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Company store: Pullman to Wal-Mart

Wal-Mart’s effort to move into Pullman invites a comparison of the 21st century company store with the 19th century version.

“The parallels are almost too obvious too mention,” said Jeff Helgeson, a Pullman resident who teaches labor studies at the University of Illinois-Chicago.  “There’s a sense in which [Wal-Mart] is very much like the model community of Pullman.”

Built by George Pullman as a planned community for workers at his railroad car plant, the town of Pullman was “celebrated internationally as a utopia,” but “within 15 years was the scene of one of the largest labor strikes in U.S. history,” Helgeson said.  He’s one of a group of neighborhood residents who’ve organized Labor Day celebrations to mark Pullman’s history.

Like Wal-Mart, the Pullman Company paid lower wages than other employers. (In 2004 a University of California-Berkeley study found Wal-Mart’s wages for non-managerial employees were 31 percent lower than the average retail wage; Chicago’s Center for Labor and Community Research estimated that Wal-Mart wages were $2 to $3 below those of its competitors.)

Both companies banned trade unions.  Both companies are known for spying on their workers to prevent any stirrings of organization.

The Pullman Company also owned every home, every store, every school, and every church in the town – even the town library – until the Illinois Supreme Court ordered the sale of all non-manufacturing property in 1898, ruling that company towns are “opposed to good public policy and incompatible with the theory and spirit of our institutions.”

A low-income cycle

Wal-Mart has commonly been called a “company store” because, in economist R.J. Eskow’s words at Huffington Post, “Wal-Mart lowers your living standards then sells you cheap goods that are all you can afford.”

“Wal-Mart has created and perpetuated a low-income cycle of worker/consumer,” said Al Norman of Wal-Mart Watch in an interview with Grist.  “Wal-Mart’s 1.5 million workers have to shop at the company store because they can’t afford to shop elsewhere. It’s a great closed-loop system, akin to a plantation where the field workers went to the company store with their day’s wages.”

“In a chilling reversal of Henry Ford’s strategy, which was to pay his workers amply so they could buy Ford cars, Wal-Mart’s stingy compensation policies…contribute to an economy in which, increasingly, workers can only afford to shop at Wal-Mart,” wrote Liz Featherstone in the Nation in 2004.

A couple years later Barbara Ehrenreich wrote of “signs… that Wal-Mart was beginning to be priced out of the reach of its own employees.”  Workers getting $8 or $9 an hour buy their clothes at thrift stores, she pointed out, and the store’s electronics and lawn and garden products “weren’t even on the distant horizon.”

In at least one other country, an old-school solution was attempted – company scrip.  But in September 2008, the Mexican Supreme Court ordered Wal-Mart’s Mexican subsidiary to stop paying its employees in vouchers redeemable only at Wal-Marts.  (The company called the program its “Social Welfare Plan,” according to one report.)

The court held that the practice was “similar to what happened in old company stores” that were outlawed by the constitution of 1917, Reuters reported.

Food stamps: a double boost

Another approach may be on view in Wal-Mart’s store on Chicago’s West Side.  Employees there interviewed by Chicagoist said “the company purposely cut worker’s hours [so they] can remain eligible for the Link Card,” the state’s food assistance program.

“There’s a lot of workers on Link,” says one employee, and when workers’ hours are cut, their Link Card allocation goes up.  And “shoppers that use their Link card at Wal-Mart include many Wal-Mart employees,” according to Chicagoist.

The use of public assistance programs like food stamps and Medicaid by underpaid Wal-Mart employees has long been an issue.  In 2004 California Assemblywoman Sally Lieber released Wal-Mart’s “Instructions to Employees” telling them how to sign up for food stamps and health assistance.  “Public assistance is very clearly part of the retailer’s cost-cutting strategy,” Featherstone wrote.

But with Wal-Mart supercenters now selling food – and accepting Link Cards – the company gets a double boost to its bottom line.

The old company store merely recouped the wages the employer had paid out.  In this innovative twist, the money paid by taxpayers to supplement Wal-Mart’s low wages can now be spent at Wal-Mart, contributing even further to the Walton family’s riches.

It gives an entirely new meaning to the term “corporate welfare.”

