Decoding a Wal-Mart Ban
The City Council here voted late Tuesday to
ban certain giant retail stores, dealing a blow to Wal-Mart's potential
to expand in the nation's eighth-largest city.The measure, approved on a 5-3 vote, prohibits
stores of more than 90,000 square feet that use 10% of space to sell
groceries and other merchandise that is not subject to sales tax. It
takes aim at Wal-Mart (WMT) Supercenter stores, which average 185,000 square feet and sell groceries....Supporters of the ban argued that Wal-Mart puts
smaller competitors out of business, pays workers poorly, and
contributes to traffic congestion and pollution. Opponents said the
mega-retailer provides jobs and low prices and that a ban would limit
consumer choice.
Certainly such a ban represents a total disdain for consumers and a populist political stunt to cash in on fashionable Wal-mart bashing. But what is really behind the ban?
A Wal-Mart Super Center differs from a large Wal-Mart mainly in that is sells groceries. And in fact the legislation does not ban all super-large stores, just ones that sell groceries (Wal-Mart could still build a super-honkin large store in San Diego as long as it didn't sell food). Well, this should give us a clue. It tells us that the politicos are not against large stores, just against large new stores that compete with existing grocery stores.
And this puts the lie to supporters statements that their concern is that Wal-Mart "puts smaller competitors out of business." There aren't any "smaller competitors" in California grocery stores, they are all large chains run by corporations. And if there are any local fresh produce shops out there, I don't think their customer base is one to run off to Wal-Mart. This is about protecting grocery retailers from competition. Why? Well, there is one other thing we need to know, and that is that California grocers all have extremely powerful and politically connected unions. This is a story from the LA Times way back in 2003:
Inglewood seemed to offer the perfect home for a new Wal-Mart
Supercenter, with low-income residents hungry for bargains and a mayor
craving the sales-tax revenue that flows from big-box stores.But nearly two years after deciding to build on a 60-acre lot near
the Hollywood Park racetrack, Wal-Mart is nowhere near pouring
concrete. Instead, the world's biggest company is at war with a
determined opposition, led by organized labor."A line has been drawn in the sand," said Donald H. Eiesland,
president of Inglewood Park Cemetery and the head of Partners for
Progress, a local pro-business group. "It's the union against Wal-Mart.
This has nothing to do with Inglewood."Indeed, similar battles are breaking out across California, and
both sides are digging in hard. Wal-Mart Stores Inc. wants to move into
the grocery business throughout the state by opening 40 Supercenters,
each a 200,000-square-foot behemoth that combines a fully stocked food
market with a discount mega-store "” entirely staffed by non-union
employees. The United Food and Commercial Workers and the Teamsters are
trying to thwart that effort, hoping to save relatively high-paying
union jobs.The unions have amassed a seven-figure war chest and are calling
in political chits to fight Wal-Mart. The giant retailer is
aggressively countering every move, and some analysts believe that
Wal-Mart's share of grocery sales in the state could eventually reach
20%. The state's first Supercenter is set to open in March in La
Quinta, near Palm Springs....Yet the Supercenters also threaten the 250,000 members of the UFCW
and Teamsters who work in the supermarket business in California.For decades, the unions have been a major force in the state
grocery industry and have negotiated generous labor contracts. Wal-Mart
pays its grocery workers an estimated $10 less per hour in wages and
benefits than do the big supermarkets nationwide "” $19 versus $9. As
California grocery chains brace for the competition, their workers face
severe cutbacks in compensation."We're going to end up just like the Wal-Mart workers," said Rick
Middleton, a Teamsters official in Carson who eagerly hands out copies
of a paperback called "How Wal-Mart Is Destroying America." "If we
don't as labor officials address this issue now, the future for our
membership is dismal, very dismal."The push for concessions has already started, prompting the
longest supermarket strike in Southern California's history. About
70,000 grocery workers employed by Albertsons Inc., Kroger Co.'s Ralphs
and Safeway Inc.'s Vons and Pavilions have been walking the picket
lines since Oct. 11, largely to protest proposed reductions in health
benefits. The supermarkets say they need these cuts to hold their own
against Wal-Mart, already the nation's largest grocer.Rick Icaza, president of one of seven UFCW locals in Southern
California, has taken issue with much of the supermarkets' rhetoric
since the labor dispute began. But he doesn't doubt that Wal-Mart is
the biggest threat ever posed to the grocery chains "” and, in turn, his
own members."The No. 1 enemy has still got to be Wal-Mart," he said.
The unions and their community allies have stopped Wal-Mart in
some places and slowed it down in others. They have persuaded officials
in at least a dozen cities and counties to adopt zoning laws to keep
out Supercenters and stores like them.
Hat tip to the Mises blog, which has more here. In 2004 I wrote how the California grocery unions were using the state pension fund (Calpers) to support their strike.
