Wal-Mart Welfare

By David Sirota, Christy Harvey and Judd Legum, The Progress Report. Posted May 28, 2004.

A new report [PDF] released from Good Jobs First this week shows that Wal-Mart, the world's largest retailer, has received more than $1 billion in economic development subsidies from states for its stores and distribution centers. The subsidies have come as many states are forced by White House tax cuts and reductions in federal grants to make tough budget decisions. A report by the Center on Budget and Policy Priorities shows states are cutting subsidies for publicly funded health insurance, child care, federal employment, both higher and lower education, and programs aimed at public safety and people with disabilities -- all this while ponying up taxpayer dollars to subsidize a retailer that took in more than $200 billion in revenue and netted nearly $9 billion in profits last year, even as it paid workers near-poverty wages, drove out local businesses and violated environmental regulations.

A key justification for corporate subsidies is the idea that a large project will expand overall business in an area; Wal-Mart executives tout their stores as a positive economic force in the community. But the Good Jobs First report argues that, unlike factories which add jobs and export products outside the region, big chain retailers like Wal-Mart "do little more than take revenues away from existing merchants and may put them out of business and leave their workers unemployed. It's quite possible that a new Wal-Mart will destroy as many (or more) jobs than it creates." And "since many Wal-Mart [jobs] are lower-paying and part-time, they will do less to stimulate the economy." Philip Mattera, research director of Good Jobs First, says Wal-Mart's "negative effect on small businesses in the communities where it locates and its contribution to urban sprawl and traffic raise serious questions about the value of giving it sizable financial incentives to expand."

A new USAction report highlights Wal-Mart as a leading advocate for new legislation "designed to kill the use of class action lawsuits, which have resulted in decisions that...provide refunds to consumers and others injured by corporate wrongdoing." The legislation would move class action lawsuits out of state courts, where they have been historically more likely to be successful, and into "defendant-friendly federal courts." The reason Wal-Mart is so excited about the legislation? According to legal analysts, "Wal-Mart is sued more often than any American entity except the U.S. government." The report points out courts in four states have recently certified class action lawsuits involving over 330,000 workers. "By contrast, three federal courts have declined to certify class actions against Wal-Mart for unpaid worker hours." The company's effort to stop workers from challenging their abuses has at least one high-profile backer: Vice President Dick Cheney. In a visit to Wal-Mart's headquarters last month, he trumpeted "litigation reform" as the way to cure America's economic ills.

The Chicago Tribune reports the Windy City has become the newest front "in a sprawling North American struggle between a behemoth company and a union fearful for its future." As Wal-Mart spokespersons take to the streets to convince Chicagoans that two new stores will "'raise the standard of living' for Chicago's working class," a loose coalition of local aldermen and organized labor is "calling up all available manpower to make its case before the City Council's expected decision Wednesday on whether to grant zoning approvals to Wal-Mart for the stores." The 1.3 million-member United Food and Commercial Workers union (UFCW) is leading the battle, charging "the retailer's low-wage ways will encourage other businesses to follow suit, to the detriment of millions of workers, both union and non-union." The UFCW's fears are justified: in Southern California, the news that 40 Wal-Mart superstores would be opening in the area caused a Supermarket Strike when three chains announced they "had no choice but to cut pay and benefits drastically."

The UFCW, Commercial Workers Union and other Wal-Mart critics in Chicago have presented Wal-Mart with a Community Benefits Agreement that would legally bind the corporation to a dozen demands, under penalty of fines. The demands include "Allowing employees to form a union and agreeing to permanently forgo tax breaks or other government subsidies in Chicago," as detailed in the Good Jobs First Report. So far, Wal-Mart executives have refused to sign.

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