities they settle in, and provide valuable work experience to the young and temporary relief to the unemployed.

Which would all be really great if they weren't also evil.

And not evil in the vague, G-8 protesters with the black kerchiefs on their faces waving placards sense of the word. But almost objectively, truly evil. Remember when they were caught taking out life insurance policies on the sickly seniors they were hiring to be greeters?

Now they are trying to branch out from the suburbs and finally move into Chicago, where they stand to make profits hand over fist and completely crush the local complexes of shops that define Chicago neighborhoods. They are getting an assist from 37th Ward Alderman Emma Mitts has agitated for the opening of a Wal-Mart near North Avenue and Kilpatrick on the West Side for some time now. The 37th is one of the most economically depressed wards in the city, desperate for jobs and tax revenue to bolster city services and economic vitality. Beggars can't be choosers, so Ms. Mitts was willing to overlook Wal-Mart's possible negative long-term effects on the area and push hard for an ordinance allowing one to open.

More recently, the Chicago Federation of Labor and several community groups, including ACORN, have taken the initiative in stopping another Wal-Mart location from popping up in the South Side 21st Ward, near 83rd and Stewart. Wal-Mart's proposed location in the South Side 21st Ward was to come up for a vote on Thursday, March 25, but after a huge contingent of community and labor activists showed up, they shelved the vote for another date -- which means the Council does not have to announce when they will be voting for it.

Now, to say Chicagoans have an attachment to their neighborhood businesses is like saying the Ayatollah Khoemeni had an attachment to the Qur'an. Chicagoans are fanatical in their devotion to the local places to buy everything from food to socks to car parts to liquor to music. The "City of Neighborhoods" is called that not only because there are so many neighborhoods, but because in a sense it is barely a city but rather just a confederation of neighborhoods, sort of like Switzerland without the cheese. Although this attachment is quite endearing, it doesn't necessarily translate to economic realities.

Community groups, labor unions, and even some aldermen are up in arms over the move, citing Wal-Mart's ability to crush competition and compromise union membership in the city. This is not merely a cultural issue, the way the outcries over Starbucks is more a cultural issue than anything else -- it is an economic issue. Although a neighborhood does stand to benefit initially from the tax revenue and job-creating strength of the Big Blue Box, there is quite an argument to be made that in fact the presence of the retailer would eventually be detrimental to a neighborhood's economic vitality.

Wal-Mart has made union-busting an art, resisting all attempts at unionization with a Carnegiean passion. In June of 2000, ten butchers at a Wal-Mart voted 7-3 to join the United Food and Commercial Workers. Wal-Mart promptly eliminated the meat-cutting departments in all of its stores nationwide, forcing the UFCW to take them to court, a case they eventually won -- although Wal-Mart promised to appeal. Wal-Mart's unfair labor practices cannot be understated when considering a possible move to Chicago. By killing small businesses around it, Wal-Mart scores a double victory: it eliminates competition while simultaneously eradicating the local job market, allowing them to keep their wages artificially low (although this is really not necessary, since they could afford to pay more if they needed to -- but why bother?).

Wal-Mart's infiltration is not akin to that of Starbucks. The effects of Starbucks' ubiquity varies from city to city, but it provides a stark contrast to Wal-Mart in Chicago. Chicago did not have a real coffee culture when other cities like San Francisco, Seattle and New York City did in the early '90s, although there were a few beloved local coffee shops. So, in essence, designer coffee was a luxury good and independent coffee shops were essentially specialty shops with a very specific focus and narrow clientele. When Starbucks moved in, they did indeed displace many independent coffee shops, but that wasn't necessarily a bad thing. Starbucks is a notoriously excellent employer, offering more than competitive wages, good benefits, valuable job experience and a solid record of community commitment.

Wal-Mart provides a wide range of general merchandise in vast quantities. This would seriously sap the ability of small business owners to carve an economic niche for themselves. Because of our city's notorious Fourth-Street-Main-Street design, this could cause entire commercial strips to fall into disuse and become blighted. Not only that, but Wal-Mart is a less-than-ideal employer, to say the least. Because the company's profit margins rely solely on volume (this is what allows them to charge ridiculously low prices), they have no room for the higher structural costs that would come with competitive pay scales, serviceable health benefits and especially a collective bargaining agreement.

