Officials are getting desperate in Chicago.
Instead of community self-determination, local leaders are turning for relief to national chain stores. Wal-Mart supporters who want to see more big box stores in the city are not slowed down by the voodoo economics of Wal-Mart. A superstore will bring no new jobs to Chicago — but don’t tell that to the city Aldermen who want one.
This week the battle lines grew sharper over a plan to build a second Wal-Mart in Chicago — despite the fact that the economics just aren’t there.
On January 10, 2010, Sprawl-Busters reported that a new study from Loyola University and the University of Illinois at Chicago (UIC) concluded that the one existing Wal-Mart store in Chicago had not produced any new jobs in the local economy.
The study, “The Impact of an Urban Wal-Mart Store on Area Businesses: An Evaluation of One Chicago Neighborhood’s Experience,” found that Wal-Mart’s opening in Chicago has produced a loss of 300 full-time jobs. Researchers concluded that the probability of a local retailer going out of business during the study period was significantly higher for establishments close to Wal-Mart’s location. The loss of jobs in the trade areas near Wal-Mart just about balanced out any ‘new’ jobs attributable to Wal-Mart. “These estimates support the contention that urban Wal-Mart stores absorb retail sales from other city stores without significantly expanding the market,” the researchers said.
“What we’re seeing here is that placing a Wal-Mart in an urban setting is basically a ‘wash’ in terms of sales revenue for the city and jobs for local residents,” explained study co-author David Merriman, head of UIC’s economics department. “This means that communities around the city should not see Wal-Mart, and other big-box retailers, as a panacea to local economic struggles.”
A total of 306 enterprises were tracked, and the research team found that 82 (27%)of them went out of business during the study period. A key finding of the survey is that the probability of going out of business was significantly higher for businesses close to Wal-Mart. Being located close to Wal-Mart was particularly toxic for retailers selling electronics, toys, office supplies, general merchandise, hardware, home furnishings, and drugs.
Based on their analysis of retail sales, the researchers concluded that “These estimates support the contention that large-city Wal-Marts absorb retail sales from other city stores without significantly expanding the market… Overall, the weight of evidence suggests that the Wal-Mart opening on the West Side led to the displacement of a range of businesses. There is no evidence that Wal-Mart sparked any significant net growth in economic activity or employment in the area.”
Despite such clear evidence, the Chicago Plan Commission this week rubber-stamped a southside Wal-Mart project, leading to a show-down at the City Council, where the plan must be approved or buried. The so-called “Pullman Park” project is an enormous tract of urban land which involves not just retail, but 850 homes, a hotel tower, a community recreation center, elderly apartments, and a park.
Local officials say they need the Wal-Mart supercenter because it will sell groceries, and the southside of Chicago is called the “food desert” because of its lack of grocery stores. Instead of trying to find local entrepreneurs, clergy and other leaders of the community are turning to a giant corporation from Arkansas to save them.
But Chicago City Alderman Edward M. Burke (14th), who chairs the Council’s Finance Committee, insists on linking Wal-Mart to a living wage ordinance. Burke says that any project which requires city funds should have to provide a living wage of at least $11.03 an hour. Burke has drawn a line in the sand and told Wal-Mart that he will not support their big box project unless there is a living wage deal as part of the package.
Such an agreement should not be a problem for Wal-Mart, which claims that “as of March 2010, the average wage for regular, full-time hourly associates in Illinois is $12.15 per hour.” These figures don’t count the myriad of part-timers who work for lower wages, and the full-timers may only get 34 hours per week.
The retailer has taken the position that it will not negotiate over wages. “We’ve been open and transparent through this entire process,” a Wal-Mart spokesman told the Chicago Sun-Times. “We’ve been willing to listen to both our critics and our supporters. But, we’re not willing to make any commitments” on wages. “We feel like we pay a competitive wage nationally, here in the state, in Chicagoland and specifically at our Austin store. We feel like our jobs offer real career opportunities.”
None of this talk made any difference to the Chicago Plan Commission, which looks only at zoning issues. But during the presentation this week, one Alderman could not resist from injected a little politics that had nothing to do with land use. Alderman Anthony Beale (9th) told the Commission that he has the votes to win for Wal-Mart at the Zoning Committee, and ultimately from the Chicago City Council. Beale said he was backing Wal-Mart as a last resort, because “Nobody else is coming to the area. Nobody else is trying to fill the ills of my community.” Wal-Mart will certainly “fill the ills” of the 9th ward. “If Wal-Mart doesn’t anchor this site, my site goes nowhere because everyone else has said, ‘No. We’re not interested,'” Beale complained.
In fact, Beale said he tried wooing a bunch of other retailers, but ended up with Wal-Mart. “Wal-Mart wasn’t our first choice,” Beale admitted. “I worked with the unions to try to get someone else to come in.”