Pullman split on Wal-Mart

With a proposed Wal-Mart in Pullman on the agenda for Wednesday’s zoning committee meeting, public opinion in the community remains divided, as an unsuccessful effort to  win an endorsement by the Pullman Civic Organization shows.

It was only a week and a half ago, at a meeting of the civic group, that residents learned that Wal-Mart has signed a tentative agreement to anchor Pullman Park, a massive development project south of 104th Street and west of the Bishop Ford Expressway.

At the end of a long meeting, a vote in favor of the project was moved, but Wal-Mart skeptics won a vote to postpone a decision.

Buses are being provided for residents who support the Wal-Mart to come downtown for the zoning meeting en masse.

But some Pullman residents are asking how well the project has been marketed to other retailers, why economic development assistance isn’t flowing to small businesses in the area, and whether the rush to close a deal will foreclose an opportunity to impact Wal-Mart’s employment policies.

“They say nobody else is going to come but Wal-Mart, and we’d better take it or we won’t get anything,” said longtime Pullman resident Tom Shepherd.  “Why don’t we try a little harder?”

Developers have said that Jewel, Dominick’s, Target, Costco, and Ikea have turned down the spot.  But spokespersons for several of the companies told the Chicago Reader last week that they hadn’t been contacted.

David Doig of the Chicago Neighborhood Initiative told the Reader he’d worked through brokers, though reports on those contacts weren’t provided.  Alderman Anthony Beale told the Reader that he’d contacted retailers about a development at 115th and Michigan and assumed that if they turned that down, they wouldn’t be interested in Pullman Park.

Resident Ellen Garza would prefer to patronize small businesses, and thinks economic development should support that sector.  “Beale has done nothing for small business,” she said, mentioning commercial strips along 115th and 111th where “small businesses are limping along.”

“Where’s the economic development that would promote them and help them grow?” she asks, arguing that “small businesses help the community, make the community richer.” [Newstips explored this issue in 2006.]

Garza objects to the argument that any job is a good job, especially in economically-depressed minority areas. “Why are African Americans always treated like second-class citizens?” she asked.  “They don’t need unions, they don’t need a living wage, they don’t need benefits – it’s racist.”

“I think it’s a terrible idea to have a Wal-Mart in our neighborhood,” she said, calling the company “the worst employer on the face of the earth.”

Another resident, Jeff Helgeson, says Chicago has an opportunity to influence Wal-Mart. The company is “not a lost cause,” he said.  “They have changed – they stopped locking employees in their stores overnight, for example – and they did that in response to public pressure.”

“If they want to come into this market, they need to be kept to Chicago standards, not bring Chicago down to the level of other places,” he adds.  He’s afraid that “we might be giving in at a moment when we have some leverage.”

It’s been a long haul for the Pullman Park proposal since Park National Bank acquired the old Ryerson Steel site for $24 million in 2008.  A series of meetings seeking community input for development plans were held; PNB talked about building 1,000 single-family homes in keeping with the architecture of the Pullman Historic District, along with big box and smaller retail, a hotel, senior housing and a community center.

But the bank was seized by the FDIC last October and sold off to U.S. Bank, the nation’s sixth largest bank.  Not until this March did U.S. Bank announce that the PNB’s development efforts would be spun off in the Chicago Neighborhood Initiative.

“Park National Bank was really responsive to the community,” says Helgeson. “They were trying to do it without going to Wal-Mart. When U.S. Bank came in, suddenly Wal-Mart is the only option.”

Also subject to change is the financing of the project.  Before U.S. Bank and Wal-Mart, city financing through a new TIF zone passed last summer was said to be crucial to the feasibility of the project.  Now, according to residents who attended the presentation at the PCO meeting, developers say that phase one of the project – building the Wal-Mart store – will only use private funds.

This could avoid getting the project tangled up in the Finance Committee – or, perhaps, coming under the sway of a proposed ordinance that would require that beneficiaries of city subsidies pay a living wage.  Wal-Mart has consistently rejected such a requirement.

Wal-Mart “breakthrough” – or hype?

City Hall sources told Fran Spielman that “Wal-Mart has agreed to hold an unprecedented face-to-face meeting with organized labor,” and that got a front page headline suggesting a “Big-Box Breakthrough.”

