Wal-Mart's Verbal Contract

A funny thing happened to the labor deal that Wal-Mart supposedly agreed to in order to get approval for a second store in Chicago-apparently with the Walmonster it's a good idea to examine the fine print. DMI blog has the story: "It looked like at least a modest victory: in exchange for the right to build a second store in Chicago, Wal-Mart would pay all employees in the city at least $8.75 an hour (50 cents more than the state minimum) and would raise wages to at least $9.15 within the first year. While the wage level was still lacking (back in 2006, advocates called for a living wage of $10 an hour plus benefits) the agreement represented an unprecedented step. As the blog Chicagoist noted: “The labor movement in Chicago has done what nobody else in North America has been able to do: force Wal-Mart to negotiate a wage agreement on behalf of their employees with a labor union.”

With Wal-Mart, however, looks are deceiving: "By all appearances the door was open to make similar demands – and build on them – as a condition for opening Wal-Mart stores in other urban markets, including New York. Alas, no sooner had Chicago’s zoning committee approved the changes necessary for a second Wal-Mart store in the city than the company began insisting that the deal did not exist. Instead, Wal-Mart spokespeople made the dubious claim that the company’s wages were already “as good, if not better” than its Chicago competitors. The upshot? Chicago’s City Council would be wise to get all agreements in writing before granting final approval to the store this week. In the meantime, New Yorkers’ caution about embracing a similar deal with company appears well-founded."

So, just as we had advised Charles Barron to get every offer from the retail giant in writing, we caution the city council to make sure that all of its land use deals have a written exclusionary clause. If they don't, we get the dangerous situation that we are now facing in East NY. But as Crain's reports:, New York isn't buying the Chicago deal "Nation's top retailer said to agree to near-prevailing-wage minimums for new Chicago store, but labor leaders in Gotham scoff. “This is New York; this is not Chicago,” says head of retail workers' union here...New York labor officials were quick to cast aside any notion that the Chicago agreement meant Walmart was any closer to gaining a foothold in New York City. “This is New York; this is not Chicago,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union. “They've got a long way to go before they would be welcome here.”

Appelbaum apparently is prescient-as the DMI report highlights. But vigilance must be maintained: "Mr. Appelbaum and United Food and Commercial Workers Union Local 1500 leaders say they'd be happy to sit down with Walmart officials to discuss their desire to open a store in New York. But it's clear that here in New York, the retailer would have to move beyond what it agreed to in Chicago if it wanted labor's imprimatur on a project."

Move beyond?-and constructing an agreement that isn't written in disappearing ink might be a good idea. But what should an agreement look like? Crain's tells us: "Union leaders say they wouldn't consider negotiating a specific wage amount, but would want any agreement pegged to the prevailing wage for grocery workers in the area. Full-time unionized supermarket workers here start at $12 an hour, plus benefits. And though local unions' opposition to Walmart has often been framed around issues of low wages, pay rates are not the only obstacle Walmart would have to surmount in talks with worker groups."

Crain's does, however, offer a potential game plan for the Walmonster: "As it did in Chicago, Walmart could try to drum up public support for such a move by partnering with religious leaders who are concerned about high unemployment in minority neighborhoods. It's also likely to follow its Chicago strategy of focusing on poor neighborhoods where there is a pent-up demand for jobs and supermarkets. New York City residents already spend $125 million a year at area Wal-Mart stores, according to the company."

That model makes Gateway 2 a good target-since East NY qualifies as a poor community where bargains are certainly welcome. As the reality of the Wal-Mart interests in the site becomes clearer, it will be up to the store's opponents to make the case to the community-and to the city as a whole-that there is a, "High Cost of Low Price."