Reclaim Democracy!

Big Box Balderdash

by

Wal-Mart’s claim of “creating jobs” has no credibility

By Paul Krugman 
First published by the New York Times, December 12, 2005

© 2005 NY Times Company

I think I’ve just seen the worst economic argument of 2005. Given what the Bush administration tried to put over on us during its unsuccessful sales pitch for Social Security privatization, that’s saying a lot.

The argument came in the course of the latest exchange between Wal-Mart and its critics. A union-supported group, Wake Up Wal-Mart, has released a TV ad accusing Wal-Mart of violating religious values, backed by a letter from religious leaders attacking the retail giant for paying low wages and offering poor benefits. The letter declares that ”Jesus would not embrace Wal-Mart’s values of greed and profits at any cost.”

You may think that this particular campaign — which has, inevitably, been dubbed ”Where would Jesus shop?” — is a bit over the top. But it’s clear why those concerned about the state of American workers focus their criticism on Wal-Mart. The company isn’t just America’s largest private employer. It’s also a symbol of the state of our economy, which delivers rising G.D.P. but stagnant or falling living standards for working Americans. For Wal-Mart is a huge and hugely profitable company that pays badly and offers minimal benefits.

Attacks on Wal-Mart have hurt its image, and perhaps even its business. The company has set up a campaign-style war room to devise responses. So how did Wal-Mart respond to this latest critique?

Wal-Mart can claim, with considerable justice, that its business practices make America as a whole richer. The fact is that Wal-Mart sells many products more cheaply than traditional stores, and that its low prices aren’t solely or even mainly the result of the low wages it pays. Wal-Mart has been able to reduce prices largely because it has brought genuine technological and organizational innovation to the retail business.

It’s harder for Wal-Mart to defend its pay and benefits policies. Still, the company could try to argue that despite its awesome size and market dominance it cannot defy the iron laws of supply and demand, which force it to pay low wages. (I disagree, but that’s a subject for another column.)

But instead of resting its case on these honest or at least defensible answers to criticism, Wal-Mart has decided to insult our intelligence by claiming to be, of all things, an engine of job creation. Judging from its press release in response to the religious values campaign, the assertion that Wal-Mart ”creates 100,000 jobs a year” is now the core of the company’s public relations strategy.

It’s true, of course, that the company is getting bigger every year. But adding 100,000 people to Wal-Mart’s work force doesn’t mean adding 100,000 jobs to the economy. On the contrary, there’s every reason to believe that as Wal-Mart expands, it destroys at least as many jobs as it creates, and drives down workers’ wages in the process.

Think about what happens when Wal-Mart opens a store in a previously untouched city or county. The new store takes sales away from stores that are already in the area; these stores lay off workers or even go out of business. Because Wal-Mart’s big-box stores employ fewer workers per dollar of sales than the smaller stores they replace, overall retail employment surely goes down, not up, when Wal-Mart comes to town. And if the jobs lost come from employers who pay more generously than Wal-Mart does, overall wages will fall when Wal-Mart moves in.

This isn’t just speculation on my part. A recent study by David Neumark of the University of California at Irvine and two associates at the Public Policy Institute of California, ”The Effects of Wal-Mart on Local Labor Markets,” uses sophisticated statistical analysis to estimate the effects on jobs and wages as Wal-Mart spread out from its original center in Arkansas.

The authors find that retail employment did, indeed, fall when Wal-Mart arrived in a new county. It’s not clear in their data whether overall employment in a county rose or fell when a Wal-Mart store opened. But it’s clear that average wages fell: ”residents of local labor markets,” the study reports, ”earn less following the opening of Wal-Mart stores.”

So Wal-Mart has chosen to defend itself with a really poor argument. If that’s the best the company can come up with, it’s going to keep losing the public relations war with its critics. Maybe it should consider an alternative strategy, such as paying higher wages.

Editors’ note: Krugman somewhat disingenuously selects just one of many studies about net employment / disemployment by big box stores. Other studies suggest a slight net gain in local employment when a big box store opens. His general point is valid, however: a primary advantage of chains (we won’t tackle market-distorting subsidies here) is they employ fewer people per dollar of sales than smaller businesses. When people cite Wal-Mart’s efficiencies, this is the greatest one.

Independent community-based businesses typically employ many other businesses. They hire or use the services of designers, cabinet shops, sign makers, accountants, insurance reps, computer consultants, attorneys, advertising agencies and others. Local retailers and distributors also carry a higher percentage of locally-made goods than the chains, creating more jobs for local producers.

In contrast, a new chain store typically puts in place a clone of other units, eliminates the need for local planning, and uses a minimum of local goods and services, centralizing those jobs at corporate headquarters. Some jobs are likely to be eliminated (or future jobs not created) in the community hosting a big box store as a result.

In addition to our own library of studies, the New Rules Project and the American Independent Business Alliance each collect many studies on the economic impacts of big box stores.

Letter to Wal-Mart from Religious Leaders

by

Published December 10, 2005

The following letter, addressed to the CEO of Wal-Mart Stores, Inc. was coordinated by Wakeupwalmart and several dozen religious leaders around the country (list of signatories follows the letter).

Dear Mr. Scott,

The holiday season is a time to honor and remember the virtues of hope, love, joy, sharing, sacrifice, and faith. For people of all faiths, the celebration of the holiday season is a time to remember and embrace the best of our values. It is a time to reflect upon our lives, the impact we have on others, and the responsibility we all have to improve the lives of those less fortunate than us.

The prophet Moses in Deuteronomy 25:13-15 teaches “Thou shalt not oppress an hired servant that is poor and needy … lest he cry against thee unto the LORD, and it be sin unto thee.” During this holy season, we must ask ourselves – at what moral price do we accept the sins of exploitation and greed? Sins, it is sad to say, which are exemplified by one of America’s largest and richest corporations, Wal-Mart.

Every day, Wal-Mart’s so-called low prices come at a high cost to the moral virtues and greatness of your workers, our families, and our nation. Everyday, America pays too high a cost for Wal-Mart’s immoral business practices.

As all faiths teach us, the current exploitation of those who work to provide us with goods and services, whether at Wal-Mart or its suppliers, can never be morally justified. Under all conditions, it is simply immoral and wrong. It goes against the teachings of our spiritual leaders and our commitment to justice, fairness, and community.

