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Economics and the Race Divide in a Southern City

From Woolworth to Wal-Mart

by JORDAN GREEN

On Feb. 1, 1960, four North Carolina A&T University students quietly took seats at the segregated Woolworth’s lunch counter and waited to be served, igniting a black-led movement that spread to the Kress Building and other retail outlets and ultimately resulted in the demolition of segregated public accommodations in Greensboro’s downtown business district. While the sit-ins are now widely celebrated by city leaders, throughout the ’60s the white political establishment alternated between pleas for dialogue and stubborn resistance in its response to black demands for justice.

Fast-forward 35 years and the same odd marriage of civility and racial tension seems to define city politics. And along with jobs, education and healthcare, consumer choice remains one of the major arenas in the struggle for racial equality. But despite the recent resurgence of downtown, with its thriving nightclubs, restaurants and boutiques, the action has moved out to the residential sections of the Greensboro .

Equitable economic development is now the call in Greensboro, with black elected officials pushing for retail investment to bring jobs and consumer choice to those who live east of US Highway 29, thus freeing residents from driving across town to shop at the Friendly Shopping Center and other retail centers located in majority white residential areas. Little surprise, then, that the public discourse around local developer Donald Linder’s efforts to bring a Wal-Mart Supercenter to the old Carolina Circle Mall in northeast Greensboro has at times taken on racial overtones.

The Bentonville, Ark.-based retail giant currently has two stores in Greensboro . The company’s Battleground Avenue location is a discount store, while the Wendover Avenue location – with more than 100,000 square feet of floor space for groceries and other amenities – qualifies as a Supercenter.

When support for Linder’s request for $300,000 in economic incentives for the Wal-Mart project appeared to erode among the white majority of City Council during its July 7 meeting, District 1 Councilwoman Dianne Bellamy-Small reacted with frustration, invoking the civil rights tactic of the boycott which was successfully used to desegregate city buses in Montgomery, Ala. in 1955.

"If it means you have to stop driving to west Greensboro to shop, to get some economic development, you need to just stop driving there," she said, to the applause of several northeast Greensboro residents who came before City Council to express their support for the project.

During the public input section of the meeting, one white resident who was opposed to the incentive grant called the site "a black hole" and predicted no major retailer would succeed there.

Linder would end up withdrawing his request for $300,000 – money for the purpose of buying out easement rights from neighboring property owners – after a majority of the City Council, including Mayor Keith Holliday, signaled they wouldn’t support it. In a closed-session meeting with the developer the previous month council members had favored the grant to Linder in a 7-2 non-binding vote. When the deal came to light, a wave of public revulsion built on the twin currents of fiscal conservatism and objection to Wal-Mart’s business practices forced elected officials to back away from the deal.

But the deeper fault line in Greensboro’s Wal-Mart battle had been revealed, one often overlooked in the growing national debate over the company: race.


"WE REALLY NEED THE DEVELOPMENT"

Greensboro has buzzed with public skepticism over whether the $300,000 incentive grant was really necessary for the Wal-Mart project to succeed and why a company whose net sales reached $285.2 billion in 2004 couldn’t contribute the necessary funding to help the local developer clear the hurdle.

"It wasn’t Wal-Mart going to the city saying if we don’t get the money then we’re out of here," said Glen Wilkins, a spokesman for the retail giant who is based in Atlanta . "What we needed is easement rights to put the store on the property. There was a cost to get those easement rights. We contributed money, the developer contributed some money and then additional money was needed. The developer came up with the money."

Overall, Wal-Mart plans to invest $25 million in its new superstore, says Ben Brown, assistant city manager for economic development, and Linder plans to invest an additional $25 million on a second phase of the shopping center’s redevelopment to accommodate a home improvement center such as Home Depot or Lowe’s, along with other retail outlets. The combined tax revenue for the city over the next three years could amount to $500,000, he said, adding that the redevelopment project is projected to create 400 jobs.

Strong local support for the Wal-Mart Supercenter has come from Goldie Wells, a community leader active with Concerned Citizens of Northeast Greensboro. At the June meeting she pleaded with city council members to help secure the Wal-Mart deal to bring more economic life to the area.

Earlier this month, she filed as a candidate for the open District 2 seat after Councilwoman Claudette Burroughs-White announced she would not run for reelection.

