Mega-retailer Walmart, which has long opposed unionization of its workforce, is more likely to open new stores in states that support a worker's right not to join a union than in states with pro-union statutes, when the states neighbor each other, new research has found.
In reviewing data from 1998 to 2005, researchers from Columbia Business School in Manhattan discovered that when Walmart proposed to open 102 new stores within 25 miles of borders along right-to-work and pro-union states, it was more likely to site the new stores in states with right-to-work statutes.
Such laws, adopted by 22 U.S. states, prohibit unions and employers from entering agreements that make union membership a condition of employment.
The findings suggest that the Bentonville, Ark.-based company prefers jurisdictions in states with right-to-work rules and will fight harder to open stores there, even when faced with protests from those opposed to the building of the new stores, according to professor and study co-author Paul Ingram.
By situating stores in a right-to-work jurisdiction within a certain distance of a pro-union state, Walmart essentially taps into the same market, he says.
A Business Trend?
In doing so, Walmart is engaging in what is called regulatory arbitrage, a strategy by firms to affect regulatory policies by deciding to open new stores, offices or plants in other states where labor and tax laws better favor business.
The fallout for neighboring states that don't land a new Walmart store includes losses in sales tax revenue and jobs. The bigger implication, Ingram says, is that other employers may follow Walmart's lead and opt to locate their businesses in the right-to-work state instead of the pro-union one.
"Any one Walmart is marginal," he says. But the aggregation of employers starting up or expanding operations in right-to-work states, away from states favorable to unions, "could add up to substantially fewer jobs and less tax revenue in non-right-to-work states."
The research further showed that Walmart wasn't alone in preferring to build in right-to-work states. "Other businesses have that same preference," Ingram says. The trend was also seen among some manufacturers, including, notably, aircraft-maker Boeing, which has roots in union-friendly Washington state.
In an emailed response, Walmart spokesman Steven Restivo didn't count a union-friendly climate as a factor. "With more than 4,000 stores spread across all 50 states, our real estate selection process is pretty simple: We seek to open stores where customers need access to quality jobs and more affordable grocery options."
Balancing Policy and Shareholders' Interests
In recent years, the company has begun a push toward opening more stores in urban areas, where unionization is more common. But if Walmart is going to be successful in that effort, "it is going to have to change its aggressive stance towards associates who organize and a progressive public who supports them in order to be successful," says Jennifer Stapleton, assistant director of Making Change at Walmart, a campaign of the United Food and Commercial Workers.
"It is in the interests of shareholders that the company keep growing," Stapleton says. "However, what we see here is that it is particularly hard for Walmart in communities where public officials and citizens take the concerns of workers seriously."
Still, Ingram says, whether a state has a right-to-work statute is by itself probably a minor issue to Walmart, because the company's employees aren't unionized.
"What matters more are a host of other policies -- regulations for doing business, taxes, other labor laws," he says, "that tend to be more pro-business in right-to-work states."
Though, as suggested, Walmart may not be making business decisions solely on the basis of avoiding union organizing efforts, part of the retailer's business model is to "make sure there are no unions" within the company, says Randolph McLaughlin, professor at Pace Law School in White Plains, N.Y.
"Walmart has had a history of opposition to unions," McLaughlin says. "And the best way to avoid a union is to go into states where it's more difficult to unionize."
Next: Apple's iPod: The Case for the Innovation Economy [Huffington Post Business]
Stories from CNN Money
- Unemployment Claims Stuck Above 400,000
- America's Own 'Lost Decade'
- State, Local Layoffs to Hit Record Levels