Monday, May 03, 2010

Wal-Mart's Baltimore Chop

In yesterday's NY Daily News, the paper resorted to importing someone from, of all places Baltimore, to make the case why Wal-Mart would be good for NYC-and Marta Mossburg's ignorance, both of this city and what kind of impact the Walmonster would have here, is glaring: "There may be more to life than cheap underwear, as Pat Purcell of UFCW Local 1500 said in a recent Fox News interview. But what about the poor people who need it? Should they be forced to buy expensive personal items, groceries and furniture to appease union activists and those seeking an "authentic" urban experience? That's the real question on the proposed Walmart in Brooklyn's Gateway II shopping center. But you won't hear that issue raised by Purcell, his labor union brethren, community organizers and some local politicians who oppose the giant retailer using the same recycled arguments they first employed when the company tried to break into the five boroughs years ago..."

What Baltimore's Think Tank contessa fails to understand is that there is a high cost to NYC for all of the supposed low prices that the Walmonster brings into an area. And one of those costs is in the city's labor market. As we said over five years ago: "60% of a supermarket’s overhead is in its labor costs so it stands to reason that if you can dramatically reduce these costs you can concomitantly lower the price of cheerios. There must be total transparency on this point. The lowering of labor costs means that workers will be paid less, and have fewer benefits at the same time they are losing the job protection and security that their union provides."

And, as the national record shows, Wal-Mart has been responsible for the disappearance of supermarkets all over the country-with low wage workers replacing union employees. And then there's the impact on the smaller businesses in a community. Study after study has demonstrated how Wal-Mart wipes out downtown shopping areas-in effect, creating an oasis in one place and desert everywhere else. As we have pointed out: "One of the staple pro-Wal-Mart arguments is that the store creates jobs and hence contributes to the economic betterment of an area. However, critics continually point out that job creation cannot be viewed in a vacuum, that the Wal-Mart jobs added need to be balanced with those jobs lost due to store closings or cutbacks. And even when Wal-Mart does’t cause direct jobs losses it, by offering low paying, low-benefit employment, creates a race-to-the-bottom atmosphere where competitors slash their own wages and health care packages in order to stay afloat."

But Mossburg can't resist using the city's high unemployment rate as a cudgel for the Walmonster: "If Brooklyn leaders are smart, they will welcome Walmart for the same reasons. When the biggest question for many people is not about earning a "living wage," but any wage, with unemployment at 10% in New York City, the store is expected to hire hundreds. Would Barron rather constituents drain welfare payments from a broke city rather than work?"

Unable to see the zero sum nature of cannibalization, our out of towner misses how Wal-Mart's retail impact can do the opposite of what she hopes for: reduce the number of jobs and retail outlets, while lowering the quality of  the jobs that are offered. She misses that supermarket employment has been a bridge for low income New Yorkers to the middle class; while also being a boon for minority entrepreneurship.

But our Baltimore critic can't resist a little supermarket slander-underscoring once again how little she knows about New York: "They will have the fight of their lives if they try to bring Walmart out here. It's not going to happen," Councilman Charles Barron (D-Canarsie) told The Brooklyn Paper last month. "No one exploits workers more than Walmart. To exploit workers the way they do is unconscionable." If  Barron and supporters win, the only people exploited will be his constituents, especially the poorest ones. Food prices in inner cities are the highest in the nation. Many poor people do not have cars, so they do not have options other than convenience stores or the tiny, often dirty supermarkets with wilting produce and high prices."

Perhaps a site visit would be in order so that our Baltimore buddy could see the number and variety of local supermarkets in and around the proposed site-not to mention the fact that NYC is trying to arrest the loss of supermarkets in order to provide fresh produce to underserved neighborhoods. Nothing could do more to harm this, "fresh initiative," than a Wal-Mart or two on the city's arterial perimeter.

But Mossburg really gets into a fallacious blame the victim mode when she cites the work of our friend Eamon Moynihan: "And it's not just poor people who need help in New York, it's everyone. The cost of living makes New York City the poorest big city in America, according to Eamon Moynihan of the Cost of Living Project. Largely because of expensive housing, someone making $100,000 in New York City has the same standard of living as someone making about $63,000 in Washington, D.C., and $51,000 in Chicago, he wrote in a 2009 issue of City Journal."

It is, as we have said, precisely because of this high cost of doing business that so many folks do leave the city to shop-a trend that is
likely to continue even if a Wal-Mart comes to East New York. And the end result will be the further cannibalization of existing local stores, as a Chicago study underscores, with no stemming of the outward shopping exodus.

But, most glaringly, the Mossburg effort to compare Baltimore, where Wal-Mart entered absent any protest, to New York falls flat; owing to the author's total lack of knowledge about our city's retail environment: "The lack of protest comes in part from the fact that the slowly decaying city has few food and retail options. Case in point: there are so few places to buy food in this city of 635,000 that the library system recently brokered a deal with Santoni's Super Market in Highlandtown. Two library branches now serve as drop-off points for online grocery orders from the store, giving the city's overwhelmingly low-income residents access to fresh, affordable food they would not be able to find otherwise."
Not so in New York City-but this highlights the dangers in some of the rhetoric used to promote the Fresh Initiative-words that leave the impression that there are "food deserts" that leave the poor bereft of retail choice. This type of over statement opens the door for the mega monster's supporters to waltz in as good Samaritans.

But in the end, Mossburg's argument founders on her inability to understand how the Bloomberg mega development policies create collateral damages. Her observation about Kingsbridge underscores this myopia: "Retail developments blocked over wage debates do not help job seekers - or taxpayers. For example, Kingsbridge Armory in the Bronx, which could have generated about 1,000 construction jobs and 1,200 permanent jobs, sits vacant because tenants behind the project could not support the requirement to pay both construction and retail employees a living wage of $10 per hour. As a result, the city earns no sales, property or income taxes from the facility and must spend money to maintain a structure built almost 100 years ago. Other businesses in the area are not benefiting from spending generated by the wages earned at the complex."

As per Moynihan-and Steve Malanga-we do need to devise ways to reduce the cost of doing business for all of the existing city retailers, Bringing in a community and job killer like Wal-Mart will only make a bad situation worse-and could even push us into becoming more like, God forbid, Baltimore.