Walmart has unveiled a plan to work with the city of Chicago to open dozens of stores that could create as many as 12,000 jobs over the next five years.

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Walmart plans dozens of stores for Chicago

June 22nd, 2010

CHICAGO – Walmart has unveiled a plan to work with the city of Chicago to open dozens of stores that could create as many as 12,000 jobs over the next five years.

The initiative, which Walmart calls the "Chicago Community Investment Partnership," has won the support of mayor Richard Daley, but immediately drew fire from unions that contend the retailer’s starting wages are too low.

The plan, which Walmart executives tout as a way to eradicate food deserts in the inner city and stimulate local economic development, would involve opening several dozen stores of varying size and format across Chicago. The city has three areas with about 600,000 residents that are seriously underserved by food retailers.

The stores are projected to employ approximately 10,000 people and create 2,000 unionized construction jobs to diminish Chicago’s 11.4% unemployment rate. The outlets are also estimated to generate more than $500 million in sales and property taxes for the city and Cook County. Charitable partnerships that could be developed would be worth another $20 million, according to Walmart.

"We want to deliver long-term solutions that benefit Chicago and its residents," said Hank Mullany, executive vice president and president of Walmart North, a region within the Walmart U.S. division. "While our goals are dependent on our ability to site and build stores in a timely fashion, we remain confident that we can make a real difference to Chicagoans in need of a job and those who seek more convenient access to fresh, affordable food, especially those living in the city’s underserved communities."

On Tuesday Mayor Daley declared his strong support for the plan, asserting that the city needs the jobs and opportunities that would be created. However, the Chicago Federation of Labor pointed out that the starting wages of store associates, $8.75 per hour, are a mere 50 cents above the minimum wage, and 50 cents below what the Unions wanted.

Representatives of Walmart and the unions met on May 3, but failed to reach an agreement.

With the exception of one store that opened on Chicago’s West Side in 2006, the retailer has failed to obtain approval from the city council’s zoning committee. Daley has argued that the city has consequently lost tax revenue as a result.

For Walmart, the initiative clearly represents an effort to find new sources of growth in urban markets through flexible deployment of its different formats.

Recently the retailer has experienced weakening sales growth as some of the more affluent consumers who shopped its stores during the depths of the recession appear to be going elsewhere, while such extreme-value retailers as Dollar General Corp. and Family Dollar Stores Inc. may be luring away Walmart’s core low-income shoppers.