With small business choked out, no amount of tax revenue can guarantee outside investment in a neighborhood. Ikea does not displace local business, because there is sure to be a very limited number of designer furniture retailers in a given neighborhood. Rather, it creates a new market and attracts satellite business because it is a unique shopping destination (which is why an Ikea should be put somewhere like Englewood rather than the South Loop, but that's another story). A Wal-Mart offers nothing new. There are already places to buy clothes, videos, candy, headlights, tires, cheap jewelry, music, pillows and baby strollers in every neighborhood. So there is no "unique destination" being created, at least after the novelty has worn off. Rather, an important part of the market has simply been replaced and concentrated in the hands of one firm. If variety is the spice of life, then whatever neighborhood Wal-Mart infests will become a rice cake. And nobody's lining up around the corner to eat rice cakes.

There is another side to this story, and it is exactly what Ms. Mitts is arguing: Is there a line of people waiting to bring jobs to the 37th? When was the last time you drove or took the bus out there to do some window shopping? Can the people of the 37th, desperate for work and the tax revenue necessary to rebuild the community afford to stand on principle against Wal-Mart?

It is wrong for anybody to tell the unemployed people of the 37th, many of whom do not own cars and have little access to good public transportation, that they mustn't be afforded a chance to feed themselves and their families because Wal-Mart is a mean, mean company. Unless we can do something more than tell them to "keep their eyes on the sparrows," as the preachers say, we shouldn't stand in the way of a chance to create jobs and get revenue.

But we can do something more. Opposition to Wal-Mart is much more than a cause-celebre. Wal-Mart represents a very real threat to the economic vitality of neighborhoods. It will choke out not just one type of small business but almost every retailer. It will improve the job market, sure -- but those workers will not be properly treated, especially because beggars cannot be choosers. As the examples of Maytag and Brachs candy show, when one employer dominates a localized job market a threat exists to economic stability. Suppose Wal-Mart experiences some kind of fiscal downturn and needs to close some locations (not likely, but job cutting, hiring freezes, and shift limits are not at all uncommon). Which Wal-Mart will they target (no pun intended)? The one in Naperville, or the one in North Austin? And when that location closes or has staff or hours cut back, that neighborhood is back to square one.

The City does have the ability to remove the need for a Wal-Mart and save small business as well as create a fair, competitive labor market. It does have the ability to offer initiatives to create jobs and bring tax revenue to places like the 37th Ward and 21st Ward. Property-tax redistribution is a major one, but also the little things, like a re-allotment of police officer beats. Sweeping tax incentives for developers, TIF zones, overhauls of public transportation, and the expansion of access to federal and state programs providing for the capital improvement of real estate are all viable, though admittedly complicated, options.

Wal-Mart is not the answer. It is a virus. It is dangerous. Those who read this column regularly know that I often come down on the side of sensible market solutions to social and economic problems. Opposition to a Wal-Mart opening in the city is not merely a platitude, not a generic opposition to big business or a sentimental attachment to local joints.

It is opposition to a stop-gap solution that will put the already precarious livelihoods of many city neighborhoods into the stranglehold of a company that prides itself on sucking everything and everyone involved with it dry. Sure, a job is a job -- but not if it kills all else.

At Lady Di's Tap near Kinzie and Laramie, I sat next to a man, a recently unemployed maintenance worker. He asked me if I knew of any places hiring near my apartment; I told him I didn't. He asked where he could look for a warehouse job, and I told him to try the Warehouse District, natch, but he could sense the reservation in my voice.

"Where are the jobs at, man?"

I shrugged. "Hell if I know. Downtown?"

"Naw," he answered, nodding at the bartender for another drink, "they're all stuck at the bottom, man. At the very fucking bottom."

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Comments

Andrew / March 31, 2004 10:40 AM

Unfortunately, it looks like Daley's given it his blessing, so Wal-Mart, here we come.

Here's another article on just how bad Wal-Mart is, from Fast Company: The Wal-Mart You Don't Know.

Pete / March 31, 2004 10:58 AM

Wal-Mart would bring in jobs, but they would be low-wage, non-union jobs without affordable health insurance. (Read Barbara Ehrenreich's Nickel and Dimed for a very sobering look at being a Wal-Mart employee.) Is this really worth the economic devastation to be wreaked on the rest of the neighborhood?

amyc / March 31, 2004 11:19 AM

Wal-Mart only creates jobs in the short term. As the store squeezes out its competition over a few years, areas with Wal-Marts tend to lose three jobs for every two created by that company. There is absolutely nothing good about Wal-Mart. Relying on them for economic rejuvenation is even dumber over the long term than relying on gambling.

Pete / April 1, 2004 11:45 AM

Patronizing Wal-Mart also helps finance the Walton family's continuing assault on public education, as explained in this article in Chicago's very own In These Times.

Ramsin / April 1, 2004 5:21 PM

A stirring of conscience among our 50 aldermen:

"Aldermen say 'union, yes' and delay Wal-Mart Stores."