But in the story, Wal-Mart’s Steven Restivo said company officials “have not made any commitment to meet,” and Jorge Ramirez of the CFL said a scheduled meeting had been called off, and Wal-Mart hadn’t yet rescheduled.

It wasn’t clear who had set up the meeting – or whether Wal-Mart had actually agreed to it in the first place.  The company has been completely consistent in refusing to discuss wages or benefits with anyone, ever.

It was only 9th Ward Alderman Anthony Beale who thought it was significant, calling the meeting (or the suggestion of a  meeting) a “huge” breakthrough, according to Spielman.

That remains to be seen – as does Beale’s repeated claims that he has the votes to win City Council approval for a Wal-Mart in Pullman.  He said so in February, in March, and in  April, even as he postponed presenting the matter to the Zoning Committee.

It’s worth recalling Beale’s 2007 boast to Mick Dumke that Wal-Mart would open in his ward within a year.

UFCW Local 881 President Ronald Powell issued a statement saying “Wal-Mart has not met nor committed to meet” with labor representatives.  “While we have requested that such a meeting take place, Wal-Mart has previously stated it was not interested,” Powell said.

Noting Wal-Mart’s “long, well-documented history of egregious violations of labor, worker, taxpayer, and human rights,” Powell said Chicago has “a unique opportunity” to require the company to do business differently here.

The union called for “a set of enforceable standards…that ensure living wages, comprehensive and affordable health benefits, [and] workplace rights” covering all big box retailers.  Powell reiterated Local 881’s stance:  “No Wal-Mart expansion in Chicago until Wal-Mart comes to the table to negotiate solid, enforceable wage and benefit standards for their workers.”

Local 881 represents workers at Jewels and Dominick’s groceries, where it’s likely that a new Wal-Mart supercenter would lead to pressure for benefit reductions.  After Wal-Mart moved into southern California in the early 2000s, the proportion of grocery workers with health benefits in that area dropped from 97 percent in 2003 to 54 percent in 2007, as noted here last year.

It’s hard to say where the Pullman Wal-Mart proposal stands right now, and Beale’s enthusiasm may not be the best guide.  What is clear is that Mayor Daley, hoping to move the proposal forward, is calling on Wal-mart to sit down with its critics, and Wal-Mart is refusing.

Sick days at Wal-Mart

A demonstration outside Chicago’s Wal-Mart store (4650 W. North) today at 5 p.m. is part of a national campaign targetting the corporation’s “irresponsible sick leave policy” which increases risks to public health.

The Demerit Wal-Mart campaign by Wake Up Wal-Mart and allies highlights the revelation by the New York Times last fall that Wal-Mart gives demerits that can lead to termination to employees who use paid sick days.

The coalition is calling on Wal-Mart to give its employees the right to stay home when they are sick – and to follow government recommendations to let flu epidemic victims stay home without being punished.

Today’s demonstration is sponsored by UFCW Local 881 and backed by the Good Jobs Chicago coalition.

Walmart in polls and at the polls

[UPDATED]  Again with the polls — Walmart has a full-page ad in the paper today touting three polls showing over 70 percent support for a Walmart on the South Side.

Of course, the next question is not asked.  It’s this:  do you think Walmart and other big businesses should pay a living wage?

In fact, as Amisha Patel of the Grassroots Collaborative reminds us, when voters were asked the followup question, they responded overwhelmingly in the affirmative.

In voter referendums in 300 precincts during the campaign for a living wage ordinance in 2005 and 2006, voters supported a requirement that big box stores pay a living wage by margins in the 80 percent range.  Patel points out that support for the ordinance was strongest in African American precincts.

In 2007, when the living wage ordinance was a major issue in a number of aldermanic elections, supporters of the ordinance carried the day by a wide margin.

Those are the polls the politicians care about – and that’s why, for all the outrage of editorial boards and columnists demanding full deference to the world’s largest corporation, there’s a limit on what Walmart can do in Chicago.

Even Mayor Daley recognizes it, so far at least, declining to approve the 83rd Street Walmart without Council backing.  And whenever an amended redevelopment agreement for the site is brought forward, the Good Jobs Chicago coalition intends to ensure that alderman get to vote on adding a community benefits agreement guaranteeing decent wages and benefits, and local hiring and investment.  And all these people can count votes.

