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A Hopeful Law on Wal-Mart

August 16, 2004

The Los Angeles City Council is trying a new tactic in the escalating battle over building or banning the new jumbo-sized Wal-Mart stores. Rather than blocking superstores outright, as some council members originally proposed -- a move that Wal-Mart could challenge in court or angry bargain hunters could overturn at the ballot box -- the council passed a hairsplitting law last week. It bars construction of retail-and-grocery superstores if a newly required analysis finds that they will harm a neighborhood economically more than help it.

Both Wal-Mart and its organized-labor opposition professed confidence that any study would sanction their positions. But let's be optimistic and hope the new law works for both sides, albeit perhaps not in the way either envisions.

Technically, the law applies to any retailer wanting to build a store larger than 100,000 square feet that devotes more than 10% of its sales floor to food. But because it exempts membership stores like Costco, this in effect means the big W.

"Wal-Mart" has become shorthand for every ill that plagues U.S. workers, from stingy wages and medical benefits to jobs driven overseas by pressure to cut costs. Opposition here and nationwide coalesced when the nonunionized chain expanded into grocery sales via its 200,000-square-foot "supercenters." Even before the first of 40 planned California supercenters opened in La Quinta in March, the company's low pay was central to last year's long, bitter supermarket strike and lockout.

These and other negative effects have been documented, including in a Times series last year. But the flip side is savings to consumers, whose desire for Wal-Mart's famously low prices have made it a retail behemoth. Economists praise the company's innovations and efficiencies in moving and tracking goods, and they credit its low prices for holding down inflation.

The new law would apply in designated "economic assistance areas," where the city has used tax incentives or other public subsidies to create jobs and revitalize poor neighborhoods, about 40% to 60% of Los Angeles. If those neighborhoods sound like the very ones that would welcome Wal-Mart's low prices, the city argues that it has a right to protect its public investment against the threat of a superstore driving out better-paying grocery stores and leaving behind blight.

That's assuming, of course, these neighborhoods have jobs to drive out, wages to depress and no abandoned buildings now. One of the law's positive, if unintended, consequences could be to force the city to disclose just what its investment has accomplished.

Another welcome consequence would be if the new law pushed Wal-Mart to tailor its stores to an area's needs. Los Angeles badly needs more mixed-use and infill development, not big boxes surrounded by acres of parking lots.

For instance, a regular-sized Wal-Mart moved in to anchor a half-abandoned shopping center in Baldwin Hills last year and now attracts enough customers to help the center's other retail tenants, not drive them out of business. Rather than fighting the new law, the company should seize the chance to play the good guy.

The city's challenge is to not just keep out low-paying jobs but to bring in better ones. More than 2 million adults in Los Angeles County lack any kind of health insurance, and they don't all work at Wal-Mart. The City Council needs to keep its focus on attracting high-skilled jobs and training the workforce to fill them.

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