If there is one shared hope all faiths have in common, it is the central belief that we must work together to improve the lives of others. This central tenet, ‘do unto others as you would have them do unto you,’ is the bedrock of our values, our faith, our families and our communities.

Unfortunately, Wal-Mart needlessly ignores the Golden Rule putting our children and their workers needlessly at-risk.

Despite $10 billion in profit last year, more than 600,000 Wal-Mart workers and their families struggle with no company-provided health care. Even more troubling, nearly 1 out of every 2 children of Wal-Mart workers lives without health care or relies on a public program. Wal-Mart has repeatedly broken child labor laws. Wal-Mart is being sued by 1.5 million female employees for discrimination. And, Wal-Mart continues to pay poverty-level wages, forcing many of its workers to make the impossible choice between rent and health care.

It is hard to imagine why Wal-Mart would consciously choose to make 1.3 million workers suffer in the name of “low prices,” a suffering we can no longer let stand.

For those of us who are Christians, we celebrate the life, the birth and the teachings of Jesus, and we call on Wal-Mart to change. As we prepare to celebrate Christmas, we ask ourselves: Would Jesus support the exploitation of so many for the profit of so few? Would Jesus tolerate systematic discrimination against women? Would Jesus stand by idly while thousands of children go without health care? Would Jesus accept violations of child labor laws?

The answer is simple. Jesus would not embrace Wal-Mart’s values of greed and profits at any cost, particularly when children suffer as a result of those misguided values.

Those of us who are Jewish, Muslim or Buddhist also have scriptures that remind us that God is just and God’s servants must practice justice in all of our words and deeds. As we prepare to celebrate our own holiday traditions, we also ask ourselves, is it right to shop at Wal-Mart? Would our God want us to support Wal-Mart’s values and actions with our dollars?

We know Wal-Mart has the power to improve the lives of millions of workers, their families, and our communities. Wal-Mart can become, if you and the Walton Family so choose, a leading example of moral greatness in corporate America. You have the power to change and set an example that would truly honor and reflect the call of all faith traditions to righteousness and justice.

So beginning today, in the shared spirit of the holiday season, we call on Wal-Mart to change, to become better, and to embrace the best of American values. It is within your power to become a truly responsible, ethical, and righteous company.

In the end, there is no better present Wal-Mart could give to its workers, their families, and America than to change for the better this holiday season.

Sincerely,

Reverend Jesse Jackson, Rainbow PUSH Coalition
Reverend John H. Thomas, President, United Church of Christ
Reverend James Lawson, Holman United Methodist Church in Los Angeles, CA
Kim Bobo, Executive Director, Interfaith Worker Justice
Bishop Gabino Zavala, Regional Bishop in the San Gabriel Pastoral Region (Archdiocese of Los Angeles, CA)
Reverend Doctor William Jarvis Johnson, Calvary CME Church of Pasadena, CA
Reverend Alexia Salvatierra, Clergy and Laity United for Economic Justice (CLUE)
Father Michael Pfleger, Faith Community of St. Sabina Parish, Chicago, Illinois.
Reverend Bennie E. Whiten, Jr., United Church of Christ
Retired Bishop Jesse DeWitt of the United Methodist Church
Reverend Mark Wendorf, McCormick Theological Seminary and Board Member of Interfaith Worker Justice
Professor William P. Quigley, Loyola University New Orleans School of Law and Board member of Interfaith Worker Justice
Dr. Edie Rasell of the Justice and Witness Ministries, United Church of Christ.
Reverend Ron Stief, Director of Washington, D.C. office, United Church of Christ
Pastor Sylvia Tucker, Union Baptist Church of Hopewell, VA
Mr. Ralph Ramirez, President of Richmond, VA Southern Council Leadership Conference Chapter
Reverend Rebekah Jordan, Mid-South Interfaith Network for Economic Justice
Reverend Sinclair Oubre, J.C.L. of St. John the Evangelist Catholic Church of Port Arthur, TX
Reverend Doctor John J. O’Brien, C.P.
Reverend Bridgeforth, Shiloh Baptist Church, VA
Reverend King, Southern Council Leadership Conference of Danville, VA
Reverend Rufus Fuller II Pastor of New Hope Baptist Church, VA
Reverend William Avon Keen of Traynham Grove Church,VA
Reverend John Snider, Saint Stephen’s Lutheran Church, West St. Paul, MN
Reverend Bill Bulson, Holy Apostles, MN
Reverend Timothy M Johnson, Cherokee Park United Church of St. Paul, MN
Reverend Johnathan C. Tetherly, Chaplain of Hampden County House of Corrections, MA
Father Thomas Mueller, S.S. Cyril & Methodist Orthodox Church, WI
Father Jerry Schroeder, St. Benedict the Moor Parish of Milwaukee, WI
Reverend Viviane Thomas-Breitfeld, Good Sheperd Lutheran Church in Waukesha, WI
Reverend Kelly Fowler, First United Methodist Church of Waukesha, WI
Reverend Doctor Ronald Faust, Kansas City Interfaith Worker Justice, MO
Reverend Tom Blakley, Barry Christian Church, MO
Reverend Spencer Barrett, Co-chair, Kansas City Interfaith Worker Justice, MO
Pastor Robin Hood Senior Pastor, Redeemed Outreach Ministries, IL
Reverend Fr. Alfredo Gundrum , Pastor of St. Kevin, Chicago, IL
Reverend Jose Landaverde, Amor de Dios, United Methodist Church, IL
Reverend William F. Marx, Pax Christi of Western New York
Reverend Dan Schifeling, Church of Nativity, United Church of Christ
Sister Jean Sliwikski, Western New York Workers’ Rights Board
Reverend Suzelle Lynch, Unitarian Universalist Church, Brookfield WI
Reverend Doctor. Roland Womack, Board Member, African-American Ministers Leadership Council, and Pastor, Progressive Baptist Church, Milwaukee, WI
Pastor Susan Burchfield, Immanuel Lutheran Church of Seattle, WA
Reverend Richard Vogel, Executive Pastor, St. James United Methodist Church, Kansas City, MO
Reverend Emanuel Cleaver II, St. James United Methodist Church of Kansas City, MO
Reverend Norman D. Copeland, AME Church, Los Angeles, CA
Reverend Calvin S. Morris, Ph.D. Executive Director Community Renewal Society of Chicago, IL
Reverend Jennifer Kottler, Protestants for the Common Good of Chicago, IL
Reverend Jon M. Luopa, Univeralist Unitarian Church of Seattle WA
Sisters of St Joseph of Springfield, MA Justice and Peace Committee
Reverend William F. Brisotti, Our Lady of the Miraculous Medal Church, NY
Reverend Catherine Schulyer, Protestant Campus Ministry of Stony Brook, NY
Reverend Richard E. Edwards, Stony Brook Community Church, NY
Reverend Thomas W. Goodhue, Executive Director, The Long Island Council of Churches, NY
Reverend Paul Ratzlaff, The Unitarian Universalist of Fellowship of Huntington, NY
Sister Rosemary Everett, SNJM, Sisters of the Holy Names, CA
Father Bill Leininger, Human Concerns Commission, Diocese of San Jose, CA
Monsieur Gene Boyle, St. Thomas Aquinas of Palo Alto, CA
Reverend John Freesemann, Holy Redeemer Lutheran Church of San Jose, CA
Rabbi Melanie Aron, Congregation Shir Hadash of Los Gatos, CA
Reverend Carol Been, The Interfaith Council of San Jose, CA
Ms. Mary Quinn Kambic, Catholic Labor Committee of Baltimore, MD
Ms. Evely Laser Shlensky, Board member, Executive Committee, Interfaith Worker Justice
Mr. Monroe B. Sullivan, National Board Member, Interfaith Worker Justice
Ms. Karen Herrling, Attorney, Catholic Legal Immigration Network
Mr. Stephen Hand, Editor, Traditional Catholic Reflections

