Unions No Chicago-Like Wal-Mart Deal for New York

Wal-Mart has cleared a major hurdle to opening a second Chicago store.

A community and labor coalition dropped its opposition Thursday, June 24, after the Arkansas retail giant reportedly agreed to start workers at a minimum of $8.75 an hour and pay them $9.15 to $9.35 an hour following their first year on the job.

New York labor officials were quick to cast aside any notion that the Chicago agreement meant Wal-Mart was any closer to gaining a foothold in New York City.

“This is New York; this is not Chicago,” said Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union. “They’ve got a long way to go before they would be welcome here.”

The Chicago Federation of Labor announced that a coalition had reached an agreement with the retailer on the wages and had secured a commitment to build the project using union labor, among other measures. The project subsequently cleared a major zoning committee vote in the Chicago City Council.

Wal-Mart would not confirm the pact with labor groups; a spokesman said the retailer had a deal “with the residents of Chicago.” The agreement was only for a store in Chicago’s Pullman neighborhood, though the retailer announced earlier last week plans to build dozens of stores in Chicago in the coming years.

The deal came a day after union leaders and elected officials rallied at New York’s City Hall in opposition to Wal-Mart opening its first store in Gotham. The rally was organized amid reports that the company is eyeing the Gateway II site in Brooklyn.

Appelbaum and United Food and Commercial Workers Union Local 1500 leaders say they’d be happy to sit down with Wal-Mart officials to discuss their desire to open a store in New York. But it’s clear that in New York, the retailer would have to move beyond what it agreed to in Chicago if it wanted labor’s imprimatur on a project.

Union leaders say they wouldn’t consider negotiating a specific wage amount, but would want any agreement pegged to the prevailing wage for grocery workers in the area. Full-time unionized supermarket workers here start at $12 an hour, plus benefits. And though local unions’ opposition to Wal-Mart has often been framed around issues of low wages, pay rates are not the only obstacle Wal-Mart would have to surmount in talks with worker groups.

“There’s absolutely no question there’d have to be some sense of how they’d deal with unionization,” said Pat Purcell, assistant to the president of Local 1500. “They can pay $10 or $11 an hour, but if they’re going to fire workers like they’ve done in the past when we try to unionize them, that won’t work for us.”

Union leaders worry that if Wal-Mart were to come to New York, its stores would likely eat into the market share of unionized retailers such as Pathmark, Key Food and Duane Reade and put mom-and-pop shops out of business.

At the Wednesday rally, City Council Speaker Christine Quinn said that Wal-Mart’s less-than-pristine labor record is also at issue. “We don’t want companies that have led the nation in lawsuits being brought against them by workers,” she said. “We don’t want companies that have the largest class action in history brought against them. We don’t want companies where women are, over and over, paid less than men and not promoted.”

It’s possible that Wal-Mart could bypass the unions and City Council altogether in New York. They’re likely looking for an as-of-right site that wouldn’t require City Council approval, or one that has already gone through the land-use process.

Those sites are a rarity in the city, though Wal-Mart has come close to finding such a location in the past, Mayor Michael Bloomberg said at a Crain’s New York Business forum in October. “It’s not the city’s business to tell companies they can or can’t be here,” the mayor argued, citing the retailer’s efforts to improve its benefits policies and labor practices. “That’s what the marketplace is for.”

As it did in Chicago, Wal-Mart could try to drum up public support for such a move by partnering with religious leaders who are concerned about high unemployment in minority neighborhoods. It’s also likely to follow its Chicago strategy of focusing on poor neighborhoods where there is a pent-up demand for jobs and supermarkets. New York residents already spend $125 million a year at area Wal-Mart stores, according to the company.

The Gateway II site, which is owned by the Related Cos., has already received land-use approval, though a Wal-Mart spokesman continues to insist the company has no projects to announce in the city.  

Filed by Daniel Massey of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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