Good Jobs Chicago has been canvassing the 9th and 21st wards and reports residents are responsive to their message.

“People hear only one side of the story – that a Walmart job is better than no job,” said Latrell Smith, an organizer with Action Now.  “When they hear the other side, it hits them that $8 an hour won’t begin to cover basic necessities or get people off public assistance.  Almost everyone we talked to agreed it’s a good thing to set reasonable standards for the ‘big boxes.'”

Patel applauded Ald. Edward Burke’s proposal to require a living wage of companies receiving city subsidies (withdrawn Monday after business leaders objected), noting similar measures have been passed in Denver and Pittsburgh. “It’s a great way to make sure development is creating good jobs,” she said.

Judging from polls, the ones where voters vote, Chicagoans would tend to agree.

Holiday shopping tips

Gordon at Nonprofit Communicator offers a list of gift ideas from local nonprofits, including Artisans 21, Greenheart Shop, Maya Works, and Heartland Alliance’s Hope for a Hurting World gift catalog.

Greenheart, 1911 W. Division, holds its annual holiday celebration and benefit party for Chicago Fair Trade, with fair trade items from around the world and products from local artisans and social enterprises (like Beeline Honey, a project of  the North Lawndale Employment Network).  It’s Wednesday, December 9, 5:30 to 8:30 p.m.

From CFT’s calendar:  Fair trade goods will be available at holiday markets at Berry United Methodist Church, , 4754 N. Leavitt, on Saturday, December 5, 10 a.m. to 4 p.m., and at Fourth Presbyterian Church, 126 E. Chestnut, on Saturday and Sunday, December 5 and 6, 9 a.m. to 2 p.m.

Patronizing locally-owned businesses is a way of keeping money – and character – in our neighborhoods, according to Local First Chicago, which has a holiday shopping guide (pdf).

Recognizing that they’re competing with shopping malls, which offer big deals, one-stop shopping, and free parking, the Andersonville Chamber of Commerce is reimbursing parking for anyone who spends $20 in Andersonville – just mail in a copy of your store receipt and your parking receipt.  Your Ride’s On Us runs through New Years Day.  That’s one of a number of holiday promotions; check out Late-er Night Andersonville on December 18, for that not-quite-last-minute shopping.

Finally, via Working ITT, the International Labor Rights Forum lists its annual inductees to the Sweatshop Hall of Shame, including Abercrombie and Fitch, Hanes, Ikea, Kohl’s, LL Bean, Pier 1 Imports, and (of course) Walmart – companies which “employ laborers who toil for long hours under dangerous working conditions for poverty wages” – and which use threats and sometimes violence to suppress workers’ attempts to organize.  Some alternatives are listed on Sweat Free Communities’ consumer guide to non-sweatshop gifts.

City cuts small business support

With neighborhood economic development groups objecting to a major reduction in city funding at a time of growing job loss, 22 aldermen have submitted a resolution ordering the Mayor’s Office of Budget and Management to restore the funds in the city’s proposed 2010 budget.

The resolution is on the agenda for the City Council’s budget committee hearing on Monday. If approved, it could be considered at Wednesday’s council meeting.
The proposed budget for the Department of Community Development cuts spending by 21.5 percent for delegate agencies – about 120 neighborhood chambers of commerce and other groups that support commercial and industrial districts.

It’s a huge cut for a small budget item – a $1.5 million reduction from last year’s appropriation of $6.4 million. It’s a far greater reduction than other programs in the department. And it comes on top of cuts ranging from 3 to 7.5 percent each of the past six years, while the city’s budget has steadily grown.

With pressure on neighborhood businesses ratcheting up, other funding sources for the groups – especially local banks and real estate agencies, who know the value of a thriving business district — have been squeezed particularly hard, said Kimberly Bares of the Rogers Park Business Alliance.

Because the city provides only partial funding, its spending on delegate agencies seeds a tremendous amount of economic development effort, she said.

“We’re providing tremendous value to the city’s efforts, for minimal funding,” said Roger Romanelli of the Randolph Fulton Market Assocation. “We’re out on the streets every day, working directly with hundreds of businesses” in ways that would be impossible for the city.