Pete / April 2, 2004 9:06 AM

Generous, well-timed contributions from the Walton Family Foundation would probably change their minds.

disgruntle / April 2, 2004 12:48 PM

I bet every single person who has commented here has never ever been near the neighborhood where they are planning to build the walmarts. I just moved from foster and n. sheridan to 43rd and MLK drive. And I wish there was walmart or target close by. Now, I dont particularly like walmart but people who live on the southside and westside have to travel either to the loop or the northside to buy certain items. Plus those mom and pop shops mark up the retail price of the product by at least 20% to 30%. I really wish you people keep ideology in your neighborhood and out of others.

amyc / April 2, 2004 1:27 PM

True enough that lower-income areas usually lack decent grocery and department stores, and that needs to be remedied. But the fact that any area that gets a Wal-Mart ends up economically worse off in the long run means nothing to you?

Kevin Brancato / April 2, 2004 2:24 PM

WM is not evil, not dangerous, not a virus, and it does not kill all else.

If you want to believe such things, go ahead. But if you want me to believe you, you have to present more than one dubious case of worker mistreatment (some of which is unavoidable with a corporation that has over 1.4 million employees in the US).

There are many issues where you could have convinced me, if you had thorough data to back up your claims. These are covered in several points:

1) There is absolutely no evidenece that WM has lower total compensation compared to mom and pop stores--especially in inner cities. It's wages are lower compared to unionized grocers, but so are the skill and experience levels of its employees.

2) There is no evidence that WM has ever lowered wages after it has driven out competition (either grocery stores or mom and pops).

3) There is no evidence that, in the short-term or in the long-run, a new WM devastates downtown areas in cities or rural locations. Areas are not worse off because a WM enters and stays.

4) ~99% of all actions taken by WM to prevent unions from forming in its stores are perfectly legal; the other 1% are contested. Many people decry WM's practices not because such methods are immoral or illegal, but because they assume WM has no legal right to defend itself.

5) Opposition to new WMs comes from a small very energetic minority; in several cases, democratic majorities have had to use referrenda to force their elitist city councils to let in WM.

6) Also, I fail to see what is wrong about taking out an insurance policy on employees and paying all the premiums, when this is legal, as it is almost everywhere. Still, if politicians would simplify the corporate tax structure, this wouldn't be worthwhile for companies to do.

FYI--I do not shop at WM. But then again, I'm not poor or unemployed, and can afford the luxury of posting a comment to a blog.

Craig / April 2, 2004 2:30 PM

Excellent article, Ramsin.

At a recent open-forum debate (they call it Fight Club, but that's beside the point) sponsored by the local product designer professional organization, the subject turned to Wal*Mart and it's stranglehold on not only it's employees and the community but also those who provide the products. By demanding cheaper and cheaper products more and more corners are cut to meet the buyer's demands and ultimately the crappiest product is delivered. So Wal-Mart may "pass the savings" on to the customer, but they also pass on sub-par products.

At this debate an interesting story was told by a woman who had family living in a small rural town in North Carolina. A few years ago she visited and there was a new Wal-Mart. Of course it was the same old story: Wal-Mart entered, stomped out small business, and wrecked the local economy. When the woman returned a few years later she was suprised to see the Wal-Mart had gone out of business itself-- turns out the town was too poor to even afford their "falling prices".

Andrew / April 2, 2004 4:03 PM

Here's a story originally in LA Weekly, about how Wal-Mart tricked an Inglewood, CA, resident into participating in their fight to get a store opened in that town. The fight there is at least as contentious as here, but at least in California the public gets to vote on it directly in the form of a ballot initiative.

Ramsin / April 2, 2004 10:19 PM

I'd like to thank everybody for taking the time to comment, first of all. I'd like to point out also that there are only 3 WM's in major urban markets: two in Philadelphia (which opened recently and are smaller than most) and one very recently in Los Angeles. Zero in Atlanta, zero in New York, zero in Chicago, zero in Detroit, zero in St. Louis, zero in Boston.

Disgruntle--I work in the 37th Ward, but not in an office, in the "field," so I spend about eight to nine hours a day talking to people, visiting community organizations, shopping, and going to bars in areas all over the 37th Ward. That is why I decided to write this column. There is a shopping center at Kedzie and Chicago and another one at Cicero and North Avenue. Either of these could provide at least most of the products of a Wal-Mart. There would be more difficulty further south in Lawndale, but there is a huge shopping center at Kedzie and Roosevelt that would suffice there.

