June 22, 2010 / 12:47 AM / 7 years ago

Mayor Daley favors Walmart expansion in Chicago

CHICAGO (Reuters) - Chicago Mayor Richard Daley gave unflinching support on Tuesday for Wal-Mart Stores Inc’s plan to open dozens of stores in the city, despite stiff union opposition that could hurt the retailer’s political allies in municipal elections.

The prospect of adding jobs in a down economy and bringing food stores to areas with no existing supermarkets -- neighborhoods known as “food deserts” -- were among the factors leading Daley to support of the big-box retailer.

But union leaders have said they will lobby lawmakers on the city council -- who, along with Daley, face an election in February -- to block the expansion plan.

The zoning committee will consider on Thursday a proposed development in the Pullman neighborhood that would include a Walmart store.

“There’s a lot of muscle on both sides,” said Paul Green, a political scientist at Roosevelt University. “It’s the only issue, really, in 20 years the mayor’s had to fight for.”

Daley said he strongly supports building the stores and would accept Walmart’s offer to pay its workers wages of at least $8.75 an hour. That is 50 cents an hour more than minimum wage, but 50 cents an hour less than what the unions want.

Walmart said the new stores would create thousands of temporary construction jobs and generate $500 million in additional tax revenues for the city.

“We want what the mayor wants in every respect. The only thing we differ on is how much these people are worth,” said Jorge Ramirez, secretary-treasurer of the Chicago Federation of Labor.

“Walmart has this strategy of entering the urban marketplace, but they want to bring the rural wages with them,” he said, adding Walmart’s pay scale is a drag on the wages paid by competing retailers.

The latest push by Walmart marks a departure from its usual strategy of placing stores in suburbs and towns, where it rarely meets resistance. Expensive real estate in urban areas and zoning issues complicate the usual formula for discounters such as Walmart and Target Corp.

The proposed stores would be of various sizes and formats and not just large supercenters.

Representatives of the world’s largest retailer and the unions met last month and again on Monday, but failed to reach an agreement, said a spokesman for the labor federation, which represents 300 unions and 500,000 workers.

In 2006, when Walmart was seeking two Chicago locations, Daley vetoed a union-backed ordinance passed by the city council that would have required large retailers to pay workers at least $11 an hour in wages and $3 an hour in benefits.

Daley argued the law was anti-competitive and said the city lost revenue as residents shopped in the suburbs -- an argument he made again on Tuesday.

After Daley’s veto was sustained by the city council, unions helped defeat several pro-Walmart aldermen in Chicago’s 2007 elections.

Green predicted the need for jobs will outweigh the concerns of lawmakers that the unions could cost them reelection.

“The mere fact that there is this desire for jobs trumps the argument that if Walmart does build, they’ll cause other people to lose their jobs,” Green said.

One of the arguments raised by Walmart opponents is that the discounter destroys existing retailers. A University of Illinois study that concluded Chicago’s lone Walmart cost as many jobs as it created was challenged by critics who said it revitalized an impoverished West Side neighborhood.

Chicago is a city of nearly 3 million. If Walmart succeeds in its plan to expand, it could pave the way for stores in other urban areas at a time when U.S. sales growth has been slowed by a weak economy.

Reporting by Emily Stephenson; additional reporting by Andrew Stern; editing by Andre Grenon

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