“Most delegate agencies have staffs of one or two people doing the work of ten,” said Luis Alva of the Little Village Chamber of Commerce. LVCC’s activities include workshops for businesses on a range of topics as well as a highly successful 13-session workshop on starting a business. “These are people who go on to open businesses, invest in the community, and hire people,” he said.

The group also features festivals and sales to attract shoppers from outside the community to the 26th Street retail district, which is second only the Michigan Avenue in business activity and sales tax revenue. Local dress shops are clamoring for a repeat of LVCC’s recent bridal expo, Alva said.

Delegate agencies include groups funded under the Local Industrial Retention Initiative, which are also facing 21.5 percent cuts, said Mike Holzer of the Local Economic and Employment Development Council. LIRI is the city’s primary delivery vehicle for direct economic development services to small manufacturers, and LEED Council manages the North River Industrial Corridor.

LEED Council has leveraged over half a billion dollars in private investment for the corridor, which includes four planned manufacturing districts, Holzer said. The Goose Island district, which was a marginal industrial area in the early 1990s, when 25 firms employed fewer than 1,000 workers, is thriving today, with over 65 firms and a workforce of 5,000, he said.

Those are jobs that allow workers to buy homes and send children to college. And they’ve been attracted during a period when the U.S. has lost millions of manufacturing jobs; Chicago lost over 100,000 manufacturing jobs from 1995 to 2005, according to the Brookings Institute.

Small and mid-size firms generate the vast majority of new jobs, said Ellen Shepard of the Andersonville Chamber of Commerce, and since local businesses use local suppliers and support charities in their own communities, they generate far more local economic activity.

“With national and international markets faltering, and many residents being laid off…we are more reliant than ever on our neighborhood businesses,” she said. The city should be “significantly” boosting funding for neighborhood development groups, not cutting it, she said.

Bares said the cuts are likely to force some neighborhood groups to close down – and adds that there are local business support groups on the South and West Sides that have yet to be included in the city’s delegate agency program.

With major corporations getting city subsidies of tens of millions of dollars, while over a hundred local groups – which serve thousands of small businesses — must share a $5 million program, it’s clear the city could focus more on locally-owned businesses. The other program supporting neighborhood businesses, the Small Business Improvement Funds provided by selected TIF districts, is being cut this year from $3 million to $2.25 million.

That means less than half of 1 percent of TIF funds go to support small business, Shepard said. Romanelli said he had 38 applicants for small SBIF grants in the Kinzie Industrial TIF last year; funds were only available for eight grantees.

With aldermen now responding, cuts may be headed off this year – but it’s a bit of a fluke. Bares learned of the cuts ahead of time only because she serves on the city’s Community Development Advisory Committee; she went on to alert her colleagues. In previous years, delegate agencies learned their allocations were being cut only after the budget had been approved.

“This has certainly illustrated to us the difficulties everyday citizens have negotiating the city’s budget labyrinth,” she said.

Washington and Wal-Mart

At Mechanics, Ramsin Canon looks into Laura Washington’s recent writings attacking Chicago unions for opposing jobs in the black community (meaning Wal-Mart jobs).

“In Laura Washington’s world, is the choice only between food deserts and terrible working conditions for working people of color? Can’t we eliminate food deserts without making the standard of living even worse for working class people?”

Washington’s current piece presents Republican candidates in search of black votes; her earlier piece relied on data from the Chamber of Commerce.  There might be other sources of information worth checking into.

Earlier we highlighted a report by In These Times (where Washington is a columnist) noting judgments by the NLRB and Human Rights Watch that Wal-Mart regularly and systematically violates the legal and human rights of its employees.  And reviewing  the company’s long history of law-breaking, we cited a report that after Wal-Mart moved into southern California and forced groceries there into a race to the bottom, the proportion of grocery workers in the region who had health benefits dropped from 97 percent in 2003 to 54 percent in 2007.

Washington might want to check with South Side faith leaders who joined Grassroots Collaborative this summer in calling for standards for large retailers.  And she might want to check with food justice activist LaDonna Redmond, who recently opened an organic grocery in Englewood; she stressed the importance of local ownership when she talked with Newstips in June.



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