December 13, 2011
By Marc Bussanich, LaborPress City Reporter
John Marshall, an economist with UFCW, said at a labor forum on December 7 at the Murphy Institute that in response to slow growth in the U.S., Wal-Mart’s new strategy is to build in the country’s urban areas. The company has opened stores in Chicago and Washington, D.C., but not in the City because of fierce opposition.
Forum speakers Council Member Charles Barron and RWDSU’s Ademola Oyefeso are part of a campaign to stop Wal-Mart from opening in the City, but the campaign is also prepared to work with the company to improve working conditions, should it open for business.
According to The Alliance for a Greater New York (ALIGN), an organization promoting job creation, and a campaign member to stop Wal-Mart, Wal-Mart plans to open 159 stores, 114 of which would be new Wal-Mart Express stores averaging 15,000 square feet.
Marshall said that the big box retail model is facing a crisis. Wal-Mart’s U.S. division accounts for two-thirds of the company’s total revenue, but sales growth has stopped growing, especially after the onset of the Great Recession. To remedy the crisis, Wal-Mart has been cutting costs, contributing to 20,000 fewer employees.
Marshall noted that Wal-Mart has “cut costs savagely” by forcing full-time workers to part-time status, eliminating premium pay on Sundays and holidays, eliminating profit-sharing, significantly reducing health-care coverage via the proliferation of more part-time workers and paying an average wage of only $8.81 per hour.
These cuts have allowed Wal-Mart, although sales growth is slowing, to be profitable. According to ALIGN, “Same-store U.S. sales have declined for nine consecutive quarters.”
The urban centers represent a new frontier for the company, and an opportunity to stem loses and return to profitability. Indeed, the revenue potential for Wal-Mart in New York is tremendous. Marshall quoted a Wal-Mart executive who said in 2009 that Wal-Mart stood to increase its sales between $80 and $100 billion in urban areas. As New York is the largest consumer market in the U.S., sales growth potential is probably closer to $100 billion.
But the campaign fears that Wal-Mart’s entry will lead to job losses and not job creation, and adversely impact smaller-sized grocery chains that sell to consumers in neighborhoods where larger grocers are absent. Marshall said that for every two jobs Wal-Mart creates, three jobs are eliminated. In a study, ALIGN reported that 159 new Wal-Mart stores “could lead to an estimated 3,980 jobs lost and $353 million in lost wages. And because Wal-Mart doesn’t pay health care benefits for part-time workers, “taxpayers could be liable for $4 million to foot health care benefits for 4,279 new Wal-Mart workers.”
In response to Wal-Mart’s claim that it will serve food deserts (areas where healthy and affordable food is lacking) by opening up to 300 new stores, Marshall cited a Deutsche Bank study that compared 30 different grocery items sold by Wal-Mart, and a Target and a unionized Pathmark store in Brooklyn. The study revealed that 14 items were cheaper at Target, 12 items cheaper at Pathmark, two items similar in price and two items not stacked.
Council Member Charles Barron said, “We have to stop Wal-Mart from coming to New York,” although he agreed for Related Companies to build a shopping complex in his district of East New York in Brooklyn, which Wal-Mart may lease, after the company approved $3 million to be allocated towards construction of affordable housing units and a day care center.
Ademola Oyefeso, RWDSU’s political director, said the campaign’s main goal is to keep Wal-Mart out of New York, but “if Wal-Mart is committed to opening here, we want to force them to do better.”