One, Two, Three, Four…We don’t want your Superstore
Wal-Mart has made billions selling toaster ovens and polo shirts for pennies less than its competitors; after all, the company motto is “Always low prices.” And who wouldn’t want cheaper goods? Yet some communities are fighting to keep the retail giant out of their neighborhoods, claiming that Wal-Mart’s low prices could damage their quality of life. In Vermont, Wal-Mart’s opponents argue that the state’s economy and culture would be damaged by the retailer’s presence. In California, opponents say the company has cost taxpayers millions by shortchanging its employees on healthcare. Here is a roundup of some instances of community backlash against Wal-Mart and the company’s response.
SUPERSTORE VS. SMALL BUSINESS
Activists regularly argue that competition from Wal-Mart destroys small businesses, particularly the “mom and pop” stores that they say make their communities unique. This criticism has become even more vocal since Wal-Mart began moving into additional retail areas, such as groceries, opticals and flowers. In an article in the Los Angeles Times, one small businesswoman, Bonnie Neisius, owner of a UPS franchise in Las Vegas, Nev., described how she has watched surrounding businesses close and her own business decline since Wal-Mart moved in down the road. “I’m probably down 45 percent,” Neisius said. “I just don’t get the foot traffic anymore.”
More recently, the retailer has come under attack in Vermont, where preservationists say the character, culture and economy of the entire state is under threat from an influx of superstores, particularly Wal-Mart. In May 2004, the National Trust for Historic Preservation put Vermont on its “endangered” list amid fears that Wal-Mart was planning a big expansion in the state. Wal-Mart already has four stores in Vermont; three of them are moderate-sized buildings — 75,000 to 80,000 square-feet — that have been designed with the input of the community and are situated in the heart of downtown areas. The fourth, built in the town of Williston in January 1997, was the first large, 150,000 square-foot Wal-Mart store in Vermont. Not long after, Williston saw other “big-box” stores — Home Depot, Toys “R” Us and Bed Bath and Beyond — move in next door.
Richard Moe, president of the trust, told the New York Times, “We know the effects that these superstores have. They tend to suck the economic and social life out of these downtowns, many of which whither and die as a result. I think it will drastically affect the character of Vermont, which I think is quite unique.”
Mia Masten, a spokeswoman for Wal-Mart, told the Times that Wal-Mart often tries to work with communities and is not “just coming in and bulldozing our way in.” “We’ve also heard from a lot of Vermonters who want a Wal-Mart closer to their communities,” Ms. Masten said, “And customers have told us they like a larger store. It enhances their shopping experience that there’s a wider selection and the aisles are larger.”
In St. Albans, Vt., where Wal-Mart has announced plans to build in 2005, some local residents are excited. “I thought it was wonderful news,” David Giroux, a lifelong resident, told The Burlington Free Press. “You can’t buy a set of sheets in this town. We’ve needed this for a while now.”
WAL-MART AND THE “HEALTH” OF COMMUNITIES
Another charge that local communities have made against Wal-Mart is that the company provides inadequate benefits and that local taxpayers are forced to pick up the burden. Critics say Wal-Mart’s healthcare benefits are often so poor and the coverage is so expensive that many employees chose to go without it and instead get their coverage through state programs like Medicaid and or hospital charity.
A November 2004 New York Times article cites a study in Georgia that found 10,000 children of Wal-Mart employees were in the state’s healthcare program at a cost to taxpayers of $10 million a year. The same article describes a hospital in North Carolina that found that 31 percent of its 1,900 patients were Wal-Mart employees on Medicaid, and an additional 16 percent were Wal-Mart employees with no insurance at all. And in California, a study released in August 2004 by researchers at the University of California at Berkeley determined that the healthcare expenses of uninsured Wal-Mart employees were costing the already economically-strapped state $32 million a year in taxpayer funds. Wal-Mart has disputed findings that the company encourages its employees to apply for public assistance and called the California study “biased,” noting that the researchers at Berkeley did not contact the company for facts and statistics.
