Chicago is Wal-Mart’s kind of town.
Chicago is the city of backroom deals, and in the case of Wal-Mart, there were deals being cut everywhere. Deals between Mayor Daley and Wal-Mart. Deals between construction workers and Wal-Mart. Deals between the Federation of Labor and Wal-Mart. None of these deals were made in public, and all of them were controversial.
The Chicago media declared that the deal to bring a second Wal-Mart to the city “could have nationwide impact.” But there is less than meets the eye in all of these deals, and little likelihood that the back room bargaining would be repeated in other urban areas. And according to Wal-Mart, there was no deal at all.
According to the Chicago Sun-Times, the latest round of ‘Let’s Make a Wal-Mart Deal’ began a couple of weeks ago, when Mayor Richard Daley had a private meeting with Wal-Mart officials at a gathering of the U.S. Conference of Mayors. The Mayor extracted a promise from Wal-Mart that they would build 21 new stores in the city, instead of just the so-called Pullman Park project on the south side. This was not much of a concession from Wal-Mart, since the company had already indicated it wanted to breed many new stores in the Windy City.
By bundling a bunch of new stores together, Wal-Mart hoped to increase its skin in the game — and it worked. Chicago Federation of Labor President Dennis Gannon told the Sun-Times, “All we heard was one store, one store. When they made it $1 billion worth of construction and a couple dozen stores, that put more pressure on us to make a deal and do the right thing.”
Gannon is referring to a labor agreement that Wal-Mart reached with the Building Trade Council in Chicago — the folks who can construct the buildings. The agreement covers 20 counties, and says that union workers will build the new Wal-Marts. This works for Wal-Mart, because construction workers only are on the job for ten to twelve months building a store — and then they are gone. The people who go on to work inside those stores will be fired if they try to organize a union.
Mayor Daley crowed that the union had finally come to its senses. “They heard from their members,” the Mayor told WLS radio. “They’ve got mortgages. They’ve got kids in school. And I feel sorry for all of ’em. They just want jobs. When you start building things … you get a feeling that maybe the economy can pick up.”
The sticking point over an agreement with Wal-Mart was the issue of wages. The unions have been pushing the retailer to raise its wages, and Wal-Mart has said that is non-negotiable. Some city councilors wanted Wal-Mart to join the city — but only if they paid their workers $11.03 per hour. This was considered a ‘living wage’ by city aldermen.
But Wal-Mart claims that as of May 2010, the average wage for regular, full-time hourly associates in Illinois is $12.27 per hour. Yet Wal-Mart balked at that wage, and only offered to raise entry level wages to $8.75 an hour — .50 cents over the minimum wage in Chicago.
To try to work out a deal, Wal-Mart met with labor leaders in early May, but instead of offering a “living wage,” Wal-Mart offered starting workers at $8.75 per hour. Even the pro-labor Chicago city council stated that the union should just accept that offer. As the Council’s Finance Chairman, Edward Burke, said, it was time to “declare victory” and go home.
The union negotiators wanted more from Wal-Mart, saying that they “knew there was more on the table.” Wal-Mart then apparently offered to give workers a 40 to 50 cent an hours increase after completing their first year on the job.
Although the unions claimed that this agreement was unprecedented, Wal-Mart said the deal was no different than the deal they gave workers in other parts of the nation.
Once this wage deal was announced, the Chicago Zoning Committee voted unanimously in favor of rezoning land for the southside Pullman Park Wal-Mart plan — as if zoning land was based on who offers the most jobs.
One Alderman told Bloomberg news that this was the “first time that the largest retailer in the world had seen fit to offer 50 cents more than minimum wage as starting pay.” But a Wal-Mart spokesman said afterwords that what the company agreed to was not new policy at all, but just repeated the company’s existing policies on raises. “There are no deals,” the company spokesman told Bloomburg news. “All raises are based on performance.”
The media said it took Wal-Mart six years to create a deal. The media all describe the deal as “bringing more jobs” to the city, when in fact some studies suggest that Wal-Mart at best is a wash for new job creation. Most Wal-Mart jobs are transferred from existing businesses elsewhere in the Chicago trade area. The deal also means that the union will not be representing any of the “associates” who are hired by Wal-Mart.
It also means that Aldermen who were afraid that the Wal-Mart issue would be used against them in the February election, now have been told that the unions will not target them for defeat.
But Wal-Mart is not a done deal yet. Next week the full 50 member City Council will vote on the plan for Chicago’s southside. The Chicago Federation of Labor says no deals that were discussed with the union go beyond this second store. “There are 21 more stores that are going to come in,” explained Dennis Gannon of the Chicago Federation of Labor. “We are going to hold Wal-Mart accountable at every… step of the road, to make sure they are living up to their side of the agreement.”
One Alderman lamented the Wal-Mart deal and told the media that the Wal-Mart deal means “Pandora’s box is open. I’m sure they’re going to aggressively start looking at different locations to open up.”
Another Alderman added, “I think the eyes of the nation really are on this chamber today… Up until this point, they haven’t been able to get into Chicago. This is going to change their opportunities, not only in Chicago, but nationwide.”
Readers are urged to call Chicago Mayor Richard Daley after hours at 312-744-3300 and leave this recorded message: “Mayor Daley, Do you have any idea how many existing jobs will be displaced if you clear the way for 21 Wal-Marts? Is this your idea of a jobs program — replacing existing jobs? Your embrace of this huge corporation as a Savior for the City is so misplaced.
These are the very people who helped knee-cap our manufacturing base in America, who made our trade deficit with China run a fever, and who lowered the value of working wages in this country. Wal-Mart has rolled back the value of labor, and you have welcomed them into your city as if this was the best you could do.
Wal-Mart claims it’s paying its workers $12.27 per hour in Illinois — but as a special deal for Chicago — the wage within city limits will only be $8.75. That’s quite a deal you helped broker for the unemployed of Chicago. Work for less than your worth at Wal-Mart.
This is empty economic development. You have just made a major contribution to Chicago’s jobless recovery. You should be urging the City Council next week to aim for higher paying jobs, rather than rejoicing over giving the big corporations the keys to your city.”
