Wal-Mart has groups at odds over city stores
Proposed stores could destroy jobs, experts say

Mark W. Anderson/The Chronicle Members of the 37th Ward Pastors Alliance stand with Alderman Emma Mitts during a May 12 community meeting called to discuss a proposal for a Wal-Mart in the Austin neighborhood.

By Mark W. Anderson
Associate Editor

Is any job that pays a wage worth taking, especially if you’re unemployed?

That seems to be the question at the heart of a controversy about the proposed arrival of two Wal-Mart stores in Chicago, one in the West Side community of Austin and the other in the South Side neighborhood of Chatham. On one side of the battle are residents of two economically-deprived communities, hungry for jobs and development, while on the other, stand a collection of community activists, union members, politicians and concerned citizens who see the world’s largest company as a danger to communities everywhere, including their own.

The proposed arrivals, which await a city council vote tentatively scheduled for May 26, would be the retail giant’s first operations within the city limits, even though there are already more than 50 Wal-Mart and Sam’s Club locations in the greater Chicago area. The Austin location is slated to replace a vacant building at 1657 N. Kilpatrick Ave., while the Chatham store is part of a larger shopping development proposed for an abandoned steel plant at 8301 S. Stewart Ave.

For some, Wal-Mart simply cannot come fast enough to these job- and development-starved communities.

“We want Wal-Mart to come here because it’s going to bring jobs and opportunity to our area,” said Alderman Emma Mitts of the 37th Ward, which includes Austin. “I believe that wherever Wal-Mart is, people will come to that community, and having a Wal-Mart here is going to attract other businesses. We’re looking to become a partner with them.”

For Mitts and others, the question is simple: The opening of a Wal-Mart benefits everyone by creating retail and construction jobs, along with increasing the number of shopping opportunities in the area, adding tax revenues and attracting other retailers such as restaurants, coffee shops and grocery stores to neighborhoods that haven’t had national retailers interested in operating within their boundaries for years, if not decades. For her part, Mitts estimates that unemployment in her community currently stands somewhere around 60 percent.

Wal-Mart, which has historically operated in more rural and suburban communities, is seen by many as making a push into inner city communities in an effort to expand its customer base. In April, the company lost a high-profile battle in an effort to open an Inglewood, Calif., location and currently finds itself faced with similar battles over proposed developments in Milwaukee and Philadelphia.

Alderman Howard Brookins Jr. of the 21st Ward, however, said he has already seen the power of Wal-Mart in his community, which includes 83rd Street and Stewart Avenue.

“When [Wal-Mart] said they were interested in coming, there was interest from other businesses,” he said. “Restaurants such as Red Lobster and Applebee’s, that weren’t interested in coming into the inner city before, signed onto the project.”

For its part, Wal-Mart, the largest company in the world with more than $233 billion in sales last year, is promising 235 jobs at the Kilpatrick Avenue location alone and projects that the Austin store will generate $54 million in sales and more than $4 million in state, county and local taxes in its first year of operation.

As part of its marketing campaign toward community residents, the company touts its record of hiring from within the areas it serves, its financial support for community-based organizations and the kind of unlimited job opportunities that come with being a worldwide operation. As part of an economic impact report the company generated specifically for the Chicago proposals, Wal-Mart lists contributions of $200 million in charitable donations in 2002 and says two-thirds of its store management associates companywide started their careers in hourly positions.

But for others engaged in this battle, what Wal-Mart promises simply isn’t good enough. They point to the company’s history of union-busting, unfair labor practices, its ability to secure tax breaks from financially strapped municipalities and point to evidence that instead of creating jobs, the average Wal-Mart location actually decreases employment in any given area by driving its local competition out of business. On this side of the argument are union workers, academics, concerned citizens and, in the case of Chicago, aldermen who see the future of their own community in what’s happening in Austin and Chatham.

“I think that there are two kinds of people who oppose [these developments],” said Jeff McCourt, director of Illinois Good Jobs First, a national research and policy organization that examines how state and local subsidies are used in the private sector. “One is a group of people who are opposed to Wal-Mart entering these communities on principle. The other is opposed to Wal-Mart entering communities like Austin without making any formal commitments to the community that there will be actual benefits.”

