City Limits MONTHLY http://www.citylimits.org/content/articles/articleView.cfm?articlenumber=128
Date: May/ June 2005
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When Wal-Mart wants to open new stores, it doesn't give up. What can New York do about it? By Liza Featherstone
Manhattan is a mecca for destination shoppers from all over the world. But many less visible parts of the city, especially poor neighborhoods in the outer boroughs, are anything but customer-friendly. Stores are few and far between. Basic necessities are overpriced, resulting in the sad irony that the working poor must travel to middle-class communities to find better bargains. Selection is dismal, and merchandise is often damaged. Return policies are, at best, informal and capricious.
It's no wonder, then, that big box stores would look at New York's boroughs as an untapped market, and that some consumers might crave them. Would New Yorkers welcome Wal-Mart, which undercuts competitors by 30 to 70 percent, sells just about anything a household might need, and serves more poor and working-class shoppers than any other retailer?
"Fuhgeddaboutit!" as a TV news headline declared. When word got out last December that Wal-Mart was planning to open a store in Rego Park, Queens, as part of a shopping center that would also include Old Navy and Sears, the outcry was swift. That's because, as Rego Park City Councilmember Helen Sears explains, "People who shop are also people who work."
Wal-Mart is not kind to those who work. In the last several years, it has faced large-scale legal actions for sex discrimination, overtime and child-labor violations. Even worse, the company pays poverty wages--$8 to $10 per hour--and Wal-Mart workers pay as much as 40 percent of their health insurance premiums. (Many employees choose to depend on publicly subsidized health care instead.) The company has also been unwavering in its disregard of labor rights, recently closing a Quebec store after workers voted to join the United Food and Commercial Workers (UFCW). Wal-Mart's entry into the market often has a disastrous effect on unionized supermarkets, which, Rutgers labor relations professor Robert Angelo points out in a recent study of the industry, have for many people "replaced factories as attractive and stable places of employment opportunity." For all these reasons, says Stuart Applebaum, president of the Retail Wholesale and Department Store Union (RWDSU), "We'd like to keep Wal-Mart out."
To that end, in December the New York City Central Labor Council (CLC), UFCW Local 1500 and the RWDSU began to build coalitions with small business and neighborhood groups, and to forcefully lobby City Council members behind the scenes, arguing that, as Applebaum puts it, "Wal-Mart's low prices come at too great a cost."
The City Council proved receptive. Says Local 1500's Pat Purcell, "What politician is going to be the one to let Wal-Mart in, in an election year?" At hearings on the issue, and in public statements, council members seemed to compete with one other to denounce the red-state retailer in the strongest terms. Councilmember Sears took her concerns directly to the source, meeting with Wal-Mart officials for what she delicately calls "an open and candid discussion." She told them that if Wal-Mart came to New York City, it would have to "review" its labor practices. Sears also met with officials from Vornado Realty Trust, the company that planned to develop the Rego Park site. Throughout January and February, the developer endured pressure from politicians like Sears, as well as bad publicity about the Wal-Mart deal, as the coalition's press conferences and hearings drew media coverage.
In late February, Vornado dropped the retailer from the Rego Park project. The national developer's decision was particularly striking given that many of its projects in other communities have included the retailer, and that Vornado proudly displays the Wal-Mart logo on its website.
The quick death of the Rego Park Wal-Mart was a victory for the Wal-Mart Free NYC coalition. But Wal-Mart has said it is looking at several other New York City sites, including two on Staten Island, and it's likely that many of the problems Wal-Mart ran into in Queens can be avoided on the next try. Wal-Mart proved an albatross to the Rego Park project, which has several other major retailers eager to move forward. By contrast, one of the Staten Island locations--in Richmond Valley--is an abandoned and polluted industrial site with no other takers. Like Rego Park, it would require City Council approval for rezoning, but in a local political climate that is likely to be friendlier. Already, the Staten Island Advance has editorialized in favor of the company's plans to open on the island.
Wal-Mart is determined to come to New York. Many retail analysts say that the company must open more stores in urban areas in order to continue its growth, as it has nearly saturated rural and exurban America, and many of its stores are now competing with each other. Given its mediocre stock performance in recent years, Wal-Mart also does not want to be humiliated on Wall Street's home turf.
Most communities that have defeated Wal-Mart have ended up having to fight the retailer again. The company has a proven ability to learn from its mistakes. In Inglewood, California, Wal-Mart attempted to make itself an exception to local land use rules by holding a voter referendum on a proposed Supercenter. That arrogance proved costly to Wal-Mart, says Madeline Janis-Aparicio of the Coalition for a Better Inglewood, which led the campaign against the Supercenter. "It became an issue of respect," she says. "What Wal-Mart did was stupid, and it helped us." CEO Lee Scott now acknowledges the company erred in Inglewood, and Wal-Mart has approached further development in California with far more success, opening several Southern California Supercenters since its Inglewood defeat.
In New York, the company displayed a similar arrogance. It received invitations but didn't send representatives to the two hearings related to the Rego Park project held by the City Council's Economic Development Committee. Rego Park might have been a mistake, too; it's a middle-class neighborhood, which is not as desperate for retail as other parts of Queens or Brooklyn and the Bronx, where Wal-Mart is now looking. [See "Queens' Cash Flow Problem," below.]