Condemnation Nation

by

Retail chains and the big business of eminent domain

By Joshua Kurlantzick
First published by Harper’s Magazine, October, 2005

This June the Supreme Court handed down one of its most important property-rights decisions in decades. In Kelo v. New London, the Court ruled that the city of New London, Connecticut, could use eminent domain to seize homes–properties, the Court agreed, that were not “blighted or otherwise in poor condition”–from a handful of owners who refused to make way for a massive private redevelopment plan. The 5-4 decision confirmed the right of local governments to forcibly take property from one private owner and give it to another if the handover would presumably result in economic development–an affirmation of cities’ redefinition of the “public use” clause of the Fifth Amendment, which traditionally limited the taking of property to instances that benefited the larger public good. Indeed, throughout the nineteenth century and much of the twentieth, states invoked eminent domain primarily for these public uses, seizing smallholder land to build roads, parks, railroads, hospitals, and military bases.

In New London, however, the homes will not be replaced by a waterfront park or a school; they’ll make way for a conference center and hotel, an upscale office complex, and other structures designed to lure pharmaceutical giant Pfizer to the area–developments, it was successfully argued, that would bring increased tax revenue to economically distressed New London .

It was the Supreme Court’s more liberal jurists who voted in favor of New London , with Justice John Paul Stevens writing in the majority opinion that there “is no basis for exempting economic development from our traditionally broad understanding of public purpose.” Left-leaning editorial pages came out strongly in favor of the decision. The New York Times wrote that the ruling was “a welcome vindication of cities’ ability to act in the public interest.” “The court’s decision was correct,” agreed the Washington Post. Democratic leaders either touted the ruling or remained silent. Conservatives, on the other hand, quickly condemned the decision, with Florida Governor Jeb Bush calling it “horrible” and the Wall Street Journal opinion page, normally known for championing corporate interests, caustically noting that the Court’s liberals had given local governments “more or less unlimited authority to seize homes and businesses.” In her dissent, Justice Sandra Day O’Connor warned, “Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”

This political divide, perhaps, shouldn’t be surprising. Liberals have historically supported government’s right to use broad powers to promote the greater social good–from protecting minorities and the poor to revitalizing faltering communities–and have had to defend this position against increasingly vituperative attacks from conservatives, who decry government programs as “not the solution to our problems” but “the problem.” Are liberals right, however, in claiming that eminent domain remains more solution than problem? Between 1998 and 2002, according to a study by the Institute of Justice, a public-interest law firm specializing in property rights, more than 10,000 properties in forty-one states were taken or threatened by eminent domain so that the land could be given to another private interest. And these numbers may actually be understated. In Maryland alone there were 1,237 of these private-interest threats or seizures. Of the more than 5,500 condemnations filed or threatened in California between 1998 and 2002, 858 are known to be on behalf of other private parties; it is impossible to know how many of the remaining thousands were as well.

What these numbers reflect is not some noble effort to revitalize America ‘s cities but a concerted campaign by city governments, on the one hand, and large real-estate developers and “big-box” retailers, on the other, to exploit eminent domain for their own gain. The developers and retailers–stores such as Wal-Mart and Target, which build numerous warehouse-style outlets on vast swaths of land to keep costs down–already enjoy immense advantages, including huge tax breaks, over smaller competitors; and yet increasingly they are urging cities to condemn property to serve their own interests, and employing lobbyists and donating large sums to local officials to help this effort. Cities, hoping to generate greater tax revenue, have been eager to comply, mostly to the detriment of homeowners and small businesses. To defend eminent domain as it is now practiced, therefore, is not a defense of our social compact with government, of the need for individuals to make sacrifices in the face of progress; it is an endorsement of a municipal-corporate collusion that now operates like a machine.

“The idea that you can invoke eminent domain is absolutely essential,” the mayor of Long Branch, New Jersey, Adam Schneider, explained to me. “Without that tool developers are not going to get on board.” And because companies now expect land seizure as part of their deal with cities, they will leverage the power of their tax revenues if city officials, their sizable economic redevelopment departments, or their hired private-public development corporations do not readily bend to their whims. In Long Beach , California, which has undergone extensive redevelopment of its waterfront and many commercial areas, the “developers are very well-versed in the legalities” of eminent domain, Councilman Frank Colonna told me. “The developers that get in are fully aware the city is committed to delivering the property, and would use eminent domain if we have to.” In the New London case, the president of Pfizer’s research department openly informed the city that if the company was to consider locating in New London, condemnation and redevelopment of adjacent areas would be vital. When megapharmacy chain CVS wanted to build a new drugstore in Ambridge, Pennsylvania, its local developer simply asked the government to seize the land and give it a lease; the town complied. In a more obscene flouting of public use, the city of Cypress, California, prevented a local church from building on property it had legally acquired in order to give the land to Costco.

