December 6, 2003
City Report Is Critical of Wal-Mart Supercenters
By Nancy Cleeland, LA Times Staff Writer
A report commissioned by two Los Angeles city councilmen warns that Wal-Mart
Stores Inc.'s Supercenters could harm the local economy and recommends that
the company be required to raise its pay and benefits if it wants to operate
in the city.
The report, made public Friday, moves Los Angeles one step closer toward banning
or placing severe restrictions on the mega-stores, which combine a full supermarket
with a typical Wal-Mart discount outlet. Wal-Mart plans to open 40 of the stores
in California within the next two years. At least five California cities have
approved Supercenters; Oakland and several others have instituted zoning rules
that ban them.
The expansion of nonunion Wal-Mart into the grocery business threatens the
state's highly unionized supermarket industry and figures prominently in the
strike and lockout of grocery workers in Southern and Central California .
The supermarket companies say they must cut labor costs to compete.
Bentonville, Ark.-based Wal-Mart will oppose any effort by the city to prevent
it from opening a Supercenter in Los Angeles , said Pete Kanelos, the company's
California-based community relations specialist.
"We will not allow ourselves to be singled out and have separate rules apply
to us that do not apply to our competitors," he said.
Councilmen Eric Garcetti and Ed Reyes commissioned the analysis. The
report, prepared by consulting firm Rodino Associates, says Supercenters can
push down retail wages, strain public services and hurt smaller businesses. It was based
in part on testimony from two public hearings packed with union members and
Wal-Mart employees.
The report says Wal-Mart's wages are about $8 an hour lower than union grocery
wages. Eventually, the report says, that could set a trend toward lowering
overall retail wages in Los Angeles .
The report also finds that Wal-Mart's health benefits could push more employees
into emergency rooms and public medical assistance and that its aggressive
marketing could force smaller competitors out of business.
Garcetti spokesman Josh Kamensky said that although the report concludes that
all so-called big-box stores would affect the local economy, the City Council
probably would focus on those that sell a high share of groceries.
"That's where the impacts are compounded, because wages are much higher" in
union groceries, he said.
The 72-page report says the sales tax benefits of big-box stores to cities
may be illusory, because the stores may take business from other retailers
in the same community. However, it notes that existing Wal-Mart stores in the
region have delivered jobs and merchandise to communities such as Baldwin Hills
and Panorama City that had been abandoned by other major retailers.
Based on the report's recommendations and guidance from the council's Economic
Development and Employment Committee, the city attorney's office will draw
up a proposed ordinance, which could be ready for action early next year. Assistant
City Atty. Cecilia Estolano said Oakland 's ordinance, which withstood a court
challenge from Wal-Mart last month, might embolden Los Angeles .
"It's changing our view of how far we can go," she said.
Kanelos said the city's agenda was political, not economic. "Organized
labor and our competitors are making every effort to limit competition and
protect their market share," he said.
Wal-Mart commissioned its own analysis of potential Supercenter effects by
the Los Angeles County Economic Development Corp. The report has not been released.
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