Nor is it as conservative as Staten Island. There, Wal-Mart opponents will face a "challenge, because of the political environment," admits Richard Lipsky of the Neighborhood Retailers Alliance, which has been a vocal anti-Wal-Mart pressure group. But Lipsky points out that there is a conservative case to be made against the retailer, one that emphasizes "place and tradition, quality of community life." In Staten Island, Lipsky promises cheerfully, "We will be cultivating right-wing populism as well as left-wing populism."
As varied as the upcoming battles may be, the company's recent setback in Queens shows that New York may have the political will to defeat Wal-Mart. Rabbi Michael Feinberg of the Greater New York Labor-Religion Coalition, who has been active in the fight against Wal-Mart, says, "To be honest, if New York City can't keep Wal-Mart out it's quite absurd. Other communities with far less organized labor and community activism have been able to stop Wal-Mart."
New York's anti--Wal-Mart coalition is exploring several policy strategies. In Chicago, where a store is scheduled to open by this Christmas, Wal-Mart opponents have been trying to require the retailer to pay a living wage. That wouldn't work for New York City, which does not have the authority to set wage standards. But the City Council does have power over zoning. Seventeen members have introduced a bill requiring large retailers--those opening stores bigger than 85,000 square feet--to give a full public accounting of criminal charges, civil actions or violations against the company. They would also have to explain what wages and benefits the store would provide as well as its projected local economic impact. One model is Los Angeles, where to get a license to build such a store, a company must pay for an economic impact study to show how the project will affect local workers and businesses.
One player decidedly unenthusiastic about such policies is Costco, which declared in a recent letter to the City Council that constraints on major retailers' business practices are unfair to Costco, whose wages and benefits were among the best in the retail industry.
Wal-Mart's possible arrival has also been a major inspiration behind the Health Care Security Act (HCSA), introduced before the City Council this fall, which would force large grocery stores--as well as large employers in several other industries--to provide health insurance for their workers, or pay into a fund that would do so. Since Wal-Mart would probably never agree to abide by HCSA, its passage could deter the company from opening stores in New York. (In contrast to Costco's reaction to big box legislation, many companies are supporting HCSA as a way to make competition fairer.) As associate counsel at the Brennan Center for Justice, Nathan Newman helped draft Chicago's living wage law and is now working on policy solutions for New York. "Wal-Mart won't come in if [HCSA] is passed. Wal-Mart doesn't want the standards raised," he says. "Of course, you and I know it won't bankrupt itself paying for workers' health insurance. But Wal-Mart doesn't want that demonstrated."
As Wal-Mart begins to consider other New York locations, those fighting the retailer will have to address the dearth of shopping alternatives in many borough neighborhoods. City shoppers have enthusiastically embraced national retailers that aren't too different from Wal-Mart. Target, for example, is also nonunion, and its wages are in many markets as low as Wal-Mart's. Yet when a Target store opened in Brooklyn's Atlantic Center it inspired almost no opposition, partly because there was so little affordable and convenient shopping in the area.
"I see a lot of people in Park Slope carrying Target bags," says Michelle de la Uz, executive director of Brooklyn's Fifth Avenue Committee, which is located just blocks from the Atlantic Center, "so I guess it is filling a need." But when de la Uz's organization looks for jobs for graduates of its workforce training programs, it searches elsewhere for positions--for living wage jobs. "I think we are all becoming more sophisticated," she says. "We don't just need development, but accountable development. We have to ensure that people work with dignity, that we don't invite retailers in to help depress wages."
In Red Hook, where a new Fairway supermarket is under construction, Fifth Avenue Committee and its former subsidiary Brooklyn Workforce Innovations have been working with the company to ensure that residents of the Red Hook Houses will have an early opportunity to apply for jobs at the store. Fairway has an agreement with the UFCW that any new shop will be unionized, and workers at the store's Manhattan locations are well compensated.
Whatever the alternatives to Wal-Mart may be, says Rabbi Feinberg, "communities themselves need to decide what is appropriate economic development for communities. Which seems to be much easier to discuss and think about than to do."
"It's not that big is bad," says Andrew Friedman of Make the Road By Walking, which has been organizing low-wage retail workers in Bushwick and is part of the Wal-Mart Free NYC Coalition. "It's exploitative conditions that are bad."
Addressing the lack of retail in neighborhoods is not at the top of most community organizations' to-do lists, and it has something to do with the fact that many regard a single-minded emphasis on bringing in retailers as a backwards approach to development. Build a neighborhood's purchasing power through better jobs, they agree, and retailers will be eager to set up shop.
"If there are assets in a community," says Aaron Shiffman, executive director of Brooklyn Workforce Innovations, "there will be expenditures, and then there will be quality goods and services." Such development is fostered not simply by bringing in jobs, he adds, but "quality jobs. Not every job is created equal."
Liza Featherstone is author of Selling Women Short: The Landmark Battle for Workers' Rights at Wal-Mart (Basic Books).