“I don’t know if they are trying to find a way into the city,” black Chicago West Side pastor Joseph Kyles told the Chicago Tribune three weeks ago, “or if they are genuinely wanting to take the lead in dealing with the city’s social ills” (Dan Mihalopolous, “Nobody Neutral on Wal-Mart Proposals,” Chicago Tribune, May 4, 2004).
The Weakest Link in Wal-Mart’s Bid “to Expand Its Empire”
I hope Reverend Kyles was joking.
The “they” to which he referred was the rapacious low-wage and anti-union mega-retailer Wal-Mart, which has recently made black Chicago ground zero in a quest to expand its market reach. With 3,650 stores in the United States and another 1,499 around the world, Wal-Mart has “reached saturation in the suburbs and rural communities that have made the chain the world’s discount retail leader.” Thus it is “venturing,” the Chicago Tribune noted yesterday, “into large, union-friendly cities like Chicago to expand its more than 5,000-store empire” (Antonio Olivo, “Wal-Mart Wages Grass-roots Campaign to Crack Chicago,” Chicago Tribune, May 23, 2004, sec. 1, p.1).
Backed by the city’s powerful and (by no means just coincidentally) corporate-friendly mayor Richard M. Daley, Wal-Mart is pushing the Chicago City Council for zoning changes that will permit it to place its first stores in the Midwest’s leading metropolis. The “large-box” (including groceries) structures it hopes to build in Chicago are located in two African-American neighborhoods: Austin, on the city’s predominantly black West Side and Chatham, on the (also predominantly black)South Side. For Wal-Mart, the road to the big city pot of gold passes through streets that are lined with boarded-up shops, empty lots, storefront churches, ubiquitous small corner grocery and liquor stores (the former stocked with overpriced and unhealthy food items), and “unattached” (to school and/or labor markets) youth, who stand at the bottom-rung intersections of capitalism and racism.
It is no accident that Wal-Mart is trying to enter Chicago through the African-American inner city. The company calculates that the ghetto is so desperate for jobs and low-cost shopping choices that its residents will be willing to turn a blind eye to Wal-Mart’s rich record of tyranny and exploitation. It figures that the job- and retail-poor black community, where “beggars can’t be choosers” and “oatmeal beats no meal” (as one local black paper recent put it), is the weakest link in the urban chain.
To sweeten the pot for black community leaders, the company told Kyles that it might consider hiring ex-offenders. This weak commitment (Wal-Mart can cite no examples where it has agreed to hire people with criminal records) touches a core concern in black Chicago. Forty percent of the city’s black male adults carry the crippling mark of a felony record, thanks in no small part to the racially disparate so-called “War on Drugs” (see Paul Street, The Vicious Circle: Race, Prisons, Jobs and Community in Chicago, Illinois, and The Nation, available online at www.cul-chicago.org). Mass criminalization is the public investment and intervention authorities apply as “solution” to the misery of hyper-segregated black communities that fester in the urban shadows of the imperial “homeland.”
A Not-so “Populist” “Public Relations Experiment”
Wal-Mart’s statement of interest in hiring some of the ghetto’s criminally marked is a small part of what the Chicago Tribune calls “a public relations experiment in Chicago as Wal-Mart girds for similar fights in major cities across the country” The Tribune describes this “experiment” as a “populist” and “grass roots” “campaign” (Olivo, “Wal-Mart Wages”), ignoring the critical difference between pseudo-populist corporate propaganda and genuinely grass-roots populism.
As part of its “charm offensive” in black Chicago, the Tribune reported earlier this month, Wal-Mart brought two of its leading African-American executives to black community meetings. Speaking to a group brought together by 21st Ward Alderman Howard Brookins, one of these executives “cited [a biblical passage from] Colossians 3:23, which urges labor for the Lord, not man. The company eagerly will hire blacks, [the executive] vowed, [telling his audience that] ‘you won’t go in and pay your hard-earned money to someone who doesn’t look like you.’”
Also advancing a crass, manipulative, and top-down brand of identity politics, Brookins introduced his audience to a black Chicago advertising executive whose agency receives $20 million a year for creating television spots portraying Wal-Mart’s workers. “You can see him,” Brookins told his constituents, “he is African-American” (Mihalopolous, “Nobody Neutral on Wal-Mart”).
The Wal-Mart executive didn’t say when “the Lord” designated Wal-Mart as a leading organizer of His laborers on earth, granting the Walton family the right to make obscene earthly profits off His workers within and beyond the United States. He neglected to mention the predominantly Caucasian identity of the company’s top owners or the insidious way that super-chains like Wal-Mart take community dollars out of local circulation, destroying nearby competitors and depositing profits in distant corporate coffers. Also deleted was the low ceiling that Wal-Mart labor policies put on the amount of “hard-earned cash” that Wal-Mart workers receive.
