2 Bills Target ‘Big Box’ Benefits, Impacts
As Wal-Mart battles to expand in California, Lt. Gov. Cruz Bustamante and other Democrats are pressuring the world’s largest retailer through proposed legislation to improve health benefits for its employees -- or pay a steep price.
The effort is part of a five-year push by Democrats to target Wal-Mart and large warehouse stores that do not hire unionized workers. The attack is coming on two fronts.
One bill would require “big-box” stores to reimburse government for the cost of providing public healthcare to workers. Another would require the stores to pay for expensive studies on whether they harm local economies by crushing competition and offering inadequate benefits to workers.
To retailers, the legislation is a special favor for unions battling Wal-Mart as the company moves vigorously into California. The retailer has said it wants to open 40 Supercenters, which carry everything from cheese to chairs in stores that are at least 200,000 square feet.
“When the unions say jump, the lawmakers jump,” said Bill Dombrowski, president of the California Retailers Assn., which represents grocery stores and other large retailers such as Target but not non-member Wal-Mart. “I think the unions are introducing [the] bills as a platform to continue their fight with Wal-Mart.”
Although most of the recent skirmishes over Wal-Mart have occurred at the local level -- most notably Tuesday night’s vote against the mega-store’s expansion into Inglewood -- Democratic officials are continuing a long-standing fight with the firm at the state level.
Bustamante, a union supporter who harshly criticized Wal-Mart during last year’s recall campaign, is spearheading legislation in the Assembly that would require stores larger than 75,000 square feet that devote a portion of their space to selling groceries, to reimburse state and local governments for the cost of providing public healthcare to workers.
The measure, authored by Assemblywoman Sally Lieber (D-Mountain View), also would make it a crime to threaten or intimidate an employee to prevent them from receiving health benefits. Supporters of the measure said Wal-Mart has encouraged its new employees to apply for public health benefits such as Healthy Families rather than pay for expanded benefits, an allegation the company denies.
“This is an effort to make big-box retailers accountable and responsible and not shift their costs of doing business to the taxpayers,” said Kevin Terpstra, a spokesman for Bustamante.
To the company, the measure is an assault based on a faulty assumption. Spokesman Bob McAdam said Wal-Mart pays employees an average of $10.43 an hour in California and provides health benefits to about 50% of them, with an additional 40% covered by spouses’ health plans or insurance from second jobs. The company pays for two-thirds of the cost of health insurance, which can cost $30 a month or more for employees, he said.
McAdam said the Bustamante-backed legislation is “an attack by the unions through their friends in the Legislature on companies like ours.... This is certainly a politically motivated piece of legislation that addresses a problem that there is no evidence exists.”
In another move against big-box stores, state Sen. Richard Alarcon (D-Sun Valley) has introduced legislation that would require large retailers that sell groceries to pay for economic impact studies that could be used to kill any future expansion. Unions and other Wal-Mart critics say such stores hurt the economy because they pay low wages and squeeze out smaller retailers.
The bill would prohibit a city or county from approving any store larger than 100,000 square feet that also devotes at least 10% of its space to selling groceries, if an economic report shows that the surrounding community would be harmed.
It would require Wal-Mart or other superstores to pay for the studies, although they would have no say in choosing which independent consultant would be hired by local officials. Economic and environmental impact reports can cost hundreds of thousands of dollars.
Alarcon said local communities, dazzled by the prospect of huge sales tax revenues, sometimes don’t think rationally before accepting big-box stores. When he was a Los Angeles city councilman in the mid-1990s, Alarcon said, he helped steer a Wal-Mart to a mall in Panorama City rather than to a former General Motors plant, which became a mall. He said the compromise allowed both places to flourish.
“Wal-Mart almost literally has the effect of creating a black hole and sucking all the economic energy of some of the smaller businesses in the community,” Alarcon said. “A mistake some smaller communities make is they fail to take into account the effect on the community as a whole.”
Gov. Arnold Schwarzenegger has not taken a position on the two measures, both of which are awaiting their first hearings in the Senate and Assembly. But generally the Republican governor has said that he opposes laws that put unnecessary restrictions on businesses.
For the most part, Wal-Mart and other retailers have thwarted efforts to curb their expansion into the heavily unionized grocery business. After the Legislature passed a bill in 1999 that banned any store larger than 100,000 square feet that devoted at least 15,000 square feet to groceries, a full-force lobbying effort by retailers persuaded then-Gov. Gray Davis to veto the bill. Davis said the measure was “the worst kind of end-of-session maneuvering by special interests.”
That same year, however, Davis signed a measure prohibiting local governments from offering big-box stores financial incentives to relocate to their towns. Under the law, incentives can be offered only if sales tax revenue from the big-box store is shared by the winning and losing cities.
Though unions continue to battle Wal-Mart, business groups would like to see the issue played out in the marketplace without interference from the Legislature. Dombrowski said that means that unions must continue pressing Wal-Mart to organize workers and that grocery stores need to renegotiate contracts with union members.
“We come from the perspective that Wal-Mart coming is a big deal,” Dombrowski said. “They do represent a problem to existing grocery chains because of the cost structure, and the marketplace is going to have to sort that out.”
