Wal-Mart's next battle: in the Big Apple

A proposal for a store in Queens could produce the biggest showdown yet with the megastore's opponents.

[UPDATE: Since this story was written, developers have dropped plans to build a Wal-Mart at the proposed Queens site. But Wal-Mart says it still would like to open a store in New York City and will continue looking for a new site.]

Wal-Mart, once no more than a rural dime store, is now hoping to cap its global retail empire by taking on the nation's largest untapped metropolis: New York City.

While no formal agreements yet exist, word that the controversial low-cost retailer is eyeing a site in Queens has already generated such a backlash that some analysts say the fight for approval in Rego Park will be the largest and most symbolic showdown yet between the megastore and its union opponents.

"If there ever was a part of the country where people wouldn't tolerate [Wal-Mart,] it would be a city like New York where there's a strong labor movement," says Kate Bronfenbrenner, a labor economist at Cornell University in Ithaca, N.Y. "People there fight back when they smell a labor rat."

The battle for the Big Apple will also prove to be a test case for one of several new tactics that opponents are employing from here to Montana to hold big-box employers like Wal-Mart accountable to the community. They include requiring companies to provide health insurance, as in a proposal in New York; establishing so-called living wage laws, which is under consideration in Chicago; and limiting the size of such stores, which some communities are attempting to do in Vermont.

"A second-generation response to the big-box sector has emerged over the last year or so," says Paul Sonn, associate counsel at the Brennan Center for Justice at the New York University School of Law. "The aim is to level the playing field so that if Wal-Mart does come to New York, it will provide the same benefits that other responsible retail employers like the supermarkets are paying."

Wal-Mart and its supporters say the retailer already offers good benefits, paying almost double the minimum wage and providing some health and dental insurance, as well as a 401(k) retirement plan to eligible employees.

They believe the unions have targeted the company because it is now the country's largest employer with 1.2 million workers. And it's proudly nonunion, which they say allows it to offer bargains, helping families and communities by saving them money - at the same time that the stores increase the tax base.

"What's at issue here is not whether a particular union has been able to organize or collect dues from our workforce," says Daphne Moore, director of community affairs for Wal-Mart in Bentonville, Ark. "It's whether consumers have a choice of where they shop."

But opponents argue that Wal-Mart's wages are lower than those of other retailers such as department stores and supermarkets. And they contend that its controversial labor practices, from alleged violations of child-labor laws to lower wages to minimal health insurance, actually cost communities money.

Studies have shown that Wal-Mart employees are more likely than other retail workers to end up on food stamps and Medicaid and their children in state-sponsored health-insurance programs. Plus, they argue, Wal-Mart drives out other retailers and replaces good jobs with lower-paid ones, undermining the very fabric of the American middle class that the company purports to serve.

"As Wal-Mart goes into larger urban areas, the opposition has been much stronger than in rural areas because they're more directly competing against unionized grocers and larger numbers of successful small businesses," says Ken Jacobs of the University of California at the Berkeley Center for Labor Research and Education.

In New York, the powerful Central Labor Council, which represents more than 400 unions across the trades, has already made it clear it opposes Wal-Mart's arrival. President Brian McLaughlin says a Wal-Mart in Queens "will prove to be an economic disaster for our entire city."

He has lots of support from the nonunion sector as well. Small retailers in Rego Park like Sayed Afaq, who owns B&R Photo, Electronic and Wireless, are worried that the arrival of the megastore will be the "final nail in the coffin" for his shop. His business was already cut in half by the development of a mall across the street two years ago.

"Everybody knows Wal-Mart is the biggest company in the world, and we obviously can't compete with them in terms of prices," says Mr. Afaq. "We've already reduced our prices, but the rents are going higher. I fairly believe that if Wal-Mart is here, we will definitely be going out of business sooner rather than later because we are just surviving now."

Wal-Mart's city supporters argue that New York doesn't have the same level of retail jobs as its surrounding communities, in part because zoning restrictions make it difficult to develop here. Thus, its retail tax base isn't as hardy as in other places, and Wal-Mart will help expand it. While supporters admit some smaller retailers may go out of business, they don't believe that would be too much of a loss to the city overall.

"In New York City, we're talking about bodegas and greengrocers," says Steven Malanga, a senior fellow with the Manhattan Institute, a conservative think tank. "Not only do they overcharge consumers, they also don't offer any benefits for the people that work there."

Wal-Mart also contends that it already has plenty of customers in New York. They just travel elsewhere to shop. While the company doesn't have exact numbers, they include people like Queens resident Maria Torres and her family. They drive regularly to a Wal-Mart in New Jersey to take advantage of the savings and would love to be saved the trip.

"We buy there a lot," says Mrs. Torres. "It would be important to have one here."

But other Queens residents are skeptical. Take Maria Garcia, who hasn't yet decided whether she's in favor of the proposed Wal-Mart. "I like it very much because of the low prices," she says. "But I don't like it because [they make] too much overseas. We have lots of people here who need a job who may lose one."