The Secret of Wal-Mart’s Low-Price Success
The second black Wal-Mart executive to speak at Brookins’ meeting told his audience that moving up the ladder at Wal-Mart “has allowed me to grow personally and spiritually.” He did not comment on the spiritual price he has paid for holding an elevated position at a giant company with a widely reported and ongoing record of abusing and exploiting its workers – a history that is intimately related to its famous low prices. That record includes chronic violation of federal labor laws forbidding the harassment and discharge of workers who try to form unions, regular wage and hour abuse (including the requirement of unpaid overtime), locking night-shift workers into stores, hiring and severely exploiting undocumented workers, violating child labor laws, and discriminating against black and female workers.
According to Dorian T. Warren, an Erskine Peters Fellow in African-American studies at Notre Dame and a resident of one of the Chicago neighborhoods targeted by Wal-Mart (Chatham), “Wal-Mart is the largest employer in the world and it is also the largest discriminator in the world. Think of every possible civil and human rights law on the books,” Warren recently told the black daily Chicago Defender, “and chances are Wal-Mart has broken it” (Ferman Mentrell Beckless,”‘ Wal-Mart Will Cost Us Jobs,’” Chicago Defender, May 19, 2004, p.3)
Consistent with this history, Wal-Mart provides inadequate compensation to it workers. It pays an average wage ($8.23 an hour) that is considerably below the U.S. retail average. Such a wage translates into $16, 460 a year, far below the real cost of living in a major metropolis like Chicago. According to the Economic Policy Institute, the real no-frills cost of living for a single parent and two children (the typical welfare unit) in Chicago, based on what it calls “a basic family budget” (one that takes into account housing, food, child care, transportation, health care, and other necessities and taxes), was $35, 307 in 2001 (Economic Policy Institute, Hardships in America: The Real Story of Working Families (Washington D.C.: Economic Policy Institute, 2001, pp. 1-43, Table A4.2). In the grocery sector, which Wal-Mart has entered with a vengeance, the company’s labor costs are far below the industry norm.
The company also makes it notoriously difficult for its “team members” (as the company likes it calls its workers) to obtain benefits. Wal-Mart’s large number and percentage of part-time employees do not become eligible for health insurance until they put in two years at the firm. Even after that period, they are not permitted to buy coverage for their families. Thanks to exceedingly high deductibles and co-payments, moreover, full-time Wal-Mart workers with health insurance pay for more than 40 percent of their coverage. And two years ago, Wal-Mart changed its definition of part-time work from 28 to 34 hours a week.
These miserly compensation policies make many Wal-Mart employees eligible to receive public assistance. The American welfare state, such as it is, subsidizes the company’s Dickensian personnel practices – just one of many ways that American taxpayers support Wal-Mart. According to a recent report by “Good Jobs First,” a Washington DC-based research group (see the study, SHOPPING FOR SUBSIDIES, at www. goodjobsfirst.org), Wal-Mart has benefited from more than $1 billion in economic development subsidies from state and local governments across the United States. “Wal-Mart presents itself as an entrepreneurial success story,” notes the study’s principal author Philip Mattera, “yet it has made extensive use of tax breaks, free land, cash grants and other forms of public assistance.” “The subsidies to Wal-Mart are particularly troubling,” says Good Jobs First (GFJ), “given that the company uses taxpayer dollars to create jobs that tend to be poverty-wage, part-time and lacking in adequate healthcare benefits.” GFJ thinks that “any retailer receiving subsidies should be required to pay its employees a living wage.”
Ironically (or appropriately) enough, the super-opulent Walton family that founded and owns Wal-Mart invests heavily in the domestic policy agenda of the radically regressive Republican Party, which seeks to shred what’s left of the social safety net for poor people
Like other giant American corporations past and present, Wal-Mart exercises significant influence on the policies of other firms. It sets the pace for an inter-capitalist “race to the bottom” of the wage, benefit, and corporate-welfare scale, providing other retail chains with an excuse for requiring their own workers to give back hard-won gains. The recent grocery strike in southern California was sparked by the determination of that region’s leading supermarket chains to increase the amount contributed by workers to their “employer-provided” health insurance programs. The justification cited by managers was the threat of competition from Wal-Mart. The resulting conflict was widely called “a Wal-Mart strike” even though the Walton family’s holdings weren’t directly involved.
