A Wal-Mart in Somerville?

Wal-Mart hasn’t even applied for a permit yet, but predictably, there’s already controversy about its plans to open a Neighborhood Market grocery store in Assembly Square.

Some don’t see a need for the store. Maureen Barillaro of Somerville Climate Action told the Scout:

“We have Market Basket, we have Shaw’s. We have Stop & Shop. We have Johnnie’s Foodmaster. Somerville’s four square miles, so there is a way to get to any affordable market already.”

Mayor Joe Curtatone disagrees. “We know from Shape Up Somerville and our transportation data where produce and grocery stores exist [and] where there’s a need. There’s a rising need in the East Broadway corridor and Assembly Square.” And he pointed out that plans to build 2,100 residential units will only increase that need.

“This is not a Wal-Mart superstore that would give rise to the concerns about cannibalizing small business,” Curtatone said. (The plan is for a 34,000 square-foot grocery store.) “It may give competition to Stop & Shop, but in that case competition’s good, so we can have more affordable access.”

Is the mayor correct in that last statement?

“I don’t know that there’s enough data yet to fully analyze the impact of smaller [Wal-Mart] stores,”  says Ken Jacobs, chair of the University of California, Berkeley, Center for Labor Research and Education. But he adds: “Given Wal-Mart’s supply-chain management system, which is the chief reason they are able to undercut competitors, one would expect that they would still have a competitive advantage, and that that would have an impact on other retailers.”

One impact might be lower retail-employment rates in Somerville; Jacobs says a study by economist David Neumark at the University of California, Irvine found that for every retail job created by Wal-Mart, 1.4 retail jobs are lost.

And, counter to Wal-Mart’s claims that its wages are competitive (see the September/October Scout), the Labor Center’s research shows Wal-Mart’s average wages are substantially lower than the general average for both general merchandise and grocery workers — and that, in turn, pushes down wages at other businesses.

Wal-Mart spokesman Steve Restivo said the average wage for the company’s non-management workers in Massachusetts is $13.18 per hour. Jacobs said it would be important know whether that average included both full- and part-time workers, because many Wal-Mart workers are part-timers who might earn less. Restivo told us the majority of jobs Wal-Mart creates are full-time, but didn’t provide a specific percentage.

The city would want to clarify Wal-Mart’s employment practices, and would look for a guarantee that Somerville residents would get preference in hiring, according to Curtatone. Asked how such an agreement would be enforced, he said it would depend on the type of agreement. “We’ll be waiting to see what they [Wal-Mart] put on the table.”

As an example, the agreement the city struck with IKEA calls for the company to donate $100,000 toward a job-training and readiness program. “It will provide training for any job, not just at IKEA,” Curtatone said. “In addition, the city will work with IKEA to make sure Somerville residents get notice of any job opportunities.”

A similar agreement with Wal-Mart would probably be a step in the right direction; according to Jacobs, local-hire agreements tend to work much better if there’s a local training program that can provide job candidates (versus, say, trying to assess after the fact whether local candidates have been hired).

Another big issue: how much a Wal-Mart would contribute to the city’s tax base. Critics say tax revenues from retail stores tend to be less than promised. We look at that question, and at reports that a high percentage of Wal-Mart employees are on public assistance, in the September/October Scout.