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Tuesday, July 21, 2009

Fun With Numbers: The Chatham Walmart Proposal

I have a stimulus proposal. It's a 150,000 square foot superstore. The construction would require 500 UNION contractors, electricians, construction workers, etc. The construction project would keep these 500 employed for about a year. Once built, the superstore would employ another 400 employees to operate it. This project would be entirely privately financed and would require absolutely no public funds. In fact, this private entity has all the cash available. This is important because in the current commercial mortgage market trying to finance such a project is very difficult. For instance, my mayor's (Richard M. Daley) nephew, Robert Vanecko, attempted to fund a similar, though much smaller, project and was unable to secure financing in this market. That won't be an issue here because this private entity has cash on hand to fund the entire project themselves. This project is SHOVEL READY. In fact, as soon as the city council approves the project, all that needs to happen is securing the proper permits and then they'll break ground on the superstore. In fact, several project managers would be hired immediately even while the permits are gathered. So, this project would produce jobs immediately. Finally, the area where this superstore would be built is currently occupied by dirt.

Of course, I am describing the proposal by Walmart to build its second superstore in the city of Chicago. Chicago's latest unemployment rate is 10.3% and climbing. So, a project that would employ 500 UNION workers to build a superstore and then 400 more people would be hired to manage and operate the store is one that would have plenty of takers. There's more. This store would be placed on 83rd and Steward in the Chatham neighborhood. According to Walmart's records, which measured the receipts from credit cards and checks, the three zip codes that surround this proposed location spent $80 million at Walmart stores in the suburbs, In fact, according to the same records, Chicagoans spent $500 million last year in suburban Walmarts. (keep in mind the real receipts are much higher because cash payments can't be measured)

Chicago has one Walmart currently. That store is on North Avenue and Cicero. (4600 W. North Avenue) In the two years since that store was completed, a Menard's, Bank of America, Dunkin Donuts, among several strip stores have since been built. That store, slightly smaller and without groceries (like what would be proposed), has generated $10.3 million in tax revenues for the city, county and state.

The reason that I love to use a plethora of numbers in my stories is because numbers don't lie. The numbers are clear and they are unmistakable. Walmart would create jobs. It would create revenue for the city. In fact, it would keep revenue in the city that is currently moving to the suburbs. If you don't believe the numbers, then just think about this. In order to believe that Walmart wouldn't stimulate the Chicago economy you would have to believe that a plot of dirt is more economically stimulative than a 150,000 square foot super store.

So, why aren't the folks at Walmart not working right now to gather the proper permits to begin building? It's because powerful Alderman Richard Mell has buried their proposal in his rules committee. Chicago politicians have a long history of connections to the unions. That's why Chicago politicians hate Walmart. Walmart employees are NOT unionized. Yet, that's why I capitalized unions in pointing out that constructing the superstore would employ strictly union employees. In other words, the same people that are trying to protect union jobs are, ironically enough, costing 400 union jobs that would be needed to construct the project. As such, even protecting the unions becomes a lot more perception rather than reality. Ultimately, this is nothing more than demonizing Walmart.

If the Chicago economy had 4% unemployment that would be one thing. It doesn't. Chicago's unemployment crossed 10%. Here comes Walmart presenting a SHOVEL READY project that they're willing to finance all on their own. (the city can contribute up to $10 million to encourage business construction) They've even committed to hiring up to 500 UNION workers to build this store. Still, that's not enough. Their proposal isn't allowed to see the light of day while a powerful politician buries the proposal. What does Mell have to say for himself? Not very much, that's what. He ignored my email just as he ignored the call of the Chicago Tribune when we both asked the same question. Why are you against this proposal?

This is what happens when politics trumps policy. There's a plot of dirt there now, and Walmart wants to put a 150,000 square foot super store there. They want to pay each and every dime to build and maintain the store. They want to hire UNION workers to build it. They want to hire hundreds of people to operate the store. Finally, if it's not built, Chicagoans will simply spend $500 million in Walmarts in the suburbs. Talk about a no brainer. That's only if you have the best interest of the citizens of Chicago in mind. I'd like to believe that Richard Mell has the citizens of Chicago's best interest but not only does he refuse to allow this proposal to even receive a vote but he refuses to even explain himself.


Rick007 said...

Ironic isn't it?
These people forget what happend in 1775. The people pushing the crown were tarred and feathered.

As they say history repeats itself!!!

I see it comming.

Anonymous said...

ok what about all the jobs that will be lost because of walmart. all the mom and pop stores that will go out of business. even larger store as best buy jewels and food for less that would it realy bringing jobs to the table. say no to walmart

mike volpe said...

Those jobs are lost because those stores can't sell their products as cheaply as Walmart. Second, as the other store proves, the business that is brought into the area encourages not discourages other retailers to also move into the area.

Again, in order to believe that this will hurt the economy, you have to believe that a plot of land is better for the economy than a superstore. Good luck with that argument.

Ankur Kapil said...