Wal-Mart officials claim that 90 percent of its employees are insured either through the company’s policies or elsewhere. Wal-Mart spokeswoman Sarah Clark told FRONTLINE that over 500,000 of the company’s 1.2 million U.S. employees are insured by Wal-Mart and that the company insures a total of 900,000 employees and their dependents. According to Clark, 29 percent of Wal-Mart associates are ineligible for coverage. Stringent eligibility requirements and the employee turnover rate may account for that 29 percent: Full-time employees must work for six months before they can be covered, and part-time employees must work for at least two years. Wal-Mart’s labor turnover rate is 44 percent per year — close to the retail industry average.
Wal-Mart’s healthcare premiums are also high for the average associate’s salary. Currently, Wal-Mart’s employees must pay 33 percent of their healthcare costs: $30.50 a month for an individual or between $132.50 and $230.50 a month for families. Wal-Mart argues that its associates are a different demographic base than most companies’ employees. “One of the most significant facts is that about two-thirds of Wal-Mart associates are senior citizens, college students or second income providers, which also means that many of our associates receive their healthcare coverage from a parent, spouse or even Medicare,” Wal-Mart spokeswoman Clark wrote in an e-mail to FRONTLINE. But Wal-Mart spokesperson Mona Williams admitted to the Los Angeles Times that Wal-Mart might not be the right job for a family breadwinner: “Wal-Mart is a great match for a lot of people,” she said. “But if you are the sole provider for your family and do not have the time or the skills to move up the ladder, them maybe it’s not the right place for you.”
Another argument from Wal-Mart’s critics is that the company encourages its employees to apply for public assistance programs. Jon Lehman, a former Wal-Mart manager now working to unionize Wal-Mart stores, tells FRONTLINE that he actively encouraged and assisted his staff with applying for public assistance. “I thought I was doing a good thing at the time, he said. “Now, when I look back, I think, ‘Wow, that’s incredibly poor that the company doesn’t care enough about its workers to pay them a living wage and to help them with their medical costs, to pay their medical expenses and things like that’.”
Wal-Mart’s McAdam told FRONTLINE, “The accusation that we somehow direct our people to public assistance is just not true.” “… When we have people in need, we’re going to reach out to them and try to help them,” he said. “… But we are not trying to offload our burden on somebody else.” McAdam argued that Wal-Mart’s benefits for its employees is similar to the industry standard: “I don’t accept the premise that we are different from any other business in how we offer and provide health care coverage for the people that work for us,” McAdam said. “We do offer a substantial and comprehensive benefits package to both full and part-time people with a reasonable waiting period for those who are in transition into our company.” He reiterated that 90 percent of Wal-Mart’s employees are covered “under one healthcare coverage or another,” and concluded, “…Is there someone in our work force that’s taking public assistance? Probably. But I don’t think that’s any different than any other business.”
In November 2004, activists in California went to the ballot with Proposition 72, a statewide initiative that would require big employers, such as Wal-Mart, to offer adequate, affordable healthcare coverage to all of their employees or else pay into a state insurance fund. Wal-Mart campaigned strongly against Proposition 72 and stated, “Wal-Mart believes companies should have the opportunity to provide benefit choices that both they and their employees can afford.” On Nov. 2, 2004, California voters rejected the proposed initiative 50.9 percent to 49.1 percent.
THE COMMUNITIES DECIDE
In 2002, Wal-Mart unveiled plans to introduce 40 new Wal-Mart Supercenters in California. It also announced it was planning a combination Supercenter and Sam’s Club to be located in the Los Angeles suburb of Inglewood, a middle-income, predominantly black community. “We looked at Inglewood … there were not a lot of discount retail options,” Wal-Mart Vice President Bob McAdam told FRONTLINE. “… We thought it would be a great location for a store that would serve people close to home.” Wal-Mart argued the project would bring 1,000 jobs to an area that had been economically depressed in recent years, but local groups vigorously lobbied the city council to stop the project, claiming that it would be a net-loss for the community.