Although cities and their development professionals at times select the land that they hope retailers will fill, in many cases retailers themselves find the choicest parcels of land, which they then ask cities to hand over. When Best Buy identified desirable land in Richfield, Minnesota, for the relocation and expansion of its corporate headquarters, Richfield guaranteed the company that it would use eminent domain to take property from the area’s existing businesses. In New Rochelle, New York, Ikea said it wanted to build a 300,000-square-foot store on fifteen acres of an existing neighborhood; the city agreed to clear the land, although public outcry later led Ikea to pull out of the deal. In fact, seeking sites with the idea of condemning them has become so routine that developers and retailers aren’t shy about their aims. A Costco vice president, in a frank letter to a shareholder in 2002, acknowledged that this was now normal operating procedure–that the company had initiated “dozens” of projects utilizing or threatening eminent domain to take away enough land from former tenants for its 148,000-square-foot stores. If Costco “refrained from participating in these deals,” the VP wrote, “our competitors for those sites, like Target, Home Depot, Kmart, Wal-Mart, BJ’s, Sam’s Club, and many others, would take advantage of our reticence.”

Even when a municipality’s economic-redevelopment agency is on board, developers and retailers must convince city councils and other elected officials that the condemnations are warranted. Consequently, developers and retailers have begun deploying, in unprecedented numbers, local lobbyists to win land concessions. According to the Center for Responsive Politics, the retail sales industry more than tripled its political contributions between 1990 and 2004; the real-estate industry’s contributions grew more than sevenfold during that same period.

In New York State alone, spending on municipal lobbying has grown from some $6 million per year in 1978 to $144 million in 2004, and the number of registered lobbyists has risen to over 3,800. In some cases the lobbying is blatantly venal. In Newark, New Jersey, for example, the city council was initially opposed to a redevelopment plan that involved seizing nine city blocks and 166 properties and building high-end condominiums in their place; when a coalition of developers contributed funds directly to two municipal councilmen, they suddenly changed their stance and allowed the proposal to go forward. In Lancaster, California, Costco repeatedly threatened to leave the city unless the municipality condemned a neighboring business, 99 Cents Only. Under pressure, the local government tried to entice the smaller store into leaving, then began proceedings to condemn its land. “99 Cents produces less than $40,000 [a year] in sales taxes,” the Lancaster city’s attorney reasoned. “And Costco was producing more than $400,000. You tell me which was more important.”

Cities and their officials have used eminent domain in other ways to line their pockets. The Southwestern Illinois Development Agency charged a commission fee for condemnations allotted for private use, in essence raising money directly from eminent domain. In Mesa, Arizona, and in Cincinnati, city council members or redevelopment-corporation board members either owned property that likely would have increased in value due to redevelopment or were themselves the contractors bidding on the lucrative construction projects.

Once the local government makes a decision to condemn, it still has to demonstrate to the public that the seizures are warranted. But this has turned out not to be difficult. It has become an accepted part of the process that a private developer can pay for a study showing the property is worthy of condemnation, and can pay the attorneys’ fees involved in seizing the land. (By comparison, the idea that pharmaceutical companies should pay a part of the Food and Drug Administration’s reviews of new medicines, a similar conflict of interest, has proven extremely controversial.) In St. Louis, Target and the city commissioned a blight study that showed a site’s electrical system was deteriorating. Yet the study failed to mention that Target was responsible for upkeep of the electricity at the site, where it already had one store, so the company itself had created the “blight” it then decried.

When such studies designate land as “blighted,” they make it easier for condemnation to proceed. But “blighted” is a subjective term, and definitions of blight vary widely from state to state. The city of Pittsburgh seized a neighborhood in which some 95 percent of the buildings were reportedly occupied. According to state redevelopment law, property can be declared blighted in New York if it lacks off-street parking. San Jose has marked a tenth of the entire city as blighted. After land is designated as blighted, the public is supposed to have a chance to respond. Yet cities and developers can essentially cut the public out of this process as well. In the St. Louis Target case, the city sent notice of the public hearing on condemnation to Target but not to the property holder. In other cases the municipality published these notices in the legal classifieds of local newspapers rather than sending information directly to property owners who stood to lose their land. When the government of Port Chester, New York, wanted to obtain parcels of land for a private developer, it published its notice of condemnation in the paper, without mentioning that landowners had only thirty days to challenge the order.

With a blight designation in hand, the city and the developer have considerable leverage. Most small landholders sell, since they rarely have the resources to fight the decision. Although states require the developer to pay “just compensation” for the land, this may not take into account the difference between what the city determines is fair market value and the property’s true open market value. Redevelopment officials in Port Chester offered one landowner less than half what local tax authorities said his property was worth. In Garden Grove, California, where the city wanted to redevelop large expanses of land, the municipal government offered only $16,000 for a successful auto business; a court later forced it to pay $950,000.

As this procedure has become increasingly routine, governments and developers have formed permanent partnerships, dangerously blurring the line between the public and private sectors. Almost all cities now have economic-development professionals, and these in turn have engendered their own trade associations. The National Congress for Community Economic Development, for one, has grown from a membership of forty development corporations in the early 1970s to over seven hundred today. And these development pros now have their own meeting and junket circuits, where they can rub shoulders with and woo retailers and developers. At one of the largest of these events, the International Council of Shopping Centers, held in Las Vegas, armies of retail executives, economic-development specialists, and officials from cities across the country mingle at booths designed to advertise a city’s appeal to big retail. A contingent from Fontana, California, at the 2005 International Council exposition included the mayor, his entire economic-development team, and several city councilors. “We want the private developer to show good faith in acquiring land,” Ray Bragg, Fontana ‘s redevelopment and special-projects director, told me. “And if you run up against a stumbling block, if you find a landowner unwilling to sell, come to us and then we’ll talk about eminent domain.”

In his majority opinion, Justice Stevens wrote, The City [of New London] has carefully formulated an economic-development plan that it believes will provide appreciable benefits to the community, including–but by no means limited to–new jobs and increased tax revenue.” It was the development plan, and its promise that the seizure of homes would result in positive change–in progress–that clinched the decision for the five consenting judges. Yet these plans, according to the Court’s ruling, need not provide “reasonable certainty” that the “expected public benefits will actually accrue.” Indeed, evidence suggests that cities’ efforts at redevelopment rarely bear fruit. A comprehensive study conducted in California in 1998 shows that cities spend roughly two dollars–on condemnations, the luring of companies, and other aspects of redevelopment–for every dollar gained in growth. In three out of every four of the areas it examined, the study found that redevelopment projects had brought no net increase in tax revenue.