"I’m just pleased about the prospect of Wal-Mart coming to Greensboro ," she later said. "We really need the development." When asked to comment on the store’s potential effect on small, independent businesses, she responded: "I really don’t want to get into that."

Toni Graves Henderson, who is also running for the District 2 seat, is also cheering Wal-Mart’s entry into the city’s northeast quadrant.

"We do need more jobs," she said, "because I hear people say: ‘I need a job; I’ve been looking for months and months and I can’t find one.’ If someone wants to come to Greensboro and offer jobs, I can’t be against it."

Only one District 2 candidate, Ed Whitfield, sounded a cautionary note about the arrival of the big-box store.

"The question of wages, health care, working hours and conditions, a number of issues that employees within Wal-Mart have been raising and sometimes getting fired for – these should be the guiding principles of any economic development initiative," he said. "I know some people that work for Wal-Mart, and they needed the job, but that doesn’t mean they shouldn’t be able to fight to improve their conditions there."


HITCHING TO WAL-MART’S STAR

At the old Carolina Circle Mall, heavy equipment operators for the EME demolition company are steadily knocking down the old concrete hull of the shopping center, leaving acres of land covered with piles of concrete chunks and twisted girders while forlorn-looking metal cross beams jut out from what remains of the skeletal structure.

Just across Cone Boulevard in a strip informally known as "K-Mart Shopping Center" after the abandoned store that once anchored it, small retailers are hitching their fortunes to Wal-Mart’s star.

One of them is Mattress Station owner Kenneth Simmons, a large man who wears a straw hat and an American flag lapel on his shirt. Sitting in front of his store where he chatted with a neighbor on a recent Monday afternoon, he expressed nothing short of elation about the coming of Wal-Mart.

"I’m all for it," he said. "Ain’ nobody against it here. I don’t care about competition. I have a seventy-five percent closing rate, but I just gotta get ‘em in here. We need the traffic. We need to let people know we’re not dead around here. You build a Wal-Mart. If it’s a superstore with gas and groceries, it’ll be the biggest one in Greensboro ."

Along with the mattress store, the strip includes a Laundromat, a bingo parlor, a Mexican tienda, a nail salon, two barbershops and an African-American art store – enterprises whose specialized markets would seem to insulate them against competition from Wal-Mart.

Other east-side retailers regard Wal-Mart with a sense of foreboding, as farmers once looked upon a gathering storm – with equal measures of gratitude that it will bring much needed rain, and fear that it might wash out the crops altogether. Those who look warily on the arrival of Wal-Mart are the merchants in the strip malls that dot Summit, East Wendover and Bessemer avenues – shopping centers within the same trade area but outside the new big-box store’s immediate orbit.

Jerome Robinson, who is 41, moved to Greensboro from Washington , DC decades back to work for Willie’s Music. When the chain store went out of business, he parlayed his knowledge of gospel artists and the music industry supply chain to open J&B Music Connection in the Summit Shopping Center .

He’s counting on that knowledge to effectively defend his market against Wal-Mart, a store known to be a ruthless competitor.

"I sell lots of gospel," he said. "I have a one-day order special service. A customer can come in and ask for the song and I’ll tell them where it is. Somebody local could have something out and it would only be a hit for two weeks. And I have to know what it is."

He owns a second store in Raleigh , whose customer base he said has been cannibalized by a new Wal-Mart there. He once employed eight people at the Raleigh store but his workforce is now reduced to three. After a three-year lease expires, he said he’ll close the store and lay off the remaining employees.

"I know how they’re trying to corner the market," he said. "They’re a one-stop store. People think we’re the villain. ‘Why yawl so high?’ I’m only making $2.75 a CD. They don’t make money off music. That’s just to get people there to buy other things."

He expressed the opinion that there should only one Wal-Mart for every metropolitan market, and then in the next breath wondered aloud if Wal-Mart would hire him for his specialized knowledge of gospel music.

Other store owners are considering moving across town to be near the new Wal-Mart. Such is the case with Fashion Avenue , a low-priced clothing store in the same strip with J&B Music Connection.

