WASHINGTON — A union-backed study being released today asserts that municipalities and states should be barred from giving financial incentives to fund the “breakneck” expansion of Wal-Mart Stores Inc. According to the report, the retail giant has benefitted from $1 billion in municipal incentives given to help 240 projects since 1980.
An advance copy of the report was provided to WWD by its author, the Washington-based nonprofit group Good Jobs First. The organization advocates public policies that support jobs that pay wages high enough to allow workers to afford life’s necessities. The report, which Good Jobs said “was funded in large part by the United Food and Commercial Workers International Union,” is the latest negative critique of the effect the Bentonville, Ark.-based retailer has on communities.
For Wal-Mart’s part, vice president for government affairs Bob McAdam said Friday that government money has played a role in only “a handful” of the 300 stores it opens a year.
The 3,586-store retailer, which is the nation’s largest private employer, reported net profits of $9.05 billion on $256.33 billion in sales in its fiscal year ended Jan. 31.
The UFCW has been locked with Wal-Mart in a battle over organizing its 1.2 million workers. The union, like Good Jobs, criticizes the retailer for paying low wages.
Good Jobs argued in the 64-page report that the only rationale for Wal-Mart receiving financial incentives would be for locating stores and distribution centers in low-income neighborhoods where there are added costs for success and merchants are needed. Otherwise, the group concludes, Wal-Mart or its developers can easily afford to pay for construction and land costs.
“A lot of the subsidy deals were in situations where Wal-Mart was building a supercenter to replace an existing discount store,” said Philip Mattera, research director for Good Jobs, in an interview. “It’s not as though they are close to the bone here — $9 billion [in profits] is pretty healthy.”
States and municipalities routinely use incentives such as land deals, property tax breaks, corporate income tax credits and free water and sewer lines to encourage businesses to locate within their borders. In return, governments expand their tax base and create local jobs.
Good Jobs acknowledged its survey isn’t an exhaustive look at the topic. Its data primarily came from newspaper accounts, a source Good Jobs said it was forced to rely on due to a dearth of public data on the tax incentives.
However, the report said, “it is safe to assume that there have been many more subsidies that did not come to our attention.” It’s referencing a Wal-Mart representative who was quoted in the Dubuque, Iowa, Telegraph Herald as saying it is “common” for the retailer to ask for subsidies in one-third of the chain’s retail projects.
In defense of Wal-Mart, McAdam said of the 300 U.S. stores the retailer opens each year: “There is about a handful where [financial incentives are] part of the equation.” He said he didn’t know of a tally of incentives Wal-Mart has received.
“We’re like any other business,” McAdam said. “We return a much greater value to the community in which we locate, and that offsets what initial [financial] support we may get from those communities.”
To bolster its argument about Wal-Mart being able to expand without taxpayer assistance, the report cited a 1998 case in Chula Vista, Calif., in which a local court denied the retailer a $1.9 million municipal incentive package and the chain built a store anyway. McAdam said he wasn’t familiar with the Chula Vista case.
Wal-Mart’s expansion has run into opposition in some U.S. communities in recent years. Voters in Inglewood, Calif., in April voted down an attempt by the retailer to open a store there. The company also has run into trouble in Chicago. According to the Chicago Tribune, city aldermen put off until Wednesday a vote on a proposed zoning change that would allow Wal-Mart to open two stores, on the city’s west and south sides. Also on Sunday, reports were circulating that Wal-Mart is hitting Manatee County, Florida with a lawsuit because many residents will not negotiate their opposition to putting a supercenter on 30 acres in Bradenton, FL.
Activists who oppose Wal-Mart’s expansion argue that its low prices and hourly wages may take a toll on local merchants and wage rates.
Mindy Moretti, spokeswoman for the National Association of Counties, said that questions regarding what, if any, local incentives are offered to Wal-Mart are handled “on a case-by-case basis.”