This study is perhaps less surprising than it seems: in neighborhoods filled with small businesses, a few can close and the area will retain its economic center. But if a municipality condemns land and gives it to a big-box retailer and that chain doesn’t move in, or moves in and closes, a wide swath of land is left vacant. This history of condemnation or potential condemnation, moreover, discourages businesses from improving their stores, or new owners from moving in, since they never know when the city might take their land. In one case in Hampton, Virginia, the city condemned homes to build a project anchored by Kmart; then, in 2002, Kmart declared bankruptcy, itself a victim of even more pervasive big-box competitors. At the time, Kmart’s demise left the Hampton space an unused shell. In another case, in Phoenix , the city condemned a small tobacco shop for new development but ultimately found no takers, leaving the land vacant.

Kelo v. New London does include a proviso that may protect homeowners and small businesses from unproven redevelopment plans, with their alluring promises of greater revenue and profit: it sends the issue back to the states, which have the power to set their own standards on seizures. And eleven states already have put forward legislation that would significantly limit the Supreme Court ruling. Republicans in both the Texas House and Senate have proposed amendments to the state constitution prohibiting almost all instances in which eminent domain can be used for economic development or private gain. Tom McClintock, a conservative senator from California, has introduced a similar bill in his state. “No one should have to worry about losing your home to some politically connected developer,” he recently said. “There are 6,000 public agencies in California that now have the power to seize your home, pay you pennies on the dollar for it, and then give it to somebody else for their own personal gain and profit.” Libertarian groups have even proposed using eminent domain to seize the homes of Justices David Souter and Stephen Breyer, both of whom voted with the majority in the New London case.

Although condemnations fall most heavily on Democrats’ key constituencies–the poor and minorities-Democrats at the federal level have done little to try to ensure that eminent domain is used judiciously and constructively. By lending implicit if not explicit support to a flawed enterprise, Democrats are defending a principle–the government’s right to act on behalf of the greater good of its citizenry–that has been abused into obsolescence. And this support only confirms many voters’ fears (and the Republicans’ incessantly pushed portrayal) of the minority party as haughtily paternalistic, unresponsive to individual rights, uncaring about the needs of the little guy. In a pending Senate bill that would prevent all seizures for economic development, only two of the twenty-five cosponsors were Democrats; this summer, 157 Democrats in the House voted against a successful amendment to a bill that restricts transportation funds from being used for eminent domain takings. House Minority Leader Nancy Pelosi, one of the country’s most prominent and admittedly liberal Democrats, supported the New London decision, even saying, strangely, that the Court’s ruling was “as if God had spoken.” Apparently, these days, even God shops at Wal-Mart.

© 2005 Harper’s Magazine 

Related feature on corporate exploitation of eminent domain: Wal-Mart, the Abuse of Eminent Domain and Corporate Welfare

 

Guide for Post-film Discussion of “Wal-Mart: The High Cost of Low Price”

by

Ideas to make screenings more informative and productive events

By ReclaimDemocracy.org staff

Posted November 14, 2005

Introduction

Robert Greenwald’s Walmart documentary can be a useful conversation starter and entry point for citizens to learn about some of the destructive impacts of corporate chains on our communities, economy, jobs, environment and more. But without a strongly facilitated discussion to bring out these points, the film’s exclusive focus on a single company may leave some viewers with a misunderstanding of the problems and potential solutions.

The film can be an excellent educational tool, so we created this discussion guide to help local screening organizers facilitate such post-film discussion. A question or two prior to the film may help viewers get the most out of it, too –and they can also watch it at home, by getting a tv wall mount installation today which can help with this a lot.

This document was produced immediately after viewing the film for the first wave of screenings. We welcome your ideas for improving this guide, and we’ll update it on our website as ideas come in. To order “The High Cost of Low Price,” click here (a portion of your ($13) purchase will go to support our work).

Is WalMart Unique?

“Walmart: The High Cost of Low Price” focuses solely on Walmart Corporation while ignoring the existence of other giant retail chains (Sam’s Club, which is mentioned, is a division of Walmart) that create most of those same destructive impacts. Walmart indeed is unique in its size and impact, has a worse record than most in compliance with the law, and certainly deserves most criticism it receives. But while Walmart differs in scale and degree from other corporate chains, is it different in kind?

  • Target Corporation, Walmart’s most direct competitor, is invisible in the film, yet it:
  • Pays workers wages essentially identical to Walmart and is ardently anti-union;
  • Drives down wages at competitors, especially unionized supermarkets;
  • Has an equally devastating impact on many of the communities where it locates “superstores” and on independent business in and near those communities;
  • Wields its amassed power to extract taxpayer subsidies around the country, with all the accompanying harms the film blames on Walmart;
  • Uses corporate funds to help elect candidates favored by its directors, undermining democracy
  • Sells mostly imported goods from the same countries and often the same factories as Walmart (the prices and quality tend to be slightly higher, but an equally low portion of sales go to the people who make them);
  • Drives sprawl, increased costs for roads and services, and consumes enormous amounts of land for single-story buildings and parking lots isolated from any other destination.

Clearly, labor leaders, environmental groups and others who pressure Walmart for concessions have reason to attack it. As the world’s largest corporation, Walmart is a symbol and publicity magnet, and a positive change in Walmart can have broad repercussions. But is Walmart the disease or the symptom? What are the risks of presenting the symptom as if it were the disease?

Costco often is presented as if it were the “anti-Walmart.” The company unquestionably treats workers far better and sells more upscale merchandise, but is much else different? Doesn’t it take wealth out of communities and concentrate that money and power in the hands of shareholders in the same way?

How many of you have heard of the class action suit pending against Walmart for allegedly discriminating against women in granting promotions into management level?

How many of you are aware that a nearly identical lawsuit is pending against Costco?

Are We Making Progress By Targeting Individual Corporations?
The Walmart movie closes with the story of Inglewood, California ‘s victory over Walmart–stopping a proposed supercenter. But did this battle improve people’s lives or merely maintain the status quo?

Thousands of volunteer hours and thousands of dollars were spent to stop a single big box store temporarily, with no guarantee that Walmart will not be back next year (as has happened in many communities). This in no way diminishes the inspiring work of those citizens — they pulled of an incredible campaign to win the initiative battle. But ask yourself if we achieve real progress when our energy is consumed with defensive battles one after another?

Millions of activists have fought harms inflicted by thousands of corporations one at a time for generations. Are the major societal problems caused by runaway corporate power getting better or worse? What does this tell us?

