Wolf in Sheep's Clothing

So, the big retailers got their way, and today, the first Chicago Wal-Mart opened on the west side. (Bolds mine)

CHICAGO -- Self-professed "shopaholic" Julie Edwards arrived at Chicago's first Wal-Mart store two hours before its grand opening Wednesday -- and she wasn't alone.

Lines snaked around the mega-retailer's West Side building long before it opened, filled with residents excited to welcome the store, its bargains and its jobs to the area.

"I love this store," Edwards said. "It's about time we get nice stores in this neighborhood."

Bringing Wal-Mart to Chicago was a four-year journey that pitted unions and small business owners against politicians and activists eager to bring jobs to the city's economically depressed West Side.

More than 15,000 people applied for the 400 jobs at the new store, where an estimated 98 percent of workers live in the neighborhood, said store manager Ed Smith.

So, 98 percent of the workers come from an economically depressed area. And really, I'm trying not to be a complete cynic. That does mean that there are 400 jobs in the area that weren't there before. But, I'm afraid I do have to do a little balloon bursting.

The store's opening comes two weeks to the day after aldermen failed to override Chicago Mayor Richard Daley's veto of the city's so-called "big-box ordinance."

The measure would have required large stores like Wal-Mart to pay workers at least $10 an hour -- plus $3 in fringe benefits -- by mid-2010. The rules would have applied only to companies with more than $1 billion in annual sales and stores of at least 90,000 square feet.

At the time, Wal-Mart officials cheered the measure's defeat, saying the aldermen who voted against it were supporting "valuable job opportunities and increased savings for the working families of Chicago."

On Wednesday, Smith said the lowest paid person at the store makes $7.25 an hour, and only two workers make that.

Aside from the fact that Wal-Mart could well afford to pay their employees the wages and benefits that would have been guaranteed to them by the above measure, this "lowest wage" dancing doesn't answer important questions. What does the average person at the store make? Eight dollars? Nine? $7.45? Does anyone make ten dollars an hour, regardless of the measure's defeat?

And do they have benefits?

Well, not so much, anymore.

Among the most striking findings outlined in Wal-Mart’s 2007 benefits booklet is the substantial health care cost a low-paid Wal-Mart worker would be forced to pay under the so-called ‘Value’ plan. A typical individual Wal-Mart worker who enrolls in the Value Plan will face high upfront costs because of a series of high deductibles, including a minimum $1,000 deductible for individual coverage, a $1,000 in-patient deductible per visit, a $500 out-patient surgical deductible per visit, a $300 pharmacy deductible, and a maximum out of pocket expense of $5,000 for an individual per year.

In total, when factoring the maximum out-of-pocket expense and the cost of the yearly premium ($598 a year for an individual under the Value Plan), a typical full-time worker (defined by Wal-Mart as 34 hours) who earns 10.11 an hour or $17,874 a year, would have pay nearly 30 percent of their total income for health care costs alone.

Incredibly, the health care cost burden actually worsens should an uninsured Wal-Mart worker enroll their family under the Value Plan. Again, because of multiple deductibles for each family member, and when factoring in the cost of the medical premium ($780) and maximum out-of-pocket expense ($10,000), a Wal-Mart worker whose family is insured under the “Value Plan” could pay as much as 60 percent of their total income towards health care costs under Wal-Mart’s most “affordable “health care” plan.

Thirty percent of their total income. And that's if they make 10.11 an hour, which we know is what Wal-Mart was fighting against. As if that wasn't bad enough, how could anyone making under 20K a year afford to give away sixty percent of their total income for health care costs?

Well, I suppose you do without it.

As Ezra says:

More worryingly, Target has promised the same move. Which'll mean that the two largest retailers will both eschew traditional health care plans for low-cost (to the company), high-risk (to the employee), astonishingly stingy offerings. Now, of course, any retailers who seek to compete with them -- and that includes supermarkets, clothing outlets, and all the rest -- will be at a competitive disadvantage if they fund traditional health care plans for their employees. It also means producers will be under added pressure by Wal-Mart and Target to make the same shift in order to lower their labor costs and, thus, prices. If the producers refuse, Wal-Mart can simply replace them with their in-house brands. This is how a race to the bottom starts. This is how employer-based health security dies.

It's also how sick employees die. And keep in mind, this new standard applies to new Wal-Mart employees. Like the ones at this new Wal-Mart that apparently, Chicago couldn't do without. 98 percent of them. All from a disadvantaged area.

I kind of got taken to task by some people for grousing about the "big box ordinance;" many people shared the opinion of the woman in the first article: "I want to see them make $10 an hour, but if they can't, at least they can make something," Edwards said. "They're creating jobs for our community."

And that is true. Jobs in the community have been created. And yes, at least they're making something.

But keep this in mind: It's very expensive to be poor.

There are other tolls along the road well-traveled by the working poor. If your credit is lousy, which it is likely to be, you'll pay a higher deposit for a phone. If you don't have health insurance, you may end taking that feverish child to an emergency room, and please don't think of ER's as socialized medicine for the poor. The average cost of a visit is over $1,000, which is over ten times more than what a clinic pediatrician would charge. Or you neglect that hypertension, diabetes or mystery lump until you end up with a $100,000 problem on your hands.

So let's have a little less talk about how the poor should learn to manage their money, and a little more attention to all the ways that money is being systematically siphoned off. Yes, certain kinds of advice would be helpful: skip the pay-day loans and rent-to-pay furniture, for example. But we need laws in more states to stop predatory practices like $50 charges for check cashing. Also, think what some microcredit could do to move families from motels and shelters to apartments. And did I mention a living wage?

If Wal-Mart can come into an economically depressed area, the least they can do is offer a living wage, and provide a fair benefits package to the employees that work hard in their stores. However, they apparently are still too stingy to do this. As a result, although people will be making some money, the actual funds they are able to keep for living expenses, gas, food and health care will be whittled down to almost nothing.

For resident Donna Johnson, who used to travel to suburban Forest Park to shop at Wal-Mart, the West Side store represented unprecedented convenience.

"I think it'll make the neighborhood much, much better," she said. "People have to go so far out to shop. There's never been a store that has everything."

This is exactly how Wal-Mart works. By offering convenience, and the illusion of low prices, the inclusion of a big box store may seem to be, on the surface, a blessing for an economically disadvantaged community. I think opinions may change once local businesses begin to close, and workers realize they'll never be able to afford their health care costs. "Bargains" aren't going to change that.

All of the "benefits" of this store's opening go to Wal-Mart.

(Cross-posts are frequently, secretly fond of each other...)