Wal-Mart and New York City

by JOSEPH GROSSO

‘They’ll have the battle of their lives. Wal-Mart exploits workers…and we want no part of that.’ So thundered Brooklyn City Councilman Charles Barron this past spring when word got out that Wal-Mart was eyeing space in a forthcoming 630,000 square-foot shopping center, the Gateway II, planned for construction near Jamaica Bay. It would be Wal-Mart’s first toehold in the Big Apple, and it would be established in what has always been one of the city’s poorer regions. For its part Wal-Mart executive Steve Restivo was quoted as saying ‘We know that New Yorkers want to shop at Wal-Mart, and as a result, we continue to evaluate potential opportunities here. New Yorkers want quality jobs and affordable groceries, and it remains our goal to be part of the solution.’

As that statement implies this is not Wal-Mart’s first attempt to penetrate the largest city in the country. Back in 2005 plans to build a Supercenter in central Queens (in the Rego Park neighborhood which already features the huge Queens Center Mall along with a nearby Target, a Best Buy, and a Costco) were scrapped in the face of community resistance. Shortly thereafter plans for a store in the more conservative Staten Island were also shelved for the same reason, forcing then Wal-Mart CEO Lee Scott to admit attempting to build in New York, a city with still at least a semi-strong union presence, wasn’t ‘worth the effort.’

Of course Wal-Mart has always had ambitions that go far beyond New York. According to the company’s webpage it now has for than 8650 retail units in 15 different countries, employing over two million people (or ‘associates’ in company lingo), with sales totaling $405 billion for fiscal year 2010. Wal-Mart has listed atop of Forbes list as the largest company in the world for most of the past decade (only placing behind Exxon-Mobile during the oil price spike of a couple of years ago). It is the largest employer private employer in the U.S. overall as well as in Mexico and Canada. At last check Wal-Mart is the largest seller of groceries, jewelry, and toys in the world.

Conquering the retail world like this has left more than its share of carnage. A 2003 study by Emek Basker revealed that when Wal-Mart enters a county in the U.S. on average three smaller retails close within two years, four within five years. Then there are the lawsuits, dozens of them. In December 2008 Wal-Mart Stores, Inc announced that they agreed to pay between $353 and $640 million to settle 63 wage and hour lawsuits filed against the company in 42 different states. This a few years after the company suffered verdicts of $172 million in California and $78 million in Pennsylvania. The settled total in Minnesota was for $54.3 million, in Colorado $50 million. All of this as result such legalities as employees being forced to work off-the-clock (either by working through scheduled breaks or by punching out and working for no pay), and unpaid on-duty. As much as Wal-Mart’s PR machine bangs on about being ‘pro-associate’, the company burns through new employees with an annual turnover rate of 40-45%.

In October 2003 federal agents raided sixty Wal-Mart stores in twenty-one states in a single day and arrested 245 illegal immigrants who were part of overnight cleaning crews. Though the company denied knowing its cleaning vendors were exploiting immigrant labor it still handed the government $11 million. On top of everything else Wal-Mart is facing the largest class action lawsuit in American history represent about a million women alleging gender bias in wages and promotions.

It’s hard to imagine even a restless fiend like Sam Walton envisioning what his company would become when he broke ground in Bentonville, Arkansas in 1962, Bentonville being situated in the Ozarks- a sixty-thousand-square-mile region of woods and plateau that encompasses parts of Missouri, Arkansas, Kansas, and Oklahoma. In a major way it was Walton’s good fortune to have such a starting point since it was only a few years earlier that he lost his lease at the Ben Franklin department store he operated in more populated Newport. As Nelson Lichtenstein points out in The Retail Revolution, setting up shop in nearly all white Bentonville enabled Walton to avoid the tension and violence of the Civil Rights movement (the Ozark region having been largely and violently cleansed of African-Americans earlier in the 20th century). Lichtenstein notes:

Had he remained in Newport, the delta town where he lost his lease, his clientele would have become increasingly biracial…By the 1960s retail establishments from Greenboro to Baton Rouge were the epicenter of the civil rights movements, nowhere more so than in the small towns on both sides of the lower Mississippi, where pickets and protests demanded employment for African Americans…

Conversely, in Mississippi and other Deep South states, the homegrown Merchants were often integration holdouts, and therefore the boycott target for African-American picketers.  

Having escaped all this ensconced in the Ozarks, Wal-Mart was able to build itself with its paternal, anti-union (Arkansas was also the first state to pass a ‘right to work’ law, back in 1994), distrust of all things Yankee, philosophy with little opposition eventually riding the deregulated Age of Reagan to massive expansion throughout the suburban Deep South.  

This clearly speaks to a larger truth. For all the relevant analysis about the ‘wal-martization’ of the economy, it may be just as significant to lament the cultural dynamics that provided such fertile ground for Wal-Mart’s expansion. Of course it has to be pointed out that ‘wal-martization’ have its selling points. By applying relentless pressure to its many thousands of vendors to make manufacturing and distribution more efficient (particularly through technological and organizational innovations), Wal-Mart has done a lot to boost U.S. productivity. And it is true that the company saves U.S. customers billions of dollars a year- $118 billion in 2004 according to a study by Global Insight (as documented by Business Week writer Anthony Bianco in The Bully of Bentonville: How the High Cost of Wal-Mart’s Everyday Low Prices is Hurting America).

Is this relevant for New York? Well for all its vast Wall Street wealth, low crime, and civic boosters, a study printed last year in City Journal by Eamon Moynihan, director of the Cost of Living Project, showed that when adjusting census data for cost of living, New York is quite possibly the poorest big city in America (Detroit being the other serious contender; using the same data New York State shares the bottom with Mississippi). For instance, according to data from C2ER (a company that produces cost of living estimates) someone earning about $51,000 in Chicago and $63,000 in DC enjoys the same standard of living as a New Yorker making $100,000. While this is mainly due to the astronomical cost of housing, utility costs are also lower in the other two cities, 29% in Chicago, 39% in DC. Groceries are 28% lower in both other cities.

New Yorkers, in other words, could use lower costs where they can be found. However what New York doesn’t need is yet more low-paying, high turnover jobs, particularly ones that can negatively impact better paying jobs and further the income polarization in a city already lacking a solid middle class. This is where Wal-Mart takes a lot more than it gives proving that the cost for lowest prices is too great. Adjusted for inflation Wal-Mart wages have declined by close to 35% since 1970 and in several states Wal-Mart heath-care plan has basically shifted high numbers of lower level employees to Medicaid, putting low prices on the backs of the public. Just these obvious reasons alone make it a worthy cause to hand Wal-Mart yet another defeat in the Big Apple. Still more important is if New York’s diverse labor movement can ever hope to increase its power, by finally challenging the draconian Taylor Law (the law that makes it illegal for public sector unions to go on strike) for example or establishing a real living wage, it’s essential that a brutishly union-busting company like Wal-Mart not be able to plant its flag. To that end it should be a fight to the finish.

JOSEPH GROSSO is a writer and librarian in New York City.          

 

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