K. Bassi, the 41-year-old manager at Fashion Avenue ‘s Summit Shopping Center location, said he talked to his boss in Durham about the possibility of moving the other store from its current location on South Eugene Street up to the old Carolina Circle Mall to take advantage of the spillover effect from Wal-Mart.

"They’re very competitive," said Michael Campbell, who owns Cheap Copies of Greensboro at the corner of East Wendover Avenue and US Highway 29, and who is a member of the East Market Street Merchants Association. "People who are small and Wal-Mart has their product, they might want to consider relocating. Anybody in a two-mile radius who sells clothes or tires, they’re going to take a hit."


A GROWING GIANT WITH GROWING OPPOSITION

Wal-Mart, the world’s largest retailer and the largest private employer, portrays itself as a benevolent, home-spun company that provides good jobs, saves customers money and contributes to the well-being of communities.

"Wal-Mart is committed to growing by improving the standard of living for our customers throughout the world," the company’s 2005 annual report declares.

Throughout Wal-Mart’s Superstores, images of compassionate-looking employees beam down at customers. One featuring an employee named ‘Virginia’ who volunteers as a tutor for something called the ‘Literacy Council’ offers this heart-warming platitude: "Helping to make a difference We live here too. And we believe good, works."

But behind the virtuous image, the company is on the defensive against a snowballing number of allegations about destructive, abusive and exploitative business practices that have made it a pariah in some parts of the country.

"They don’t pay their workers enough," New York City Councilwoman Letitia James said. "The fact that a significant number of their employees rely on social services for health care – that’s a problem. We didn’t only try to impose conditions on them; we shut them down."

The New York City Council is currently considering an ordinance that requires retail stores with more than 85,000 square feet to be licensed with the city. Last year, a plan to build the first Wal-Mart in the city unraveled when elected officials and constituents rallied against it.

Wal-Mart’s 2005 annual report devotes a page and a half to legal proceedings currently pending against the corporate giant. Under the heading, "Wage and Hour ‘Off the Clock’ Class Actions," the report lists a total of 44 cases, including one filed by three former employees in Forsyth County . (The NC Court of Appeals upheld a ruling by the Forsyth County Superior Court denying the employees class action certification on June 7; the lawyer for the workers said they’re trying to decide whether to further appeal).

While claims by former employees that they were locked in and forced to clean stores after clocking out for the night are by now common in press accounts, so too are allegations that Wal-Mart discriminates against its female employees.

Potentially the most damaging lawsuit to the company is Dukes v. Wal-Mart Stores, a class-action lawsuit brought on behalf of all past and present female employees – about 1.6 million women in all- that alleges the company discriminates against women in its promotions, pay, training and job assignments.

US District Court Judge Martin Jenkins, of the northern California district, conferred class-action status on the lawsuit in June 2004. According to his court order, while 65 percent of Wal-Mart’s employees are women, only a third of the company’s management positions are filled by women.

In his court order, he acknowledged the case as the largest class-action lawsuit in history, and noted that the certification took place on the 50th anniversary year of the Supreme Court’s Brown v. Board of Education decision – "a reminder," he said, "of the importance of the courts in addressing the denial of equal treatment under the law wherever and by whomever it occurs."

In yet another case, on March 18, the US Attorney’s Office for the Middle District of Pennsylvania announced a civil settlement with Wal-Mart concluding its grand jury investigation into whether the company violated federal immigration law in its hiring of third-party contractors who employed illegal immigrants for janitorial services in the company’s stores. Without admitting any wrongdoing, the company agreed to pay $11 million to the government to support investigations by the Bureau of Immigration and Customs Enforcement.

That hasn’t ended Wal-Mart’s troubles with immigration law. In December 2004, a federal judge in New Jersey ordered that a group of illegal immigrants from Mexico, Poland and Slovakia , among other countries, be given class-action status. Zavala, et al. v. Wal-Mart Stores alleges: "Wal-Mart – acting through ostensibly independent maintenance contractors – systematically exploits immigrant labor drawn from the four corners of the earth to clean its thousands of stores, working janitors seven days a week almost every day of the year." The lawsuit was filed as a racketeering case, alleging that the janitors "worked under Wal-Mart’s supervision and that, as a matter of economic and practical reality, their employment was directed and controlled by Wal-Mart."

