WALMART’S NEXT TASK: Convincing New Yorkers That It Doesn’t “Kill Three Jobs For Every Two It Creates”

Walmart Protests

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At any given time in any given borough, mention Walmart landing in some unsuspecting New York City neighbourhood, and watch the sparks fly. No matter whom you talk to, everyone has an opinion.Even on a bright August day in a small and bustling grocery store in Jamaica Bay, store owners have Walmart on their mind.

After being shot down in Queens and Staten Island the retail giant is hoping to set up shop in Brooklyn; and though it’s been a long, uphill battle, the Arkansas chain is finally making some headway.

The opposition: “For every two jobs, three jobs lost”

In January 2010, two Hunter College professors — a New York director of land use and a public advocate — put out a report on all things written and documented about Walmart. Published by the centre for Community Planning and Development for the New York City Public Advocate’s Office, the 12-page paper presents a picture of why Walmart won’t help any New York borough.

The study maintains that for every two jobs a Walmart opening may create, it will kill three others. That one-quarter of all businesses in a comparable Chicago neighbourhood went under after Sam Walton expanded in that city. That in Ohio, Walmart has more employees on Medicare than any other employer.

Walmart also uses a Real Estate Investment Trust (REIT) where the retailer pays rent to itself and deducts that rent payment from its taxes. The company saved an estimated $245 million in 2008 on the practice, and it causes the authors of the study to question how much tax revenue a store would actually provide the city.

Even the medical insurance provided to employees is called into the spotlight. The paper points out that the Walmart health plan’s high deductible of $4,400 is almost 25 per cent of the annual salary of a worker making $11.75 an hour. The report concludes with the sentence: “New Yorkers cannot afford to devote one fourth of their incomes to healthcare before their insurance kicks in.”

The study is widely cited by opponents of the superstore’s opening. In February, the Retail Workers Union rallied in front of City Hall chanting: “For every two jobs, three jobs lost.”

Walmart’s goal: replicating its success in Chicago

Walmart knows that to get into New York, it has to win over the unions, and that’s no easy task. But it worked in Chicago last year, when the retailer divided the city’s labour movement in two. It shocked the country when it committed to using union labour, but then made clear union workers would be used in just constructing the stores — not in operating them. Building trades supported the expansion, and retail union voices were lost in the crowd.

Now it’s trying the same strategy in the Empire State.

When Walmart planners met with New York building trade leaders in January, to no one’s surprise, a deal was announced to use union labour to build any stores built in the New York area in the next five years. Steve Restivo, Walmart’s point man for union affairs in New York, even told the City Hall Times that “Walmart and the building trades share a common goal: putting New York City back to work.”

As famously anti-union as the chain is, it may be benefiting from a division in the union ranks. Only this time it is a split from a prior retail development project in the Bronx last summer that started the rift.

In that project, retail workers banned together to get a $60 million project shut down, because the stores that were coming in were not going to offer a living wage. According to reports, the deal was referred to as “a Walmart in sheep’s clothing.” Food and Commercial Workers Union employee Diana Puglisi is quick to point out that the Arkansas-based retailer does not offer the wages its competitors offer: “Every worker just wants a living wage,” she says.

Not only are union members alert to wage scales, but to Walmart’s class action suits and record settlements. The company paid $640 million to workers performing duties off the clock, denying them breaks and overtime and managing to take over a decade to pay up.

The wage-theft, as it is called, was widespread, rooting into 43 states and drawing 63 class-action suits.

And of course, there’s the argument that Walmart will kill small business. Christine Quinn, speaker of the New York City Council, says that 25% of small businesses in the Chicago area closed after Walmart opened.

Politics and corruption taint the battle

In one way, at least, the corporate giant is already reliving its Chicago conquest and this is why local store owners and union leaders solicited Carl Kruger to help them stop the retail giant.

Unfortunately, it went farther than soliciting a local politician to look out for his constituency. Kruger, a senior member of the State Senate Finance Committee, was indicted last month for accepting bribes from parties looking to keep the big box retailer out of Brooklyn.

In FBI reports, developer Aaron Malinsky paid $472,500 to Kruger’s shell corporation in return for the state senator’s endorsement of small business and opposition to Walmart.

On February 17, just weeks before his indictment, Kruger spoke at one of the most vitriolic anti-Walmart rallies yet. According to a press release from the 27th district, Kruger asked the crowd: “How can you compete with Walmart? Two words — you can’t.”

At the rally, Kruger cited examples from the Hunter study: “Approximately 85 cents of every dollar generated by local storeowners goes back into New York, while Walmart sends 85 cents of its dollars back to its corporate offices in Arkansas,” he told the crowd.

He also cited facts from Brian Ketchum Engineering, a firm involved in the bribery scandal, which has said that Walmart would increase traffic in the area by 32%, and would cost the city about $20 million per year in related expenses.

In a similar article, Mayor Bloomberg, at a ribbon cutting, was asked why Target didn’t receive the same opposition when it opened its doors in the outer boroughs, and Bloomberg said it was because Mr. Kruger wasn’t involved. All told, Kruger is accused of accepting at least $1 million in bribes.

All of this is shaping Walmart’s approach in New York. And while there have been no new store plans announced — the media campaign continues.

Walmart’s strategy is starting to work

The agreement with the builders’ unions continues to be the retailer’s main selling point to the community, but it’s not the only one. The retailer has started a Walmart New York City website devoted specifically to highlighting the company’s own set of collected data.

The point the company tries to make is pretty clear: those making more than $100,000 a year are most strongly opposed to Walmart in New York City. The message is that the wealthy have many options of where to shop, but not everyone does and Walmart wants to help New Yorkers “Save money and live better.”

The site highlights quotes from area elected officials like Councilman Eric Ulrich, from Ozone Park: “Walmart wants to come here and provide union construction jobs and permanent positions that offer pay wages equal to or higher than many competitors, and allow people to save on their grocery bills … It’s not the job of politicians or special interest groups, especially in today’s economy, to block economic development.”

It also takes aim at the studies put out opposing the New York store opening like the one from Hunter, and one from Loyola in Chicago — claiming they just don’t add up. In a portion of the site called Fact Checker, a piece like Tired Old Talking Points tries to refute effects the store has had on Chicago neighborhoods.

The piece reads like a news story with a link to an article in “a local Chicago paper,” the Chicago Sun Times. When clicked through, it turns out the article used to support the piece on Walmart’s site is an unsigned editorial pasted into the retailer’s site with no link to the original.

An Internet search did not produce the original and the links to it, from one blog, go to an error page at the Times. An on-site search produces no results either.

Of articles that do surface is a May 4, 2011 piece in Seeking Alpha that says specialty grocery stores are increasingly in demand, and that Walmart is looking to branch out and fill the niche.

And that’s part of Walmart’s strategy for expanding into New York: developing stores that are about 20,000 square feet — a far cry from its original 195,000 square foot mega stores that dominate suburban America. The new stores will be a combination of the small 15,000 square foot Marketside concept Walmart and the 42,000 square foot neighbourhood Market style store.

Somewhere in the mix of that combination Walmart executives believe lies the perfect approach into Brooklyn.

And they may be right. 

A new Quinnipiac study out July 28 shows that as the economy continues grinding down more New Yorkers think Walmart’s low prices may not be so bad.

63% of voters said the retailer should be allowed in New York, even though 50% think they don’t pay their workers enough. And while 70% think Walmart would hurt small businesses, 69% say they would shop at Walmart NYC if they could.

Now click here to see the Incredible Story of Walmart’s Expansion From Five & Dime To Global Megacorp >