business news in context, analysis with attitude

The Los Angeles City Council yesterday approved a proposed ordinance that would force all retailers wanting to build supercenters larger than 100,000 square feet to prove that their nonunion discount stores would not hurt jobs, wages or businesses in the surrounding neighborhood.

While Wal-Mart is not specified in the legislation, it is the clear target of proponents, who originally wanted an outright ban on all supercenters. Warehouse club stores such as Costco and Sam’s Club are exempt from the ordinance’s provisions.

Final approval of the ordinance is expected by next Wednesday. Passage was made a lot more likely by the release of a study by the University of California, Berkeley, that suggested that Wal-Mart’s employment policies are costing just California’s taxpayers $86 million annually paid in public assistance to company employees. The study said that Wal-Mart workers in California, because they make insufficient salaries and get inadequate benefits, rely on the state for about $32 million annually in health-related services, and $54 million a year in other assistance such as subsidized school lunches, food stamps and subsidized housing.

Wal-Mart disputes the accuracy of the UC Berkeley study, and portrayed the Los Angeles ordinance as a victory.

"The union's failure to persuade the City to ban Wal-Mart Supercenters in Los Angeles is a victory for consumers," said Wal-Mart spokesperson Peter Kanelos. "For four years, organized labor, spearheaded by the United Food and Commercial Worker's Union, has worked to convince the city to prevent Wal-Mart from selling groceries in Supercenters. The ordinance considered by the City Council fails to meet this objective in two ways: first, the ordinance in no way restricts the sale of groceries in Supercenters and second, it allows individual neighborhoods to decide the benefits of a Wal-Mart Supercenter for themselves.”

Indeed, Wal-Mart made clear that if the ordinance is passed and becomes law, it will work hard to assure that its provisions are enacted across the board, and that it is not unfairly and unevenly targeted.
KC's View:
You can’t blame Wal-Mart for trying to spin this ordinance as a victory, but we’re not sure that anyone is going to believe it. After all, the Bentonville Behemoth obviously would prefer to have no such laws restricting its ability to grow.

It’s funny. Wal-Mart spokesman Kanelos also said yesterday that “Wal-Mart is sensitive to the needs and desires of the communities we serve. As a matter of policy and courtesy, Wal-Mart meets with its neighbors, customers and community stakeholders when it opens a store.”

But one man’s sensitivity and courtesy is another man’s riding roughshod.

One other point. While indeed the UFCW may be responsible for mobilizing and organizing the anti-Wal-Mart factions, it simply isn’t fair for anyone to suggest that anyone who opposes Wal-Mart’s expansion is a tool of organized labor. It seems to us perfectly reasonable that a citizen could decide that he or she didn’t want a Wal-Mart down the street or across town because of legitimate concerns. And he or she ought to be able to express that and be taken seriously without being lumped in with a special interest group.