“Jobs, Jobs, Jobs?”
Wal-Mart’s main claim to helping “solve the city’s social ills” is the simple provision of jobs. But social-scientific evaluations of the retail giant’s likely labor market impact contradict Wal-Mart’s job-creationist claims. A report completed in March by the Center for Urban Economic Development (CUED) at the University of Illinois at Chicago found that the first Chicago store proposed by Wal-Mart “will displace more jobs in the general merchandising sector than it creates for Chicago residents.” “We estimate,” CUED says, “that the store will lead to a net loss of 54 jobs inside the general merchandising sector and 11 jobs outside the general merchandising sector for Chicago residents. The jobs, once lost, will lead to an annual loss of $1.2 million of income in current dollars for city residents.”
The store would not even meaningfully expand low-cost retail options in Chicago, CUED found. The new Wal-Mart “will expand the pie slightly,” CUED determined, “by pulling in customers currently shopping in the suburbs,” but “for the most part, Wal-Mart will only take away customers from existing retailersâ€¦in the 28-mile area around where the proposed store will open (the typical market area for a big box retail store in an urban market),” CUED calculated, “there are 763 retailers that do business in one or more of the retail sectors that competes directly with Wal-Mart. Among those, there are 61 general merchandising stores and the 40 discount retailers that will likely bear the brunt of job lossâ€¦. Without a doubt, the vast majority of the residents who live within the expected service area of the proposed store already have comparable retail options. If the proposed Wal-Mart store opens, the retail options will undoubtedly decline as will the total number of jobs in the local marketâ€¦.”
This assessment is consistent with Wal-Mart’s well-documented record of reducing local employment and shopping options and increasing the concentration of wealth and power across the nation.
Then there’s the negative impact that Wal-Mart’s global purchasing practices have on U.S. manufacturing employment, the decline of which has especially harmed African-Americans. “We all love a good bargain and cheap goods at low prices,” notes Warren. But “to bring us those low prices we thirst for, Wal-Mart brought $12 billion in merchandise from China in 2002 – 10 percent of all Chinese exports to the U.S. Wal-Mart is actually eliminating jobs in this country by boosting the off-shoring of manufacturing jobs to low-wage countries like China to bring us those cheap goods. We are shopping ourselves out of jobs and paying the costs while Wal-Mart profits, destroying our standards of living and our communities along the way. Cheap prices have expensive consequences” (Beckless, “Wal-Mart Will Cost Jobs”).
A Low-Road Template of Capitalist Ruthlessness
Wal-Mart’s collateral damage is historic and monumental, transcending its impact on two neighborhoods or one city. As historian Susan Strasser recently noted at a major academic conference that assessed Wal-Mart’s meaning for “capitalist culture” and American living standards, “Wal-Mart has come to represent something that’s even bigger than it is.”
Some of the most perceptive reflections at that conference came from distinguished labor and business historian Nelson Lichtenstein. “In each historical epoch a prototypical enterprise seems to embody a new and innovative set of economic structures and social relationships,” Lichtenstein noted. “These template businesses are emulated because they have put in place, indeed perfected for their era, the most efficient and profitable relationship between the technology of production, the organization of work and the new shape of the market.”
“In the 19th century,” Lichtenstein elaborated, “the standard-setting company was the Pennsylvania Railroad; in the mid-20th century, it was General Motors; and in the late 20th century, it was Microsoft. Today’s prototypical company is Wal-Mart, which rezones American cities, sets wage standards and even conducts diplomacy with other nations. In short, the company’s management legislates for the rest of us key components of American social and industrial policy. Wal-Mart has created a very different model from General Motors,” Lichtenstein added, noting that “G.M. helped build the world’s most affluent middle class by paying wages far above the average and by providing generous health and pension plansâ€¦. G.M.’s wage pattern spurred other companies to raise compensation levels, while Wal-Mart’s relatively low wages and benefitsâ€¦[do] the opposite.”
Seen in Lichtenstein’s broad historical perspective, Wal-Mart’s offer of 300 or so poorly paying positions distributing goods manufactured in low-wage “developing nations” is a rather long cry from the days of U.S. Steel, Wisconsin Steel, Armour’s (meatpacking), Swift’s (meatpacking), International Harvester (farm equipment machinery), Western Electric, and the Pullman Palace Car Company, when giant, white-owned and managed American corporations offered tens of thousands of relatively decent family and community-supporting jobs to black Chicagoans (see Horace Cayton and St. Clair Drake, Black Metropolis, New York, NY: 1946).