The negative publicity has been accompanied by rapid growth; the company’s net sales increased 11 percent last year, roughly in line with its expansion the previous year. The company needs to keep building new stores to maintain net sales and operating net income, the annual reports states, and it plans to build 240 to 250 new Supercenters this year like the one slated for the old Carolina Circle Mall. The Supercenters are the most controversial of Wal-Mart’s stores because of their sheer size and the fact that more than 10 percent of their space is taken up by groceries. The sale of groceries creates no tax revenue for cities and the advent of the stores is thought to drive down the wages of nearby grocery workers.

Last year, the city of Los Angeles passed a ‘Superstores Ordinance’ requiring big-box retailers like Wal-Mart to pay for an economic impact report prior to approval by city council for new stores in poor neighborhoods. The City Council based its decision on the recommendations of a commissioned study known as the Rodino Report that called into question the conventional wisdom on large-scale retail employment.

"It showed that big-box grocery stores moving into urban areas would try to locate in areas where cities had used economic development money to try to create jobs and eliminate blight," City Councilman Eric Garcetti wrote in a May ‘guest blog’ on the Wal-Mart Watch website. "Since big-box grocery eliminates jobs and creates blight by driving other, better-paying stores out of business, we’d be shooting ourselves in the foot to try to bring a Wal-Mart or other superstore into Los Angeles ."


"THE LOWEST COMMON DENOMINATOR"

A growing number of cities are concluding that Wal-Mart Supercenters impoverish workers, shift healthcare costs onto local social services and cause poor neighborhoods to further deteriorate. The city council of Los Angeles’s neighbor Inglewood voted to bar Wal-Mart from building a store, and voters subsequently voted down a referendum launched by the big-box retailer to overturn the city council decision. The Rodino Report, which was released in October 2003, lists nine local governments that have banned Wal-Mart outright, ranging from Taos, NM to Oakland , Calif.

Among the report’s findings was that the "lack of health care benefits of many big-box and superstore employees can result in a greater public burden as workers utilize emergency rooms as a major component of their health care."

Not surprisingly, Wal-Mart’s public relations apparatus hits back hard when charges are leveled that the company’s workers are forced to rely on the public dole for their healthcare, and that the company’s low wages keep workers in poverty.

"When we open up a new store it’s not uncommon to have thousands of people lined up," said Dan Fogle, a spokesman from Wal-Mart’s home office in Bentonville. "We pay good, competitive wages, with good, competitive benefits in jobs that offer the opportunity for advancement."

He specifically addressed the health-care question by citing a report commissioned by the company to the Segmentation Company, a Chapel Hill marketing services company. Fogle said the study found that Wal-Mart’s employees have health-care coverage at about the same rate as other retail employees, that 7 percent of the company’s hourly wage employees were enrolled on Medicaid prior to working at the retailer, 5 percent once they joined the company, and 3 percent once they’d been employed for two years.

"We estimate that we’ve taken 160,000 people off the list of America ‘s uninsured just by bringing them into our company," he said. "Thirty percent of people in the survey said they had no healthcare before joining Wal-Mart. Eighty-six percent of Wal-Mart’s hourly-rate employees have health insurance; 56 percent of those through Wal-Mart."

Asked for a copy of the study to review its methodology, Fogle said Wal-Mart doesn’t have the right to distribute it because it’s the property of the Segmentation Company.

Critics like Rep. George Miller, D-Calif., would no doubt take exception to Fogle’s claim that Wal-Mart pays "good, competitive wages."

A 2004 congressional report by the Democratic staff of the House Committee on Education and the Workforce, over which Miller presides, charges: "Wal-Mart has come to represent the lowest common denominator in the treatment of working people."

Wal-Mart pays its retail sales workers an average wage of $8.23, said Brown, the assistant city manager for economic development in Greensboro . That’s significantly less than the $10.83 average wage for retail sales workers in the Greensboro-High Point-Winston-Salem metropolitan statistical area, as calculated by the Bureau of Labor Statistics. The average hourly wage paid by Wal-Mart to its cashiers, $7.92 per hour, is 38 cents more than the average for cashiers in the Triad.