Citing independent studies by the Orange County Business Council and the San Diego Taxpayers Association, Inglewood activists argued that if Wal-Mart entered its community, good-paying union jobs would be replaced by low-wage, low-benefit Wal-Mart jobs. McAdam strongly disagrees with these claims. “I can look where we actually have caused jobs to be created in addition to the ones we bring,” he argued, citing a location in Panorama City, Calif., that has been revitalized since Wal-Mart moved in. “When we came into that location, the mall that we’re associated with there was basically boarded up and closed,” McAdams said. “Every storefront is full today with little business that are adjacent to the Wal-Mart store.”
But the Los Angeles City Council refused to consider Wal-Mart’s proposal, and instead, adopted an emergency ordinance specifically designed to keep out large retailers. The ordinance requires that before a large-scale building project can be approved, planners would have to examine how the proposed superstore would affect the community. Undeterred, Wal-Mart garnered 9,250 signatures to take its proposal directly to Inglewood’s voters in a referendum. McAdam explained Wal-Mart’s decision to FRONTLINE: “It’s really important to remember that the council specifically said they wouldn’t consider [the project]…. Our belief was that [an initiative] was the only way the voters were going to have their say.”
Elsewhere in California, a dozen other communities like Oakland and Contra Costa County have passed zoning laws to keep out retailers like Wal-Mart. In Bakersfield, homeowners and union workers successfully fought Wal-Mart’s building plans by arguing that the superstore would destroy local business. But in other urban areas, Wal-Mart has been allowed in — even invited. In May 2004, after intense lobbying by both supporters and opponents of the superstore, Chicago’s city council voted to allow Wal-Mart to build one of its discount stores on the West Side. And in Derby, Vt., 1,500 citizens have signed a letter to CEO Lee Scott asking the retailer to open a store in their community.
When Inglewood voters went to the polls in April 2004, they voted to oppose Wal-Mart’s initiative by an overwhelming margin of 60.6 percent to 39.3 percent. Though that decision may keep Wal-Mart out of Inglewood, it will not stop the company’s growth elsewhere, McAdam says: “The results were certainly not what we had hoped for, but we don’t view Inglewood as some major setback. … Just while everybody was talking about Inglewood, a number of other Wal-Mart Supercenter projects were being approved elsewhere in the state.”
The Fight Against Wal-Mart
Wal-Mart in NYC
|Wal-Mart sees New York City as the last retail frontier to conquer. It tried opening its first NYC store in Rego Park, Queens but that effort failed due to pressure from the Neighborhood Retail Alliance, labor unions, community groups and other concerned stakeholders. Now Wal-Mart has Staten Island in its crosshairs, announcing two planned stores, one on the North Shore in Mariner’s Harbor and another on the South Shore in Richmond Valley. Gohere for additional articles about Wal-Mart in NYC.|
Affects on Small Business
|When Wal-Mart enters a town undeniably harms small and medium-sized entrepreneurs. Not only does the company sell numerous types of goods (a list that is sure to grow), it often prices them below cost in order to drive out local competition. We believe that independent storeowners are vital to the economic wellbeing and quality of life of all neighborhoods and that their potential destruction by Wal-Mart needs to be countered. For more information, click here to view our Wal-Mart and Small Business fact sheet orhere to view relevant articles.|
|Many community around the country are concerned by Wal-Mart’s tremendous traffic. Adding to the worry is that Wal-Mart and its developers oftenunderplay the negative potential of adding thousands of cars to an area and propose solutions that don’t work. In Staten Island, where Wal-Mart is looking to build its first NYC store, the company claims that traffic won’t be a problem even though the area is already saturated with retail and its road infrastructure is abysmal. In fact, an Alliance-commissioned study by Brian Kethcam conclusively demonstrates that a Wal-Mart on the South Shore on of Staten Island would be a traffic nightmare.|
|For press releases dealing with all the issues surrounding Wal-Mart’s attempted entry into New York City. View and print these positions papers here.|
|The Neighborhood Retail Alliance has crafted a number of memoranda dealing with the issue of Wal-Mart’s desired entry into New York City. View and print these positions papers here.|
Articles about Wal-Mart