Mr. Brancato- You make valid points. If you read my past columns you'll see that I generally fall on the side of steady, sensible economic solutions that create jobs and bring in tax revenue. Trying to paint me or the other commenters here as Ivory Tower radicals is unfair and wholly incorrect.

Your points are valid insofar as suburban Wal*Marts are concerned. And to this point there are only suburban or rural Wal*Marts; and none in major, first-tier cities, at least in ultra-depressed areas. The effects a WM has on a suburb are different, because generally the suburbs they go in are not like the 37th Ward.

That is why there is "no evidence" as you say that WM will have a devastating economic effect--but it hasn't been tried in a true urban setting. Open a WM in Naperville or even Hillside, and you aren't putting it in a place where people are desperate for any kind of work, and you don't choke out all local competition, because usually a WM will displace only one, possibly two, similar large retailers (like a KMart or Target).

WM is renown for unfair labor practices. You argue that WM has a right to "protect itself" from unionization, and I think that reveals your bias. It isn't up to the corporation--it is up to the workers. The Department of Labor has very strict rules (or did, before W) about this. If you don't believe me, go into a WM and start asking the cashier a bunch of union-related questions. They will alert a manager and you'll be escorted out of the store.

It is an unfair labor practice to harass, intimidate, or otherwise retard the ability of workers to unionize. And unfair labor practices are against the law.

As for the life insurance policies, it may not be illegal, but it is certainly not ethical, especially because almost all of the people upon whom life insurance policies were taken out were non-essential employees (this wasn't a sports team taking out an insurance policy on their star player--these were usually the greeters) and also the employees usually weren't aware that when they were signing all their employment paperwork, they were signing a life-insurance policy.

You say that there is no evidence that WM would lower wages when they drive out competition, which is true. However, their wages are so low that would be almost impossible. The point stands that they could do so, because they completely trash the localized job market.

Furthermore, specialized zoning has enabled Wal-Mart to get preferntial tax assessments--as well as the fact that they always own their property. Therefore, as they squeeze out not only "mom-and-pops" as you call them, but the satellites of those businesses and even larger retailers, tax revenue can begin to decline (or stay steady, rather than increase) because those businesses usually pay a higher rate per square foot.

There is also evidence to suggest that, like Casinos, WalMart will "capture" its customers--meaning they won't window shop to nearby businesses, limiting the amount of satellite business.

In a dense urban setting--especially Chicago's, which has its 4th-Street-Main-Street design, meaning every fourth street is usually a commercial strip--WM will attract minimal out-of-area business. Will people in the 31st, 26th, or 24th Ward, much less from other regions of the city (ie, North and South Sides) travel to WM to buy socks and VCRs? Highly unlikely. As I said in the article, WM will mainly displace business, not create a unique shopping destination. It is not Ikea. Therefore, what tax revenue it does provide will be at least moderately offset by the tax revenue lost. Furthermore, the jobs it creates will be low-paid and unprotected (and, worse, unprotectable).

I make a point in the article of saying that nobody has the right to tell the poor to not get a job on principle. And I really do believe that and have argued for it in the past, especially in regards to places like Starbucks, Ikea, even Home Depot. But those are different animals. WM will have deteriorating effect on the neighborhood of the 37th Ward. There are already shopping options, just not concentrated ones. There is the Mad-Pal Plaza (admittedly, not a wonderful place, but there is a bustling shopping scene), there is the Cicero-North shopping district, and a few other smaller strips, as well.

Your bolded statement is true insofar as WM has overwhelmingly gone into areas that are already economically viable, if not solidly middle class or even upper-middle-class. And in rural areas they tend not to have a destructive effect because the economic of widely-spread rural reas is completely different from that of densely packed urban areas, especially ones with such a peculiar layout like Chicago.

WM's are usually protested by minorities--not necessarily small ones--but, once again, they are only now starting to move into urban markets. I find it highly dubious to say that the city councils refusing them are "elitest." I know Chicago's politicians pretty well, and I've never read about or met one that hasn't welcomed a big company willing to create jobs and revenue with open arms. Also, Chicago's union density is much higher than many other cities, so it is also unique in that sense.

WM will decimate either of those neighborhoods. The chance at some low-paid jobs and a marginally higher tax rate is not worth it, it simply isn't.

I know the West Side. I know they need jobs, desperately. But we can find better ways to create them, and we must.

Kevin Brancato / April 3, 2004 5:58 AM

Ramsin,

Thank you for your reply. I don't doubt your general inclination towards market solutions, although this is the only article of yours I have read. I replied extensively because your writing is forceful and persuasive, and because I think your wrong in this case.

 

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