Elce Redmond of the South Austin Coalition, a long-running West Side neighborhood group, believes strongly enough in holding Wal-Mart to their promises that he and others have drafted a 12-point Community Benefits Agreement designed to spell out what he and others say is necessary for the community to support the proposed store. In the agreement are demands that the company swear off receiving public subsidies for the project, promise to assign a minimum percentage of jobs created to local workers, adhere to a “neutrality” agreement that would allow Wal-Mart workers to unionize if they wished and “agree to not use predatory pricing schemes to undercut existing local businesses.”

Questions over whether Wal-Mart creates or destroys jobs in the long run is one of the core disagreements between supporters and opponents of these and other locations. While area residents, and the company itself, are focusing on the immediate jobs that may be created, others question the long-term impact on communities from a company that prides itself in not only offering lower prices than every other business it competes with, but also being the most efficient in getting the most sales dollars out of every employee it hires.

“Wal-Mart spans so many different sectors [in the products they sell] and they’re so competitive in these sectors, they’re a completely different animal than other types of stores,” said Chirag Mehta, research associate at the University of Illinois Center for Urban Economic Development, which completed a study in March that showed that there would be a net loss of jobs in a 3-mile radius of the Kilpatrick Avenue location after the first year of operation. “As a rule, Wal-Mart squeezes more sales out of each man hour, so they can generate the same dollars out of fewer workers. So, you’ll have a net loss. As well, when ‘big-box’ retail opens in a dense urban market, they’re generally not creating new jobs, they simply replace other jobs.”

One of the aldermen who has publicly opposed the Austin development is Joe Morre of the 49th Ward on the city’s far North Side. He sees the issue not only as one affecting an economically depressed neighborhood, but the city as a whole.

“I certainly understand the desire for aldermen Mitts and Brookins to have new developments [in their wards],” he said. “But based on the experience of scores of other cities, we find that Wal-Mart often defeats more jobs than it creates. We need to take a more holistic view about this—I think it could mean a significant setback for all of us who are working in our communities to redevelop our commercial areas.”
And then there’s the wage issue.

“To say the average wage is $8 an hour is to say it isn’t really a job,” said Robert Simpson, president of the Chicago chapter of the Coalition of Black Trade Unionists. “After costs and taxes, it’s more like minimum wage. We believe every job should pay a livable wage, and you can’t make it off $5.50 an hour—especially when you have a family.”

Elizabeth Drea, public relations coordinator for Local 881 of the United Food and Commercial Workers Union, sees dangers not only for Wal-Mart employees, but other workers as well.

“Wal-Mart usually comes in and pays the minimum wage, which forces all other workers’ wages downward,” she said. “That means there’s a severe impact on existing workers in other locations, too. It may seem like a fix, but there’s a long-term impact many people may not be willing to explore.”

In its Economic Impact Report, Wal-Mart lists the wage range for the average sales associate position in its stores as between $7.40 and $13.75 an hour, and says the average Chicago-area associate makes $10.77 an hour. A February 2004 report from U.S. Representative George Miller (D-Calif.), senior Democrat on the House Committee on Education and the Workforce, says that the average Wal-Mart employee nationally earns $8.23 an hour, below the average supermarket employee’s wage of $10.35 an hour.

None of that matters much to many of the Wal-Mart supporters in Austin and Chatham. They point to the fact that there are already Wal-Marts throughout the suburbs that ring the city, and they feel that since these suburban locations are already drawing shoppers from their communities, having a Wal-Mart in their neighborhood simply means that their long-neglected communities are finally getting some of what they deserve.

“Wal-Mart is already in Chicago,” Brookins said. “There’s one in [west suburban] Burbank. There’s one on 95th Street in Evergreen Park. So how can we put our heads in the sand and say Wal-Mart can’t come here? What I’ve seen happening is Chicagoans have spent at least $200 million in area Wal-Marts last year. But Chicago gets no sales tax dollars, no property tax dollars, and we’re spending our dollars there anyway.”

Pastor Joseph Kyles of Heirs of the Promise Church at 4100 W. Grand Ave., and one of the members of the 37th Ward Pastors Alliance, sees the controversy surrounding the proposal for his neighborhood as being fundamentally unfair. Standing alongside Mitts at a May 12 community meeting at Prosser Career Academy on the city’s northwest side that included representatives from Wal-Mart itself, he questioned the motivation of others involved in the fight.

“We do not like the fact that this neighborhood has been used as a political balloon,” he said. “Why should our community suffer for what other people want?”