There was a note of desperation in many of the comments offered by residents of the south side. One local pastor said a Wal-Mart would bring “some optimism” to this neglected part of the city. “This will give people in that community… some hope,” the pastor said.
But not all Aldermen are feeling this desperate. Alderman Freddrenna Lyle (6th) said she would introduce the living wage ordinance again — similar to the ordinance that Mayor Richard Daley vetoed once before. There are 18 Aldermen who back Lyle’s ordinance, which would require businesses with 50 or more workers that take $250,000 or more in direct or indirect subsidies from the city, to pay its workers at least $11.03 an hour.
But Alderman Beale, who apparently has not read the Loyola study of the first Wal-Mart on the West Side of Chicago, still believes that this development will create thousands of new jobs, and he is not fussy about what kind of wage they pay.
When Wal-Mart opened its only store in Chicago on the West Side of the city, the retailer said, “This store will show what a great asset Wal-Mart can be to the community, as an employer and corporate citizen.” From the very beginning of its drive to locate stores in the Windy City, Wal-Mart has based its case predominately on jobs. One of Wal-Mart’s most visible and vocal frontmen is Alderman Howard Brookins of the city’s 21st Ward on the South Side of town. “We need jobs, plain and simple,” the Alderman has said repeatedly. Brookins has been so outspoken on the issue of Wal-Mart and jobs that the Chicago Tribune has referred to him as “the Alderman from Wal-Mart.” But the jobs argument isn’t adding up in Chicago.
The researchers in the Loyola study suggest that their findings are very similar to a number of other studies on “the Wal-Mart effect” that have been published since the 1980s. “Under the circumstances,” the new study says, “claims that the Chicago Wal-Mart has led to significant economic development in nearby areas must be considered skeptically.”
Wal-Mart has been trying to break into the Chicago market like gangbusters since the spring of 2004 — almost a six year epic struggle. The Chicago City Council responded in part to Wal-Mart’s push by passing a “big box living wage” ordinance, which Chicago Mayor Richard Daley vetoed. The West Side Wal-Mart opened in the fall of 2006. To further enhance its chances of additional stores, Wal-Mart announced in the spring of 2006 that this West Side store was going to be part of a national campaign launched by Wal-Mart called “Jobs and Opportunity Zones (JOZ).
Wal-Mart promised that it would select five small local businesses for advertisements in local newspapers and on Wal-Mart’s in-store radio network. Wal-Mart also pledged to host workshops for small businesses on how to “survive & thrive” with a Wal-Mart nearby. A grant of $300,000 would be donated to local chambers of commerce to create effective programs for the funds.
But researchers from Loyola and UIC interviewed 2 of the 5 businesses selected to be part of the JOZ program. Both businesses claimed that Wal-Mart did buy ads for their businesses in local newspapers — but neither attended any Wal-Mart seminars — and one owner called the Wal-Mart initiative “pretty much a failure.”
The Loyola/UIC study underscores research conducted by economists Ken Stone, Tom Mueller, David Neumark, and others that reveal the dark side of Wal-Mart’s economic impacts. One earlier study showed that each Wal-Mart worker replaces about 1.4 non-Wal-Mart retail workers. The group Retail Forward concluded in 2003 that “for every Wal-Mart supercenter that opens in the next five years, two supermarkets will close their doors.” Wal-Mart’s only comment about the Loyola study was that it was funded by “a group with ties to labor.”
It is remarkable to see Aldermen and religious leaders in Chicago turning to a national chain store to ‘save’ their community. The sense of self-reliance, and self-sufficiency are gone. The South Side of Chicago, they say, needs a national chain store to lift it up. The community is down on its luck, flat on its back. Wal-Mart jobs were not the first choice — but now these low wage jobs are looking good to some politicians. The concept of locally-owned community economic enterprise is dead. The local entrepreneur is gone.
All that remains is the pathetic plea of local leaders for Wal-Mart to lead them out of the wilderness.
Readers are urged to email Chicago Alderman Anthony Beale at [email protected] with the following message: “Dear Alderman Beale, It is hard to watch elected officials scrap the bottom to endorse low wage jobs at Wal-Mart — especially since these national retailers create no new net jobs for your constituents.
Don’t look to Wal-Mart to pull up your community. Your power lies inside the community, not in chasing down national chain stores. You call the South Side a “food desert.” But it is really a “hope desert” — because its elected leaders can find no better partner to dance with than Wal-Mart — a company which has been repeatedly sued by its own workers for racial and gender discrimination, and for stealing benefits from its own ‘associates.’
Lift your sights, Alderman Beale. Inspire your community to create is own grocery store, rather than turning to the billionaire family from Arkansas. Do not act out of desperation. Instead of just opening the gates to cheap, Chinese imports and part-time jobs with unremarkable benefits, work to find your people a decent job at a liveable wage — and never settle for less.”