Full-time retail workers earning $8.23 per hour and full-time cashiers earning $7.92 would receive an annual income of $16,460 and $15,840, respectively. The same workers on Wal-Mart’s part-time schedule would earn annual incomes of $13,168 and $12,672, respectively – both wage structures below the federal poverty level for a family of three.

Along with healthcare costs and negative wage pressures, the Rodino Report also slammed Wal-Mart for putting other stores out of business and in turn depressing local tax revenue. "Municipal revenues may actually decrease as a result of big-box retailers and superstores," the report said, because "retail sales may actually decrease due to the big box’s lower prices" and the "negative potential impact on other local retailers may cause local store closures."

To the contrary, said Wal-Mart spokesman Glen Wilkins, the big-box stores act as an economic stimulus.

"Small businesses tend to thrive around us because we’re a general merchandise store," he said. "Many of these small businesses deal in specialty items. You’ll have a karate school, a boutique shop for women’s clothing and a bicycle shop in the same shopping plaza with one of our stores. We get so many calls from small business owners saying, ‘When are you coming here? We want to get near you.’"

In fairness to the Carolina Circle Mall redevelopment project, the Rodino Report states that big-box stores can potentially bring economic benefits when located in ghost malls, finding that "in situations where a big-box retailer or superstore proposes to occupy an existing vacant space in an existing retail mall, the positive impacts may outweigh the negative ones."

"We really needed a business that created a destination," Linder said. "That’s the only way we can get that part of the community reinvigorated. The people that just don’t like Wal-Mart for sometimes justifiable reasons, didn’t look specifically at the needs of this community."

Rather than ban big-box stores outright as was done in Inglewood , the Rodino Report suggests establishing regulations to mitigate the potentially harmful aspects of big-box stores. The report’s authors recommend imposing higher minimum wage and benefits standards as a way to counteract negative wage pressures created by big-box retailers, and even recommend imposing a ‘promotional fee’ on big-box retailers to pay for a marketing campaign to boost local retailing or requiring big-boxes to provide transportation to other retail outlets.


LABOR ISSUES ON THE AGENDA?

In an interview for this story, Greensboro Mayor Pro Tem Yvonne Johnson said that in the absence of the city offering economic incentives to a company like Wal-Mart to locate here, wages and other labor issues are outside of the City Council’s scope of concern in considering an economic development proposal.

Mayor Keith Holliday added that with the city recovering from the loss of textile, furniture and tobacco jobs in the past 10 years, he believes the city is not in a position to impose the kinds of conditions on big-box stores that have been discussed in Los Angeles and other cities.

"We’ve been in sort of a crisis mode where we’re reaching out in all directions to stabilize our employment," he said. "Are we at a point where we can discriminate against certain businesses? We have not been at that level to be able to be choosy because we’re trying to put out the fire of a five-percent unemployment rate."

Notwithstanding the fact that Los Angeles is about 15 times the size of Greensboro, the Gate City and the City of Angels compare and contrast in some interesting ways. The two cities’ unemployment rates are virtually identical, with 5.0 percent of Greensboro’s labor force idle and 4.9 percent of Los Angeles ‘ labor force out of work. The percentage of families living below the federal poverty level in Greensboro stands at 8.6 percent; Los Angeles’ family poverty rate is nearly double that, suggesting that the need for stable, decent employment is more urgent in the latter city.

Look around both Greensboro ‘s black and white neighborhoods, and with the exception of the traditional ethnic groceries, retail development is trending towards bigger and more sparsely situated stores, often open 24 hours a day to accommodate longer work schedules.

"When I was growing up you used to have a grocery store every couple blocks," said Brown. "It’s a dilemma for America . But we generally don’t make laws to control business aside from ‘don’t sell bad meat.’"

But should we? Jerome Robinson, the music store proprietor at the Summit Shopping Center thinks maybe so.

"I feel that we shouldn’t let the Wal-Marts keep coming," he said. "What is it saying? I’ve been doing this for twenty-four years. I finally have my own business. I really want my kids to be able to do this, but I just don’t see much future in it. Everybody’s dream is to own their own business, but one day the only dream will be to work at Wal-Mart."

JORDAN GREEN is a contributor to Facing South/Southern Exposure and a reporter with YES! Weekly in Greensboro, N.C., where this story also appeared. To comment on this story, e-mail Jordan at jordan@yesweekly.com.