|As the largest retailer in the world, Wal-Mart receives tremendous media coverage. We have broken the stories into various subsections: Crime,Eminent Domain, Environment, General, Health Care, Labor Practices,Lawsuits, New York City, Small Business, Subsidies, Women. For the general page click here.|
Fact Sheets and Studies
|Download our Wal-Mart and Small Business fact sheet. It is a concise compilation of anti-Wal-Mart arguments from a small business perspective. For a list of other pertinent studies on Wal-Mart go here.|
Blog (Rallies, Meetings, Forums, etc…)
|Check out our blog that features events, news, and commentary concerning Wal-Mart, other Neighborhood Retail Alliance campaigns and small business in general.|
Health Care Security Act
|The New York City Health Care Security Act is a city-level legislative initiative designed to level the playing field for responsible businesses, expand access to health care and ease the taxpayer burden. The bill would extend health coverage to tens of thousands of uninsured working New Yorkers and provide security to hundreds of thousands more who now receive coverage through their employer. Its passage would either discourage Wal-Mart from entering New York City or force it act responsibly. Check out New York Jobs with Justice for more information.|
|We have compiled a series of links to anti-Wal-Mart / pro-small business websites, blogs and books.|
DSA devotes a considerable part of its low-wage economy organizing activity to the efforts of the labor movement to organize Wal-Mart workers. Our members and supporters sometimes question why we put so much emphasis on this one corporation. The reason, as the following article shows, is that Wal-Mart shapes the low-wage economy to a greater extent than any other corporation in the United States.
A pdf version of this article, suitable for printing as a double sided leaflet, can be obtained by clicking here.
The Wal-Mart Revolution
The revolutionary promise of the 20th century was that workers would be paid well enough to buy the goods they produced– creating an upward spiral of prosperity. But a new model based on lowering living standards is taking hold world wide.
In the United States Wal-Mart is more than just a participant in the low-wage economy: it is the most important single beneficiary of that economy. It uses its economic and political power to extend the scope of the low- wage economy and threatens to extend its business model into other sectors of the economy, undermining the wages of still more workers.
Wal-Mart is a modern retailing empire with 3550 outlets in the United States and plans for many more. It also has stores in at least ten countries and plans to open 120 additional stores in international markets. In barely ten years it has gained nearly 15 percent of the retail grocery sales in the United States. According to CEO Lee Scott, Wal-Mart seeks a 30% share of grocery sales and any other product line it carries. It is one of the giants of the “service sector” of our economy. Its $244.6 billion in sales in 2002* made up well over 2% of the total U.S. Gross Domestic Product (GDP), making it the world’s biggest company (based on revenues). It is the 19th largest economy in the world. It is our nation’s largest employer, with 1.3 million employees worldwide, with plans to hire 800,000 more over the next five years. Its stock is one of the thirty in the Dow Jones Average. Wal-Mart generates large chunks of the sales of major corporations, which reinforces its influence and impact on the wages of workers employed by others.
Wal-Mart is a symbol of the American economy of the 21st century, which stands in stark contrast to the symbol of the old economy: the automobile companies. Its executives no doubt believe the same thing those automobile executives of the 1950s believed when they said, “If it’s good for General Motors, it must be good for the country.” Wal-Mart is every bit the revolutionary influence that the Ford Motor Company was, but it portends a gloomy future rather than the new age of production that was Henry Ford’s vision.
In fact Wal-Mart is the perfect example of what is wrong with the new low-wage economy and its effects on our society.
Let’s start with wages. Henry Ford wanted automobile workers to be able to buy the cars his company produced. Although profoundly anti-union, he made it a point to pay wages that were above the prevailing wage of the time.
Wal-Mart does precisely the opposite. Its wage and benefit programs are designed to keep costs down and, in the process, because of its economic influence and market share, it drives down prevailing wage rates in the communities in which it operates. Wal-Mart has recently demanded cost data from suppliers so it can show them how to reduce costs. For many of them, this means lowering labor costs to reduce prices of goods sold on Wal-Mart shelves. Wal-Mart’s purchasing power even drives down manufacturing wages in the developing world.
