Wal-Mart's Urban Romance

By Ta-Nehisi Paul Coates/Chicago

On a summer afternoon in Chicago, Margaret Garner, CEO of the Chicago construction firm Broadway Consolidated, took a ride to Chicago's poverty-stressed 37th Ward. Dressed immaculately in a multicolored blouse, black pants and red steel-toe work boots, she had an appointment with a field of dirt and dreams. Garner surveyed the 11-acre site, where an old factory had recently been demolished, and proclaimed the future: "This will be Wal-Mart No. 5,402. But I can guarantee you, it won't be anything like Wal-Mart No. 5,401."

Garner is the first black woman ever hired by Wal-Mart to build a store. In the summer of 2003, when Wal-Mart began looking at Chicago's West Side, the company went searching for contractors to build stores in the city. Wal-Mart was looking for someone who could lay down a solid foundation, both on site and in the surrounding West Side community of Austin, where high unemployment and high retail prices prevail and the labor supply, while plentiful, has a few dents in it. "The community aspect is not something Wal-Mart has typically had to deal with," says Garner. "Coming to a city and having to deal with ex-offenders, for instance. These aren't the sorts of problems that Wal-Mart typically deals with. They were looking to defer the risk."

Wal-Mart decided to rely on Garner's local knowledge, contracting Broadway Consolidated first to demolish the old factory and then to build the 150,000-sq.-ft. superstore that will employ as many as 300 people. Garner says that the work will produce between 150 and 200 construction jobs, half of which will go to minorities. Half of those minorities will be African Americans, including black men who often have the hardest time finding jobs: ex-cons. In a city whose building trades are dogged by allegations of racism and in which the unemployment rate for black men is 11.8% (double that of white men), those job promises are huge, and not just for the community.

In the past decade, the world's biggest retailer has been portrayed as a brutal giant, accused of wiping out small businesses, union busting, discrimination against female employees, employing illegal immigrants--not to mention the knock, vehemently disputed by the company, of being a low payer. But recently one of America's most embattled corporations has found an ally in one of America's most embattled demographics. No longer content to let its profits do the talking, Wal-Mart is trying to remake its image, in some measure with the aid of inner-city African Americans. The math is simple: Wal-Mart offers stores and jobs to poor black communities that are hemorrhaging both. Meanwhile, those communities extol the virtues of Wal-Mart, offering a buffer against the company's critics. Wal-Mart CEO Lee Scott is well aware of what a business partner like Garner does for the company's profile. "I like the image," he says. "In one part of Chicago you have ... an African-American woman who demolished the existing building ... and her team, which is largely minority business subcontractors, is going to be building a new store."

Beyond that local effort, Wal-Mart has taken its romance national, setting up scholarships for minorities, donating to the United Negro College Fund and writing checks for several black Congressmen. Patronage has its benefits. In May Black Enterprise, the venerable periodical of Afro-America's business class, announced that Wal-Mart would be a sponsor of its 10th Annual Entrepreneur's Conference. In its June issue, Black Enterprise listed its "30 Best Companies for Diversity." Guess who made the cut?

But Wal-Mart's move into the inner city has set off a debate in the black community about economic development. Traditional activists see the company as a corporate parasite. "Desperate people do desperate things. People would rather have a supermarket than not," says Jesse Jackson, whose Rainbow/PUSH Coalition is headquartered in Chicago. "But the point is that employment and development must go hand in hand. We need work where you can have a livable wage and health insurance, and retirement."

But an emerging cadre of more market-oriented community leaders dismisses that as so much noisy rhetoric. If you don't have a better plan for bringing jobs, they ask, then what's your point? Jackson is "entitled to his opinion, but he's never been involved with the West Side. He doesn't even come on the West Side," says Melvin Bailey, a local activist. "You'll hear a saying around here, and that is that a little bit of something is better than a lot of nothing." Denise Carter, 63, who lives in West Chicago and is disabled and retired, sees Wal-Mart as a salvation. "I'm happy Wal-Mart is coming," she says. "We need more bargains, and we need more jobs. I'm hoping I can take my grandson and granddaughter up there."

With a site on Chicago's West Side, in the impoverished Austin neighborhood, Wal-Mart has improved its score in the inner-city market. Last year Wal-Mart tried to put two stores in Chicago, both in black neighborhoods--one in Austin and another on the South Side, in more middle-class Chatham. The middle-class community, less desperate for the jobs, voted against the Wal-Mart store. The outcome in some ways duplicated Wal-Mart's split decision in California, where it lost a bid to open in Inglewood in Los Angeles County but succeeded in Oakland. Wal-Mart is also pushing for a store on Staten Island in New York City. While not exactly the "inner" city, a Staten Island location would give Wal-Mart a foothold in New York. In the long run, Scott believes, the company will win more often than not.

When Emma Mitts, an alderwoman in West Chicago, was appointed in 2000, retail in her 37th Ward consisted of corner stores. Mitts vowed to upgrade the options. In 2003, at a conference sponsored by the International Council of Shopping Centers, Mitts met with Wal-Mart officials who informed her that they had tried once before to put a store in Chicago but had been stiff-armed. "The unions stopped them," said Mitts. "But the unions weren't an issue for me."

