Wal-Mart Hard Sell in Big Apple

In April, John Menzer, chief executive of Wal-Mart International, enjoyed one of this city’s traditional honors, ringing the opening bell at the New York Stock Exchange.

But that’s about the only way New York has been inviting of late to the giant retailer, which so far has no stores in the five boroughs.

This year, the City Council refused to grant a zoning variance for what would have been the first, in Queens, citing the pay and benefits Wal-Mart gives its employees.

This month, the New York City Central Labor Council staged a rally outside a Greenwich Village school urging parents not to buy back-to-school supplies at the nonunionized company’s stores in surrounding areas. And last week the City Council voted 46-1 to require all large food retailers to offer a minimum level of healthcare benefits.

Although that legislation did not name any retailer, and could affect about 12,000 employees working at large grocery stores, its sponsor, Councilwoman Christine C. Quinn, said one goal was to create a barrier that would keep Wal-Mart out of the city unless it increased health benefits for workers.

Brian M. McLaughlin, president of the labor council, similarly said the measure was a response to “the Wal-Marts of the world [that] continue their ‘race to the bottom’ by lowering standards for working men and women.”

And a poverty study center at New York University School of Law, which helped draft the legislation, simultaneously prepared a study critiquing Wal-Mart’s health benefits, spotlighting such practices as a six-month waiting period before full-time employees are eligible for coverage, and a two-year wait for part-timers.

The city’s Republican mayor, Michael R. Bloomberg, has come out against the measure, but the lopsided vote Wednesday signaled that there easily was enough support on the heavily Democratic 51-member City Council to override his veto.

That would leave the fate of the bill to the courts after a certain legal challenge, if not by Wal-Mart then by those large grocers in the city that would be forced to increase the amount they spend on healthcare coverage for workers.

Supporters of the bill, which was backed by Council Speaker Gifford Miller -- who is seeking the Democratic nomination to run for mayor against Bloomberg -- said it aimed to get all large food sellers to contribute to healthcare at the same level as the grocery chains that spent $2.50 to $3 per hour on such coverage for each employee.

The city bill covers conventional groceries with at least 35 employees or other retail stores that use 10,000 or more square feet of space to sell grocery items, the provision that would apply to Wal-Mart and some other big-box retailers.

A similar measure is scheduled to be considered this week in suburban Suffolk County on Long Island.

“Quite frankly, it has a very anticompetitive bent,” said Mia Masten, Wal-Mart’s eastern region spokeswoman. “Some of our competitors want to keep us out.”

Wal-Mart contends that the bill discriminates against its discount-seeking customers, who now have to go across the Hudson River to three stores in New Jersey, or to the two stores in Long Island’s Nassau County, which abuts Queens.

“Last year, New Yorkers spent over $98 million at our nearby stores, so we know that New Yorkers are shopping at Wal-Mart,” Masten said, citing a poll that found “62% of New Yorkers want Wal-Mart [and] the low prices.”

Wal-Mart and Bloomberg have criticized the law as applying to a narrow group of employers: food retailers.

City officials originally did consider covering more than food sellers, said one of the architects of the legislation, Paul Sonn, deputy director of the poverty program at the Brennan Center for Justice at NYU’s law school.

But after investigating “a variety of industries,” they settled on groceries as “a sensible first step,” he said, because many of the chains serving New York provide health benefits that cost them as much as $3 an hour per employee.

Backers of the measure considered it a victory that the Food Industry Alliance, the grocers’ trade group, remained neutral. Sonn said the grocers were saying “look, we just don’t want to compete around how little healthcare we can provide our workers.”

One goal was to protect those employers, he said, from pressure to “cut back” in order to keep down prices in response to those offered by Wal-Mart and others who don’t spend as much on benefits.

“Around the country, Wal-Mart has been a leading firm putting pressure on [others],” Sonn said. “It’s not that they don’t contribute at all; they just contribute at a lower level.”

City officials say the targets of the bill include some upscale grocers, such as the Whole Foods Market chain and the Gourmet Garage. But Wal-Mart has gotten special attention, even though it does not operate in the city.

The Brennan Center recently completed a study that contrasts pay and benefit levels at the retailer with New York and national norms.

The report, “What Do We Know About Wal-Mart?”, says the retailer spends about $3,500 a year on healthcare for each covered worker -- once they become eligible after substantial waiting periods.

That is contrasted with an averages $5,646 for all U.S. employers and $4,834 for those in wholesale and retail trades.

The Wal-Mart contribution translates to about $1.50 an hour for covered workers, Sonn said, less than the City Council legislation would mandate.

The center’s study underscores that people who work at any such retailer, or a supermarket, will have a hard time supporting a family with that job alone in high-cost New York City, where an income of $44,724 is needed “for a household with one earner and one child.”

The average salary of Wal-Mart employees is $19,226, the report says, below the $25,518 average for all retailers in New York state, but higher than the $18,097 average of supermarket workers in the state.

Quinn said local officials worried that employers looking to cut their own costs might count on low-income workers getting coverage instead from the public sector’s Medicaid program, whose rising costs are straining government budgets around the country.

Wal-Mart says that echoes one myth promoted by critics, that the company “encourages associates to apply for public assistance.” In fact, Wal-Mart says, it enables employees to leave that program -- saying that though 7% of its hourly workers were on Medicaid before employment, only 3% were after they had been employed two years.

Wal-Mart has about 34,000 employees in New York state, where it has 99 stores, including 30 “supercenters,” and the recent developments have not discouraged the company from looking to increase those totals by getting their first store in the city, Masten said.

However, the lack of open space, and high costs, make some areas impractical for any big-box retailer.

“Manhattan is a particular challenge, but we are looking at all the boroughs,” said the company spokeswoman. “There already are big boxes in the city ... Target is already in the city ... as is Home Depot ... They’re nonunionized [and] doing well. And we want to be a part of the market as well.

“We’re looking in Staten Island, Queens, the Bronx,” she said. “We’re looking all over the place.”