Tuesday, October 26, 2010

Wal-Mart: On the Tusk of Defeat

Crain's Insider is reporting (subsc.) that Wal-Mart has hired Bloomberg errand boy, Bradley Tusk, to help navigate the city's choppy political waters: "Walmart has hired former Bloomberg campaign manager Bradley Tusk to bolster its efforts at establishing a foothold in New York City. Tusk was hired in the past month as a consultant “to help us tell the Walmart story,” a company spokesman says...Walmart's spokesman says Tusk was hired because of his “strong relationships” with city officials but has not yet talked to its most powerful opponent: labor. “We're a nonunion retailer,” he says. “That hasn't changed.”

The news was upsetting to UFCW Local 1500-and should be placed under the unrequited love column: "The move outraged Pat Purcell of United Food and Commercial Workers Local 1500, which represents supermarket workers and sees Walmart as a threat. UFCW endorsed Bloomberg with the understanding from Tusk that the mayor would spend no political capital to bring Walmart to the city, Purcell claims. “I find it shocking he would turn around and take them on as a client,” Purcell says."

Unlike his mayoral opponent Bill Thompson, who made a strong anti-Walmart commitment to opponents, Bloomberg has never ceased his love affair with the Walmonster-and we doubt the affection derives from the mayor's own shopping experience at the store. Put simply, Mike Bloomberg will always be fronting for the big guy-and can often be found, like the former small-statured French emperor, with his right hand tucked into his suit jacket.

We were amused, however, by a couple of the comments made by the Wal-Mart folks: "If Walmart proposes its first city store, it will argue that it would provide jobs and low-cost products at a time of high unemployment and tight consumer budgets. The spokesman says the company wants to look in neighborhoods facing double-digit unemployment. Last year, Walmart paid more than $5.7 billion to city-based businesses for merchandise and services."

The facts, though, contradict this self-serving narrative-as the Chicago study on that city's first Wal-Mart demonstrates: ""Our analyses of data on taxable sales in Wal-Mart’s home and adjacent zip codes are consistent with the hypothesis that Wal-Mart’s sales displace a significant amount of sales from its home zip code. There is some evidence that Wal-Mart’s sales also reduce sales in some adjacent zip codes, but this effect seems to be small and inconsistent."

Translation: Other stores are put out, and those workers are replaced-but in the process we replace scores of independent local businesses for one out of town retail giant. This is not a good deal for NYC-as Stacy Mitchel's keen insights underscore. She highlights this in her article on buying locally: "Buy-local campaigns work in part because they are not simply empty marketing slogans. They aim to educate and their messages are grounded in empirical research. They highlight, for example, the many studies that have shown that $100 spent at locally owned businesses generates significantly more local economic activity and supports more local jobs than $100 spent at national chains. (This is because independent retailers purchase more goods and services from other local businesses than chains do.)"

Mitchell goes on to dramatize something that Mayor Mike is tone deaf about-the importance of small business to the health of neighborhoods. In the process she also points out something that should reverberate within the sustainability band that Bloomberg makes believe he is conducting: "Other research shows that communities with vibrant local business districts score higher on measures of social and civic health, and that local businesses often have a much smaller environmental footprint than their big-box competitors. (For a comprehensive collection of such studies, visit www.newrules.org/retail.)"

All of this will go right over the head of the edifice complected officials down at EDC-folks whose notions of economic development begin and end with a phone call to Steve Ross at Related. And if the Bloombergistas have the effrontery to make the economic development and job related pitch for Wal-Mart, we can refer them to the new findings of the Tax Foundation that places NY State last in its business climate index. That is the reason why local business is suffering-a condition that Wal-Mart will exacerbate and not ameliorate.

Here's the Foundation's money quote: "Taxes matter to business. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system, and the long-term health of a state's economy. Most importantly, taxes diminish profits. If taxes take a larger portion of profits, that cost is passed along to either consumers (through higher prices), workers (through lower wages or fewer jobs), or shareholders (through lower dividends or share value). Thus a state with lower tax costs will be more attractive to business investment, and more likely to experience economic growth."

Bloomberg, who entered politics telling one and all that higher taxes were no bar to economic growth, and that NYC was a, "luxury product," then went on to disprove the point by raising taxes and fees; leading to historically high bankruptcy and foreclosure rates-particularly among the most vulnerable small business sector. Wal-Mart simply makes the bad Bloomberg-induced situation that much worse.

The bottom line here: Wal-Mart is not a good job generator, hurts entrepreneurship and workers; and is bad for the ecology of NYC-a case we will continue to make, even as the Walmonster attempts to co-opt all of the mayor's substantial entourage.