Wal-Mart’s strategy is to use part time workers to reduce its benefit costs. “Associates” – as the company workers are dubbed – are told that if they work 34 (recently increased from 28) hours a week then they are “full time workers”. According to Forbes, the self-styled capitalist tool, employees at Wal-Mart currently earn an average hourly wage of $7.50-20% to 30% less than unionized workers at Target and Kmart. The typical Wal-Mart employee earns $18,000 and isn’t eligible for or cannot afford health benefits.
Wal-Mart has employed large numbers of women associates that it has paid less than their male counterparts. By maintaining these discriminatory practices Wal-Mart has reinforced its low wage structure and improved its bottom line. In 2001 a class-action lawsuit was filed challenging Wal-Mart’s gender discrimination. Up to 1.5 million women workers could win damages.
Unlike Henry Ford, Wal-Mart seems unconcerned that its own employees are unable to afford the products that it sells. A recent analysis shows that a family of three with a single-parent breadwinner making a representative wage at the local Wal-Mart could not provide the basic necessities for that family based on an “adequate but austere” standardized budget for central Kansas – even with the employee discount!
Wal-Mart uses a predatory business model based on securing a competitive advantage from the low wages it pays employees and from its larger inventory. Typically, Mom-and-Pop local businesses are forced from local markets first, soon followed by less efficient larger competitors. Once the competitors are driven out, Wal-Mart slowly raises prices over a twelve to eighteen month period so consumers won’t really notice.
Opposition to Wal-Mart is often based on its anti-competitive business practices. Communities in which there is opposition to Wal-Mart or other large-scale retailers sometimes try to enact special zoning ordinances limiting the size of stores. These tactics can be effective, especially if the community is well organized. Increasingly, however, Wal-Mart’s superior financial resources are the key factor. They outspent a highly organized citizens group in Portage, MI, by 10-1 on a referendum. Wal-Mart routinely overwhelms citizens groups or simply moves to the next town and gets a higher bid to have the store built there instead. Wal-Mart is most concerned with preventing the unionization of its employees precisely because that is what offers the most far-reaching challenge to its corporate practices.
Democratic Socialists of America believes that it is imperative to force Wal-Mart to change. We are working along with many others to challenge the low-wage economy that increasingly dominates the lives of most working people. Ultimately the American economy cannot be sustained when driven mainly by the purchasing power of a relatively small group of well-off consumers. Only an economy in which the vast majority of workers earn enough to do more than just get by can bring prosperity to all Americans. It is impossible to envision that kind of economy as long as Wal-Mart is able to engage in business-as-usual.
We have no illusions that we can remake the economy without Wal-Mart. Instead we, and the broad progressive community, must change the basic political and economic conditions that allow Wal-Mart to ignore the well-being of its workers and the communities in which it operates.
The key to real change is to drive up the wages of Wal-Mart workers. Unionizing Wal-Mart workers will lead to higher wages and better benefits for all employees, will drive up wages in local communities, and will change the culture of the institution.
The United Food and Commercial Workers union is engaged in a major campaign to organize Wal-Mart workers. We fully support that campaign and we support legislative efforts to level the playing field. Labor law reform requiring employers to recognize a union as soon as a majority of workers have signed cards and preventing employers from dragging out bargaining is necessary to enable workers to better secure their rights.
Government can also act to raise and enforce minimum wage legislation. Living wage legislation that forces employers to provide prevailing local wages that include the cost of health care can also be enacted. Living wage legislation in many communities is limited to the employers providing municipal services, but we believe such legislation can be expanded to cover the employees of companies like Wal-Mart that benefit from tax breaks provided in many economic development packages.
Employers have always resisted unionization. But in fact our economy has always provided more for most Americans when large portions of the work force were unionized and could buy what their neighbors produced. This is one of the reasons why the loss of so many union jobs in the manufacturing sector is distressing. All of us must work to change the labor laws, support unions and their campaigns, and get the government on our side in order to abolish the low wage economy. Wal-Mart is a good place, but by no means the only place, to start.
*Our factual references are from information provided in company filings and news articles as reported by United for a Fair Economy as well as Reuters, Forbes, Fortune and the World Bank. Wal-Mart workers interested in learning more about the UFCW should contact the union or visit its websites: www.walmartswaronworkers.com and www.ufcw.org.