As anticipated, the Los Angeles City Council earlier today gave initial approval to a zoning ordinance that would require large retailers to demonstrate that their discount stores would not have a negative economic impact on jobs, wages or other local businesses in the surrounding area. The measure applies to retailers larger than 100,000 s.f. that sell general merchandise and groceries, but exempts warehouse clubs such as Costco or Sam’s Club. The Council will have to vote a second time to make the ordinance final. State officials had urged the L.A. City Council to pass the measure. State Controller Steve Westly and other Democrat leaders supported the measure, citing a University of California Berkeley study that concluded last week (see related story) that low-wage Wal-Mart jobs cost the state $86 million a year in social services. Westly told the media he was concerned about “a race to the bottom” as Wal-Mart jobs put downward pressure on wages elsewhere in the retail sector. Wal-Mart called the Council’s vote “a huge victory” for consumers and the retailer, because Wal-Mart was concerned that the city was going to simply ban all supercenters. “This ordinance … in no way restricts the sale of groceries at supercenters,” a Wal-Mart spokesperson said. “In our opinion, this ordinance, in reality, is redundant.” If the final vote goes as expected, Wal-Mart said it plans to make sure that it “is applied consistently across the board since it applies to all the superstore formats.” This is a conciliatory move on Wal-Mart’s part, since the company had threatened to litigate against any community that passed such a measure. Wal-Mart disputed claims that its workers work for less than other retailers, and said its pay was “almost identical to unionized labor workers.”
What the L.A. City Council should have passed is a cap on the size of superstores. Wal-Mart has promised to build its “Urban 99” stores to get below the size limit set by the Los Angeles officials. The Urban 99 store is a 99,000 s.f. supercenter, and so would fly under the radar of this new economic impact study. The L.A. ordinance does not ban anything — it only requires an economic impact study. If these studies are done by Wal-Mart, they are guaranteed to show glowing fiscal impacts. So Wal-Mart does not appear to be threatened by this new ordinance. One assumes that Wal-Mart will simply come in with its Urban 99 store and make the city look foolish. For examples of other ordinances with caps on size, search this database by “caps”.