According to Simon Head, a fellow at the mainstream Century Foundation and author of “The New Ruthless Economy: Work and Power in the Digital Age” (Oxford University Press, 2003), “Wal-Mart is certainly a template of 21st-century capitalism, but a capitalism that increasingly resembles a capitalism of 100 years ago.” He added, “It combines the extremely dynamic use of technology with a very authoritarian and ruthless managerial culture” (Strasser, Lichtenstein, and Head are quoted in Steven Greenhouse, “Wal-Mart, A Nation Unto Itself,” New York Times, April 17, 2004).
Price, Principle, and Prostitution
It’s encouraging in more than local way, then, to learn that Wal-Mart’s racially calculated thrust into Chicago has sparked significant resistance from a dynamic coalition of labor and civil rights activists. You wouldn’t know it from yesterday’s front-page Tribune story on Wal-Mart’s “Grassroots Campaign to Crack Chicago” (better understood as a corporate campaign to crack Chicago wage and benefit levels), but the recently formed Chicago Alliance for Justice at Wal-Mart has won endorsement from numerous local black leaders. Supporters include Reverend Jesse Jackson, who has denounced the “desperation and ghettonomics” – he might have added corruption – that leads some black Chicagoans to embrace what Jakcson calls “the Wal-Martization of our economy.” Other Alliance supporters include Congressman Jesse Jackson Jr. (who has written a letter to Chicago alderman urging them to oppose the re-zoning that Wal-Mart seeks), Congressman Danny K. Davis, the noted white anti-racist Catholic priest Michael Pflegger, and Reverend Addie Wyatt (the onetime first female local president of the legendarily anti-racist CIO packinghouse union).
Pastors at nine black Chicago churches, including Trinity United Church of Christ (8,500 members) have endorsed a boycott of Wal-Mart. State Representative Mary Flowers is on record saying that “I’m for jobs in this community, but I have an insult level. People need a livable wage. As an African-American woman, I once worked for $1 an hour. I’m not talking about what I don’t know” (quoted in “Wal-Mart Threat Fuels New Urban Politics,” Black Commentator, May 21, 2004, available online at http://www. blackcommentator.com/91/91_ cover_ cities_pf.html).
As William Lucy, President of the Coalition of Black Trade Unionists notes, “slaves technically had jobs too.” And according to Jeremiah Wright, the influential minister at Trinity, “whenever price means more to you than principle, you have defined yourself as a prostitute” (Mihalopolous, “Nobody Neutral”).
Following in the footsteps of a recent, genuinely grassroots campaign to keep Wal-Mart out of the black Los-Angeles area community of Inglewood, the Alliance seeks to interject democracy and public accountability into the excessively private, elitist, and hidden process of urban economic development. It has developed a “12-point Community Benefits Agreement” to set the terms for Wal-Mart’s new Chicago project. This agreement, Black Commentator has recently noted, “is a model for corporate behavior and accountability that could be applied or amended to fit a wide range of development projects, not just Wal-Mart. The points include: no public subsidy for the project; 100 percent union construction, demolition and remodeling work, with 50 percent of the work performed by contractors from the community surrounding the site; 90 percent of employees must be Chicago residents, including management; a living wage with affordable, comprehensive health benefits; compliance with all workplace laws, and nondiscrimination in hiring; no retaliation for union activities, management neutrality on union representation issues; no inquiries on immigration status; a halt to predatory pricing; the site will be made immediately available to other retailers if abandoned by Wal-Mart; mandatory participation in a ‘Community Commission’ to monitor compliance with the agreement; regular contributions to a Community Improvement Fund to be administered by the Community Commission. Violation of the agreement would subject Wal-Mart to fines and “possible waiver of future zoning variances for other developments” (Black Commentator, “Wal-Mart Threat”).
Today,the aldermen of Chicago will decide whether or not to re-zone Chicago in accordance with the wishes of China’s eighth-largest trading partner. It’s a key moment for those who reject urban development along the lines of “business [in-charge] as usual.” The zoning changes must not be granted unless and until Wal-Mart signs on to the Community Benefits Agreement, putting it at least partly on the higher road that justice and decency demand of those who would conduct economic development in democratic societies.
Paul Street ([email protected]) is an urban social policy researcher in Chicago, Illinois. His publications include The Color of Opportunity: Race, Place, Policy and Labor Market Inequality in the Chicago Metropolitan Area (Chicago, IL: Chicago Urban League, 2003, available online at www.cul-chicago.org, click on “Research Reports Available Online”); The Vicious Circle: Race, Prison, Jobs, and Community in Chicago, Illinois, and the Nation (Chicago, IL: Chicago Urban League, 2002 ).