Should we redouble our efforts? Work harder and longer? Or do we need to rethink whether democracy even is possible when corporations are granted the rights of human beings with none of the limitations we the people have.

Blame Walmart or Our Broken System?
What would happen to our tax base if the penalty for evading income taxes was a fine of pennies? How many people would choose to break the law and risk getting caught in this situation? This is directly comparable to the case in which Walmart negotiated a deal with the federal government to pay 18 seconds worth of revenue to settle 24 labor law violations.

So do you blame Walmart executives for continuing to break the laws when the fines imposed on the relatively few occasions where they are caught and penalized are inconsequential? Or is it our fault for failing to assert our authority over Walmart and tolerating politicians who fail to punish criminal corporations in any meaningful way?

Should we keep pleading with one company at a time to stop destructive behaviors or should we focus on eliminating such behavior through asserting the superiority of human rights over (corporate) property rights?

Can a corporation that is legally responsible only to maximize profit for its owners truly be “socially responsible?” (reference “Inherent Rules of Corporate Behavior” –consider adding your own talking points based on that article.

Why do we expect poverty-level wages to be the norm among big box stores? Is there any inherent reason why service jobs should not pay a livable wage? Is operating a machine in a factory really that different than operating a cash register?

What can be done beyond a defensive battle to stop a big box store from opening in our community? Here are a few examples.

  • Ban or limit the number of chains in your community.
  • Ban subsidies to big box stores.
  • Limit the size and/or location of retail development to ensure new stores benefit your community.
  •  Create an Independent Business Alliance to help community-based business thrive.
  •  Explore worker-owned businesses, co-ops, and community-owned department stores (contact us for more on this topic) as an alternative to absentee-owned chains.
  •  Deny claims to “corporate personhood” that allow corporations to challenge citizens’ authority.

This guide was produced by ReclaimDemocracy.org. You are welcome to adapt in any way that suits your needs. Please note ReclaimDemocracy.org/walmart as a resource to your audience and, if you find our resources valuable, make a donation to keep us working. Thank you.

Judicial Activism for Corporations Is Subverting Democracy

by

By Jeff Milchen 
Published August 25, 2005

After battling city officials all the way to the Utah Supreme Court over whether they had collected enough petition signatures to force a referendum, it seems the residents of Sandy, Utah will become the latest in a growing number of communities to decide the fate of controversial “big box” stores at the ballot box.

In a state where growth control often is equated with communism, the court came down firmly on the side of citizens seeking to prevent Sandy’s City Council from rezoning industrial land in order to allow a new Wal-Mart and Home Depot. The court’s 5-0 ruling in July said, “The exercise of the people’s referendum right is of such importance that it properly overrides individual [corporation’s] economic interests.” But after winning their initial battle, Sandy residents may find the court’s Jeffersonian words hollow.After battling city officials all the way to the Utah Supreme Court over whether they had collected enough petition signatures to force a referendum, it seems the residents of Sandy, Utah will become the latest in a growing number of communities to decide the fate of controversial “big box” stores at the ballot box.

Why? The U.S. Supreme Court has ruled corporations have a “right” to spend unlimited corporate funds to influence ballot questions. As citizens in dozens of communities have learned, that power enables giant corporations to turn ballot measures — theoretically the purest form of democracy — into yet another sphere of corporate dominance.

In May, Wal-Mart spent almost $400,000 in Flagstaff, AZ to run its own ballot initiative and reverse a size cap on big box stores previously passed by the city council. The company outspent the size cap’s defenders three to one — a whopping $44 for each vote it received — en route to winning 51% of the vote.

Wal-Mart’s ad campaigns painted the size cap as a union and governmental attack on citizens’ rights, including an ad that equated opponents with Nazi book-burners. A backlash resulted, but came after most of mail-in ballots were cast.

Becky Daggett of Friends of Flagstaff’s Future, which supported efforts to uphold the size cap, said the corporate funding “drove what should have been a community debate and determined the outcome of a local decision.”

The story isn’t unique — just two months earlier in Bennington, VT, Wal-Mart had steamrolled citizens who tried to defend the town’s big-box size cap.

This is hardly what the authors of our Constitution had in mind.

When American colonists declared independence from England, they also freed themselves from control by corporations like the East India Company that extracted colonists’ wealth and dominated trade. The colonial experience bred fear of concentrated power in the hands of corporations as well as despots, leading states to limit corporations’ size, lifespan, and range of activity. In most states, corporations were forbidden to spend any money to influence elections or law-making.

Corporations escaped many of those barriers during the 1800s, aided by the distraction and growth opportunities of the Civil War. By the end of the century, the Supreme Court’s judicial activism had invented a concept that would have shocked American revolutionaries.

Ignoring the fact that corporations’ are unmentioned in our Constitution, the Court interpreted the 14th Amendment’s guarantee of “due process of law” — written to protect the rights of freed slaves — to make corporations legal “persons.”

It took almost another century, however, before another episode of Supreme Court activism effectively created a corporate “right” to dominate ballot initiatives and referenda (initiatives are questions placed on the ballot via signature gathering among the general public, referenda are questions on which the government chooses to allow a popular vote).

The man who went on to write that key ruling gave fair warning of his bias. In 1971, he wrote a famous memo to a friend at the U.S. Chamber of Commerce, urging the Chamber to aggressively expand big business’ power, noting, “the judiciary may be the most important instrument for social, economic and political change.”

One month later President Nixon appointed the memo’s author, Lewis Powell, to the Supreme Court, where he went on in 1978 to make his political opinion the law of the land, writing the (5-4) majority opinion in First National Bank of Boston v. Bellottithat created a new class of corporate political “speech”

Notably, such decisions on expansion of corporate political power don’t necessarily follow left-right political divides. Indeed, Chief Justice Rehnquist has repeatedly attacked the invention of corporate constitutional rights. In his dissenting opinion fromBellotti, he warned of “special dangers in the political sphere” that result from granting political power to corporations (his full dissent is well worth a read).

Despite Rehnquist’s objections, corporate executives have since wielded vastly expanded power over communities around the country. Often, the mere threat of running a costly ballot initiative intimidates local governments into weakening controls over corporate activities.

So when the citizens of Sandy go the voting booth this fall, they’ll battle against a company that spent less than sixty seconds worth of corporate revenue to defeat a skilled and well-organized citizen effort in Flagstaff. Whether or not we’re concerned by the proliferation of big box stores, we all should be alarmed by this perversion of democracy.