Chicago is a union town. But in Mitts' ward--and among many poor blacks--some unions rank only a couple of notches above the Ku Klux Klan. Black leaders in Chicago have repeatedly charged that the building-trades unions, traditionally controlled by whites, are keeping a grip on jobs. While 37% of Chicago is black, only 10% of all new apprentices in the construction trades between 2000 and 2003 were black, according to the Chicago Tribune. The unions that most vociferously oppose Wal-Mart are not in the building trades but represent retail workers, such as the United Food and Commercial Workers (UFCW), which has long welcomed blacks. Still, Mitts and many in the 37th Ward conflated the two and had no problem allying themselves with Wal-Mart.

What Wal-Mart also found in West Chicago was nothing short of a natural extension of its corporate philosophy. Wal-Mart built a $285 billion corporation by going where its competitors are not. That used to be small towns or underserved suburbs. Chicago's 37th Ward, with its scant retail options, is an urban village, a first cousin to the sorts of communities Wal-Mart had always targeted. Combine the lack of jobs and stores with a strong antiunion streak, and the West Side is perfect for Wal-Mart. "If you're going to pick a spot, why wouldn't you go to the West Side?" asked Ronald Powell, president of the UFCW Local 881, which opposed Wal-Mart's entry into Chicago. "I don't think that there's any question that in the city we need jobs. But in the long term, for every one job Wal-Mart creates, they take away two."

By the the time it got to Chicago, Wal-Mart had learned something from its bad experience in Inglewood, where the retailer attempted to circumvent the city council by pushing for the necessary rezoning through a ballot referendum. Wal-Mart had then donated $65,000 to the Los Angeles Urban League and mounted a $1 million p.r. blitz. The locals got turned off by the attempted end-around play, and Wal-Mart lost the vote, with 60% of residents rejecting the store. Humbled, Scott changed the company's urban policy from one of remote maneuvering to direct community engagement--and made himself the point man. In 2003 Wal-Mart began its Good Jobs campaign, a series of ads featuring people, many of them minorities, extolling the virtues of Wal-Mart to the community (208,000 of Wal-Mart's 1.2 million workers are black).

Scott did an interview with black talk-show host Tavis Smiley, whose public-television show the company underwrites. Smiley concedes that Wal-Mart has issues, but says his relationship with the company--and particularly with Scott--has allowed him to raise those issues in private. "You need a good inside game and a good outside game," says Smiley. "I don't begrudge anybody in black America for working their outside game."

Over the past three years, Wal-Mart has set up minority scholarships for journalism at various universities, and in May Wal-Mart underwrote a documentary, on black soldiers who served in segregated units in different wars, that appeared on TV-ONE, a small cable channel geared to African Americans.

Wal-Mart also inserted itself into political races, to the unions' great irritation. The company donated money to the campaigns of black Congressmen Harold Ford, Charles Rangel and Albert Wynn. And after Wal-Mart gave a lunch for a few members of the Congressional Black Caucus, a small brouhaha between labor and the black caucus erupted. The Service Employees International Union fired off a letter accusing the Representatives of betraying labor. The head of the caucus, Democratic Congressman Mel Watt of North Carolina, bristled at the criticism. "I'm not defending them--I think a lot of their practices are abysmal," says Watt. "But I don't think you change those practices by refusing to meet with them. This was not one of those cozy I-love-you meetings."

Yet even the willingness of top black politicians to meet with a corporation that only last year was lambasted by Democratic presidential candidates shows that the lines of battle are shifting. In Chicago the unions tarred Wal-Mart with criticism that 10 years earlier would have rallied black leadership against the company. Many of those opposing Wal-Mart in Chicago were black, but the presence of an equal--or greater--number of black supporters took the subject of race off the table. To the extent that it was a topic, race worked to Wal-Mart's favor in that it was used as a club to batter the unions.

At a community meeting on the South Side in May, according to the Tribune, Wal-Mart presented Eugene Morris, who runs an advertising firm in Chicago, to offer an endorsement. Morris praised Wal-Mart, noting that the company had brought him $20 million in business. Alton Murphy, a black district manager for Wal-Mart, assured the audience that most of the jobs would be local. "You won't go in and pay your hard-earned money to someone who doesn't look like you," Murphy told the crowd.

Store builder Garner is unconcerned with Wal-Mart's corporate critics. "I think when you're the biggest and the best at what you do, people want to come after you," she says. Before Garner scored her contract with Wal-Mart, she flew to Wal-Mart's head office in Bentonville, Ark. Garner was on her own personal fact-finding mission. She had read much of the press on Wal-Mart and concluded that the company had got a raw deal. She returned convinced that Wal-Mart could be a great partner for the black community. "You know what I liked more than anything? Wal-Mart has a 10-foot rule, where if a customer comes within 10 feet of an employee, you have to ask them if they need any help," said Garner. "A lot of our young people walk around with a chip on their shoulder, and I thought I'd love to bring [this new] attitude to them, to our community."

In Wal-Mart, local residents have found a partner of the moment with which they hope to prove a point. "I'm impressed by all these young people who haven't had access to jobs, who are now excited about the opportunity," says Mary Tuff, who lives in the 37th Ward. "They say that all our young people do is just hang on the corner, but it's not true, and now we have a chance to show them." Arguments about the supposed low wages, expensive health plans and gender discrimination are almost beside the point in the 37th Ward. "If it's good enough for the suburbs, why isn't it good enough for the city?" asks alderwoman Mitts. "Why isn't it good enough for us?" --With reporting by Bill Saporito/Bentonville

[This article contains a complex diagram. Please see hardcopy of magazine or PDF.]

With reporting by Bill Saporito/Bentonville