Good for the 'Hood?

At the corner of Grand and Kilpatrick Avenues in Chicago, the Rev. Joseph Kyles addressed a rally last May. "Tomorrow morning," he said, "we need you to pray for the City Council to vote for Wal-Mart in this community." That Rev. Kyles would be preaching the virtues of a corporate retail behemoth was no fluke. It was part of a strategy by Wal-Mart executives to cultivate support among black city council members and church leaders for building two stores in Chicago--each about the size of ten football fields. It is also part of a broader strategy to bring Wal-Mart to the 'hood--touting not just lower prices but also racial equity.

Having built its base in rural areas in the 1960s and extending to suburban markets in the last two decades, Wal-Mart began approaching poor, urban neighborhoods most noticeably in 2003, when it tried to open a store in Inglewood, a poor city near Los Angeles. From there, the company moved to Chicago and New York City. Initial plans to open a store in Queens, N.Y. were dropped earlier this year, but Wal-Mart executives say they are determined to find another site in New York. With over $280 billion in annual sales and 3,500 stores across the United States, the company is now selling itself as a solution to urban racial inequality.

The pitch goes like this: Wal-mart is good for poor people of color because they get jobs and also get to buy cheap goods. What executives don't mention is that the jobs come with notoriously low wages and that the company has cracked down on union organizing. But Wal-Mart executives know that poor people of color are in no position to be picky about who brings what jobs to the community. As the largest private employer in the United States, with over 1.2 million workers, Wal-Mart is also the leading employer of African American and Latino workers.

Using race as a selling point for economic development projects in distressed urban areas is not just the handiwork of Wal-Mart. In 2001, developers promoted the Staples Center sports complex in Los Angeles as a boon for a hurting local economy, insisting that it would create jobs for people of color who lived nearby. A 450-foot-tall Marriott hotel is going up on 125th Street in Harlem, and Ikea is planning to open its biggest U.S. furniture store in Brooklyn. All make the same argument: they are helping poor people of color.

Amidst this urban gold rush for developers, communities of color are forced to choose between the very real need for jobs and having a voice in economic development.

Lessons from Inglewood

Willie Cole, a middle-aged black mother, knows firsthand the economic hardships that face the poor neighborhoods of Los Angeles. She was unemployed for two years until she landed a cashier job at a Wal-Mart that opened in Crenshaw in 2003. Although her position typically pays less than $20,000 annually, she stuck with it and was promoted into a management-training program a year later.

Cole represents Wal-Mart's best public relations argument for opening stores in poor urban areas. In fact, the company featured her in a television commercial promoting its contributions to these communities. "When Wal-Mart came in," she says in the ad, dressed in her store uniform and standing near Crenshaw High School, "they let us know that they cared." The spot has been broadcast nationally, and it received heavy airplay in Inglewood leading up to a special election there in April 2004. Wal-Mart had collected signatures for a local ballot initiative that would have exempted the company from the standard environmental reviews and public hearings required to open a store.

In Inglewood, where 47 percent of the residents are black and 46 percent are Latino, Wal-Mart claimed it would create several hundred much-needed jobs. That was attractive to a small city with an official unemployment rate that was approaching double digits. What the massive retail chain failed to mention was that its entrance has been blocked in over 200 so-called "site fights" in states such as Virginia, Vermont and Oregon. Critics, led forcefully by labor unions, denounce the company for paying low wages, providing inadequate health care benefits, displacing local businesses and contributing to undesirable sprawl. The average Wal-Mart salary is at the federal poverty level for a family of four. A study at the University of California, Berkeley estimates that California pays $86 million in public benefits to Wal-Mart employees whose low incomes qualify them for food stamps, health care and subsidized housing--programs that are funded by taxpayers. Recent studies have identified Wal-Mart as the leading employer of workers receiving public health benefits in Alabama, Connecticut, Georgia, Tennessee, Washington and West Virginia.