The reasons that drove our country’s founders to keep business creations subordinate to democracy are even more compelling today. Until we return corporate activity to “strictly business” and revoke their ill-gotten political power, the power of a Wal-Mart typically will trump even the most committed citizen efforts.

Community-level fights will continue and I wish people of Sandy the best, but the crucial battle — one to determine whether citizens or corporations will control the future of our communities and country — must take place nationwide.

Jeff Milchen formerly directed Reclaim Democracy! Our resource library on corporations and ballot questions has much more on this topic. This article is updated from a piece the author first wrote for Writers on the Range, a service of High Country News.

How Costco Became the Anti-Wal-Mart

by

By Steven Greenhouse
First published by the New York Times, July, 17, 2005

Editor’s Note: While Costco unquestionably provides better jobs than Wal-Mart and its Sam’s Club division, is its overall impact much better when community, environmental and other concerns are weighed? We urge you to consider that doing your business with community-based enterprise is usually the most responsible choice. See our Independent Business section for more on the topic.

Jim Sinegal, the chief executive of Costco Wholesale, the nation’s fifth-largest retailer, had all the enthusiasm of an 8-year-old in a candy store as he tore open the container of one of his favorite new products: granola snack mix. “You got to try this; it’s delicious,” he said. “And just $9.99 for 38 ounces.”

Some 60 feet away, inside Costco’s cavernous warehouse store here in the company’s hometown, Mr. Sinegal became positively exuberant about the 87-inch-long Natuzzi brown leather sofas. “This is just $799.99,” he said. “It’s terrific quality. Most other places you’d have to pay $1,500, even $2,000.”

But the pièce de résistance, the item he most wanted to crow about, was Costco’s private-label pinpoint cotton dress shirts. “Look, these are just $12.99,” he said, while lifting a crisp blue button-down. “At Nordstrom or Macy’s, this is a $45, $50 shirt.”

Combining high quality with stunningly low prices, the shirts appeal to upscale customers — and epitomize why some retail analysts say Mr. Sinegal just might be America’s shrewdest merchant since Sam Walton.

But not everyone is happy with Costco’s business strategy. Some Wall Street analysts assert that Mr. Sinegal is overly generous not only to Costco’s customers but to its workers as well.

Costco’s average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Sam’s Club. And Costco’s health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco “it’s better to be an employee or a customer than a shareholder.”

Mr. Sinegal begs to differ. He rejects Wall Street’s assumption that to succeed in discount retailing, companies must pay poorly and skimp on benefits, or must ratchet up prices to meet Wall Street’s profit demands.

Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, he said. And Costco’s customers, who are more affluent than other warehouse store shoppers, stay loyal because they like that low prices do not come at the workers’ expense. “This is not altruistic,” he said. “This is good business.”

He also dismisses calls to increase Costco’s product markups. Mr. Sinegal, who has been in the retailing business for more than a half-century, said that heeding Wall Street’s advice to raise some prices would bring Costco’s downfall.

“When I started, Sears, Roebuck was the Costco of the country, but they allowed someone else to come in under them,” he said. “We don’t want to be one of the casualties. We don’t want to turn around and say, ‘We got so fancy we’ve raised our prices,’ and all of a sudden a new competitor comes in and beats our prices.”

At Costco, one of Mr. Sinegal’s cardinal rules is that no branded item can be marked up by more than 14 percent, and no private-label item by more than 15 percent. In contrast, supermarkets generally mark up merchandise by 25 percent, and department stores by 50 percent or more.

“They could probably get more money for a lot of items they sell,” said Ed Weller, a retailing analyst at ThinkEquity.

But Mr. Sinegal warned that if Costco increased markups to 16 or 18 percent, the company might slip down a dangerous slope and lose discipline in minimizing costs and prices.

Mr. Sinegal, whose father was a coal miner and steelworker, gave a simple explanation. “On Wall Street, they’re in the business of making money between now and next Thursday,” he said. “I don’t say that with any bitterness, but we can’t take that view. We want to build a company that will still be here 50 and 60 years from now.”

According to a post on DOGE kaufen, if shareholders mind Mr. Sinegal’s philosophy, it is not obvious: Costco’s stock price has risen more than 10 percent in the last 12 months, while Wal-Mart’s has slipped 5 percent. Costco shares sell for almost 23 times expected earnings; at Wal-Mart the multiple is about 19. Mr. Dreher said Costco’s share price was so high because so many people love the company. “It’s a cult stock,” he said.

Emme Kozloff, an analyst at Sanford C. Bernstein & Company, faulted Mr. Sinegal as being too generous to employees, noting that when analysts complained that Costco’s workers were paying just 4 percent toward their health costs, he raised that percentage only to 8 percent, when the retail average is 25 percent. Editor’s note: It would have been helpful if the reporter informed readers of Mr. Kozloff’s salary.

“He has been too benevolent,” she said. “He’s right that a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden.”

Mr. Sinegal says he pays attention to analysts’ advice because it enforces a healthy discipline, but he has largely shunned Wall Street pressure to be less generous to his workers.

“When Jim talks to us about setting wages and benefits, he doesn’t want us to be better than everyone else, he wants us to be demonstrably better,” said John Matthews, Costco’s senior vice president for human resources.

With his ferocious attention to detail and price, Mr. Sinegal has made Costco the nation’s leading warehouse retailer, with about half of the market, compared with 40 percent for the No. 2, Sam’s Club. But Sam’s is not a typical runner-up: it is part of the Wal-Mart empire, which, with $288 billion in sales last year, dwarfs Costco.

But it is the customer, more than the competition, that keeps Mr. Sinegal’s attention. “We’re very good merchants, and we offer value,” he said. “The traditional retailer will say: ‘I’m selling this for $10. I wonder whether I can get $10.50 or $11.’ We say: ‘We’re selling it for $9. How do we get it down to $8?’ We understand that our members don’t come and shop with us because of the fancy window displays or the Santa Claus or the piano player. They come and shop with us because we offer great values.”

Costco was founded with a single store in Seattle in 1983; it now has 457 stores, mostly in the United States, but also in Canada, Britain, South Korea, Taiwan and Japan. Wal-Mart, by contrast, had 642 Sam’s Clubs in the United States and abroad as of Jan. 31.Costco’s profit rose 22 percent last year, to $882 million, on sales of $47.1 billion. In the United States, its stores average $121 million in sales annually, far more than the $70 million for Sam’s Clubs. And the average household income of Costco customers is $74,000 – with 31 percent earning over $100,000.

