While most of America's businesses are struggling through the recession, Wal-Mart and the Walton Family are raking in billions in profit. There's nothing wrong with making money - but the rest of us are getting poorer as a result. Whether it is the low wages the Waltons pay, the taxes that the company expertly dodges or the subsidies Wal-Mart demands, the average American is helping the Walton family get richer every day.
That behavior has been a drag on Wal-Mart's reputation and a primary reason why the company has had such a hard time entering high-income communities and first tier urban markets like New York City, Chicago and Los Angeles. Now, however, it's clear that Wal-Mart wants to use the cover of the recession and the promise of new jobs to enter the same communities that have rejected it in the past.
Unfortunately, Wal-Mart hasn't changed - only the economy has.
Given Wal-Mart's low-margin, high-volume business model, it has always been dependent on rapid growth to stay alive. Over the past two decades, Wal-Mart's growth plan has been simple: build as many supercenters in suburban and rural America as possible. But in the past few years, Wal-Mart has had to hit the brakes on its expansion after saturating most of the country and leaving itself few places to grow.
Still, America's big cities remain largely untapped by the company. Millions of Americans live relatively Wal-Mart-free existences in the metropolitan areas of Chicago, New York, Los Angeles, D.C. and Philadelphia, among others. Now that Wal-Mart sees a moment of weakness, it is poised and ready to strike.
Chicago, specifically the millions living just outside the city center on the South Side, has always been ground zero in Wal-Mart's battle to crack the urban frontier. For years, Chicago politicians and labor interests kept Wal-Mart out by proposing legislation that would have forced Wal-Mart to pay its workers a living wage. The bill signaled a willingness on the part of Chicago officials to accept Wal-Mart, if it would only agree to in turn help lift the living standards of its workers in the city. Of course, Wal-Mart refused to cooperate, and fought the law fiercely.
Last summer, Chicago finally shut out Wal-Mart - we thought for good, or at least for a while. Yet in recent months Wal-Mart has surfaced again, evidently negotiating behind the scenes with local Aldermen over 12 potential location sites for five or more stores.
In central L.A. there is now a very real plan to put a Wal-Mart in the Florence-Firestone neighborhood. Rumors have also surfaced in past few months about a possible store in the Union Square neighborhood of New York City.
In a time of recession, when jobs and tax revenues are scarce, it might look appealing for some city officials to turn a blind eye to Wal-Mart's record if it means a slight uptick in growth. They will likely find any benefit short-lived.
The Employee Free Choice Act (EFCA) is the one piece of legislation that could truly turn the tables for Wal-Mart workers and for the communities in which it operates by putting the choice to join a union in the hands of the workers, and eliminating much of Wal-Mart's ability to intimidate or fire workers who choose to do so. A collective bargaining voice will guarantee Wal-Mart workers a seat at the table with their managers to determine their pay, benefits and working conditions. Such power will help lift up the poorer and middle classes and lift their communities with them.
In the short term, without any mechanism to ensure that Wal-Mart will pay its workers a living wage, Wal-Mart will continue to take advantage of the recession by eliminating competition and exploiting desperate workers with low-wage, low-benefit jobs. In the long term, once we have worked our way out of the recession, our big cities may find themselves stuck with a Wal-Mart economy they will not want.
But we're confident that Americans won't be fooled. Over the past several weeks, Wal-Mart Watch activists in New York, Chicago and L.A. have sent over 25,000 letters to their city councilmembers urging them to stop Wal-Mart. More than 1,500 state legislators across the country have received letters urging them to not discuss any new Wal-Mart plans until there is an adequate safeguard like EFCA in place for Wal-Mart workers and the communities in which it operates.
Until EFCA is passed, Wal-Mart in our big cities is still a bad idea.