Tuesday, June 10, 2008

Mr Mayor: Knock Down This Wal-Mart Wall

A recent visit to a West Side-based Wal-Mart finds it brimming with customers shopping for food, clothes and any other goods the purveyor of low, low prices can hawk. The Arkansas-based retailing behemoth opened its first Chicago store in 2006 and by any measure--corporate sales, community impact or customer satisfaction—it’s been a success.
Eager to replicate a winning strategy, Wal-Mart says it’s willing and able to invest up to $460 million into the local economy by building at least 10 Chicago neighborhood stores. Like its Austin area superstore, each outlet would become a font for hundreds of new community jobs and hefty sales tax receipts.
In a slowing economy, the prospect of more urban employment and greater tax revenues should sound pretty good. But it isn’t enough to win over a rabid Wal-Mart-hating coalition of aldermen, union leaders, and community activists, who’ve politically pressured City Hall into slamming the door on the chain’s Chicago expansion. In May, city officials rejected Wal-Mart’s bid to open a South Side store, effectively telling the chain to get lost.
This is a huge, pig-headed mistake. To fix it, Mayor Richard M. Daley needs to muster his political courage by pressing opponents to end their anti-Wal-Mart campaign, even if it means ticking off labor while the city competes for the 2016 Olympics. The mayor better get moving before this plum economic development opportunity forever slips away into the welcoming embrace of nearby suburbs.
I’ll concede it’s not easy to roll out the welcome mat for Wal-Mart.
Founder Sam Walton’s quest to provide customers with deep discounts on every item in stock has a dark side. There’s merit to activist claims that Wal-Mart’s nationwide expansion, coupled with its cold-blooded operating efficiencies, has relentlessly driven many small rivals out of business and has perpetuated the demise of some rural business districts. Organized labor rightly takes aim at Wal-Mart for low-paying front line jobs and spotty benefits, especially its resistance to making health care insurance more readily accessible to all its store employees.
But there’s another hard truth: Capping Wal-Mart’s Chicago expansion won’t solve these problems but fencing Wal-Mart off will needlessly deprive communities of many vital services and job opportunities.
For example, supermarkets with pharmacies are increasingly rare in many city neighborhoods but each Wal-Mart includes ample space dedicated to grocery aisles, while its in-store pharmacies sell 350 generic prescriptions for $4 per 30-day supply. Moreover, Wal-Mart’s money centers provide basic bill paying and cash checking at prices that are much lower than those charged by currency exchanges.
Meanwhile there’s a crying need for large employers in the minority and blue collar communities, which have lost thousands of stable, good-paying manufacturing positions. On average, Wal-Mart pays store employees about $12 per hour, which lags superstore rival Costco Wholesale Corp.’s estimated $18 per hour wage, but is also better than some other superstore chains, say retail experts and community leaders.
Despite union protestations, it’s pretty clear that Wal-Mart jobs are in demand. Austin community’s Wal-Mart hired 443 people and the number of applicants far exceeded available openings, according to a Wal-Mart spokesman. (When the chain opened a store in Evergreen Park in 2006, it had 2,500 applications for 325 jobs.)What’s more, the general public also stands to benefit from a significant Wal-Mart expansion.
Last year, the West Side Wal-Mart paid $7 million in local, state and other government taxes. Times that amount by 10 Chicago stores and Wal-Mart’s suddenly pumping a lot of money into Mayor Daley’s cash-strapped city coffers.
So why isn’t the mayor on board and using his influence to support Wal-Mart? The answer: Labor Peace and the 2016 Olympics bid.
Apparently, Mayor Daley doesn’t want a reprise of 2006’s vicious “big box” battle. Daley vetoed a proposed ordinance calling for superstore chains to pay $10 an hour plus $3 in benefits, incurring the wrath of the AFL-CIO and other unions that favored the measure and backed Daley opponents in a subsequent City Council election. Daley doesn’t want another embarrassing imbroglio with labor while Chicago is in the running to host the Olympics.
Here’s hoping Daley changes his tune and starts using his ample clout and political acumen to win over opponents of Wal-Mart.
Mr. Mayor, winning the Olympics will transform your city into a global player but allowing Wal-Mart to expand will let more Chicago neighborhoods go for the gold.

(FYI: This post is my column that was slated for BW Chicago magazine, which recently ceased publication.)

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