One reason the company has risen to the top and stayed there is that Mr. Sinegal relentlessly refines his model of the warehouse store — the bare-bones, cement-floor retailing space where shoppers pay a membership fee to choose from a limited number of products in large quantities at deep discounts. Costco has 44.6 million members, with households paying $45 a year and small businesses paying $100.

A typical Costco store stocks 4,000 types of items, including perhaps just four toothpaste brands, while a Wal-Mart typically stocks more than 100,000 types of items and may carry 60 sizes and brands of toothpastes. Narrowing the number of options increases the sales volume of each, allowing Costco to squeeze deeper and deeper bulk discounts from suppliers.

“He’s a zealot on low prices,” Ms. Kozloff said. “He’s very reticent about finagling with his model.”

Despite Costco’s impressive record, Mr. Sinegal’s salary is just $350,000, although he also received a $200,000 bonus last year. That puts him at less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies.

“I’ve been very well rewarded,” said Mr. Sinegal, who is worth more than $150 million thanks to his Costco stock holdings. “I just think that if you’re going to try to run an organization that’s very cost-conscious, then you can’t have those disparities. Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong.”

There is little love lost between Wal-Mart and Costco. Wal-Mart, for example, boasts that its Sam’s Club division has the lowest prices of any retailer. Mr. Sinegal emphatically dismissed that assertion with a one-word barnyard epithet.

Still, Costco is feeling the heat from Sam’s Club. When Sam’s began to pare prices aggressively several years ago, Costco had to shave its prices – and its already thin profit margins – ever further.

“Sam’s Club has dramatically improved its operation and improved the quality of their merchandise,” said Mr. Dreher, the Deutsche Bank analyst. “Using their buying power together with Wal-Mart’s, it forces Costco to be very sharp on their prices.”

Mr. Sinegal’s elbows can be sharp as well. As most suppliers well know, his gruff charm is not what lets him sell goods at rock-bottom prices – it’s his fearsome toughness, which he rarely shows in public. He often warns suppliers not to offer other retailers lower prices than Costco gets.

When a frozen-food supplier mistakenly sent Costco an invoice meant for Wal-Mart, he discovered that Wal-Mart was getting a better price. “We have not brought that supplier back,” Mr. Sinegal said.

He has to be flinty, he said, because the competition is so fierce. “This is not the Little Sisters of the Poor,” he said. “We have to be competitive in the toughest marketplace in the world against the biggest competitor in the world. We cannot afford to be timid.”

Nor can he afford to let personal relationships get in his way. Tim Rose, Costco’s senior vice president for food merchandising, recalled a time when Starbucks did not pass along savings from a drop in coffee bean prices. Though he is a friend of the Starbucks chairman, Howard Schultz, Mr. Sinegal warned he would remove Starbucks coffee from his stores unless it cut its prices. Starbucks relented.

“Howard said, ‘Who do you think you are? The price police?’ ” Mr. Rose recalled, adding that Mr. Sinegal replied emphatically that he was.

If Mr. Sinegal feels proprietary about warehouse stores, it is for good reason. He was present at the birth of the concept, in 1954. He was 18, a student at San Diego Community College, when a friend asked him to help unload mattresses for a month-old discount store called Fed-Mart.

What he thought would be a one-day job became a career. He rose to executive vice president for merchandising and became a protégé of Fed-Mart’s chairman, Sol Price, who is credited with inventing the idea of high-volume warehouse stores that sell a limited number of products.

Mr. Price sold Fed-Mart to a German retailer in 1975 and was fired soon after. Mr. Sinegal then left and helped Mr. Price start a new warehouse company, Price Club. Its huge success led others to enter the business: Wal-Mart started Sam’s Club, Zayre’s started BJ’s Wholesale Club and a Seattle entrepreneur tapped Mr. Sinegal to help him found Costco.

Costco has used Mr. Price’s formula: sell a limited number of items, keep costs down, rely on high volume, pay workers well, have customers buy memberships and aim for upscale shoppers, especially small-business owners. In addition, don’t advertise – that saves 2 percent a year in costs. Costco and Price Club merged in 1993.

“Jim has done a very good job in balancing the interests of the shareholders, the employees, the customers and the managers,” said Mr. Price, now 89 and retired. “Most companies tilt too much one way or the other.”

Mr. Sinegal, who is 69 but looks a decade younger, also delights in not tilting Costco too far into cheap merchandise, even at his warehouse stores. He loves the idea of the “treasure hunt” — occasional, temporary specials on exotic cheeses, Coach bags, plasma screen televisions, Waterford crystal, French wine and $5,000 necklaces — scattered among staples like toilet paper by the case and institutional-size jars of mayonnaise.

The treasure hunts, Mr. Sinegal says, create a sense of excitement and customer loyalty.

This knack for seeing things in a new way also explains Costco’s approach to retaining employees as well as shoppers. Besides paying considerably more than competitors, for example, Costco contributes generously to its workers’ 401(k) plans, starting with 3 percent of salary the second year and rising to 9 percent after 25 years.

ITS insurance plans absorb most dental expenses, and part-time workers are eligible for health insurance after just six months on the job, compared with two years at Wal-Mart. Eighty-five percent of Costco’s workers have health insurance, compared with less than half at Wal-Mart and Target.

Costco also has not shut out unions, as some of its rivals have. The Teamsters union, for example, represents 14,000 of Costco’s 113,000 employees. “They gave us the best agreement of any retailer in the country,” said Rome Aloise, the union’s chief negotiator with Costco. The contract guarantees employees at least 25 hours of work a week, he said, and requires that at least half of a store’s workers be full time.

Workers seem enthusiastic. Beth Wagner, 36, used to manage a Rite Aid drugstore, where she made $24,000 a year and paid nearly $4,000 a year for health coverage. She quit five years ago to work at Costco, taking a cut in pay. She started at $10.50 an hour – $22,000 a year – but now makes $18 an hour as a receiving clerk. With annual bonuses, her income is about $40,000.

“I want to retire here,” she said. “I love it here.”

© 2005 New York Times

We also have archived an earlier story from the Wall St. Journal on this theme: Costco’s Dilemma: Is Treating Employees Well Unacceptable for a Publicly-Traded Corporation?