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2009-03-29
Columbus, OH. Wal-Mart Layoffs At Optical Lab Prompt State Review of Tax Deal

On March 19, 2009, Wal-Mart announced it had sharply reduced what its customers pay for contact lenses and youth eyewear. But several days later, regulators in the Buckeye state revealed that they had their eye on one of Wal-Mart's optical labs, and whether the retailer had violated a jobs-for-subsidies tax deal with the state. Wal-Mart has a very visible optical empire, which includes not just 2,500 Vision Centers inside its stores, but countless lens and eyewear products -- and even a network of "doctor partners" as well. Wal-Mart and Utah-based 1-800 CONTACTS, the world's largest retailer of contact lenses, announced that they are working together to "make quality eyewear more affordable for families across the nation." "At a time when every penny counts, contact lens wearers want to save money and get brand name contact lenses conveniently," said the chief executive officer at 1-800 CONTACTS. "We are proud to be working with Wal-Mart... Our alliance improves access and lowers costs -- enabling contact lens wearers to replace their lenses more frequently and live healthier lives." Wal-Mart also offers new eye doctors a partnership deal in which the retailer covers a large part of a new optometrist's business expenses. "When you partner with us, we cover a large part of your start-up costs. That means upon opening, the space, instrumentation, support and staffing resources are all in place at no cost to you. In fact, your overhead might be as minor as prescription pads and office pharmaceuticals." The "doctor partner" either leases or co-leases their office space from Wal-Mart. The company promises new doctors, "we will never pressure you to sell frames. You'll operate your practice on your terms and be able give your patients the care they deserve." Wal-Mart also has its own optical lab division -- and this is what sparked the controversy this week in Ohio. "To maintain quality and reduce costs to our patients," the company tells optometrists, "we own and operate four complete optical labs, employing more than 1,900 associates." The optical labs are in Fayetteville, Arkansas; Dallas, Texas; Columbus, Ohio; and Crawfordsville, Indiana. This week, economic development officials in Ohio began investigating the sudden closure of Wal-Mart's optical lab in Columbus, to see if the retailer violated terms of a tax agreement with the state. On March 27th, Wal-Mart shut down its lab and threw 650 'associates' out of work. Eight years ago, this optical lab was created with a $1.8 million job-creation tax credit -- a form of corporate welfare that helps Wal-Mart reduce its operating costs vis a vis its competitors that do not have tax subsidies. The lab, which makes the eyewear that gets sold in Wal-Mart vision centers, was closed by the company as an apparent cost-cutting move. A state official told the Associated Press that the Department of Development is reviewing its agreement with Wal-Mart to determine if the state can recoup some or all of its taxpayer's money. "We've spoken to the company and expressed our disappointment," a state official said. Wal-Mart would not discuss the terms of its agreement with Ohio, but said it would work with officials to resolve the situation -- which means to get the story out of the headlines.

What you can do: On May 25, 2004, Sprawl-Busters reviewed a report from Good Jobs First, which found that Wal-Mart had benefited "from more than $1 billion in economic development subsidies from state and local governments across the United States." The Washington, D.C. based research group released its 65 page report, "Shopping for Subsidies", which uncovered more than 240 cases in which the building of a Wal-Mart store was helped by corporate welfare. For years, states and municipalities have thrown corporate welfare at Wal-Mart, in an attempt to lure the company to their jurisdiction. In many cases, these special tax deals were not necessary at all, and amounted to little more than a corporate subsidy that gave Wal-Mart another financial advantage over its smaller competitors. In the case of eyewear, Wal-Mart is the manufacturer and the retailer. It even controls the medical personnel that recommend the vison products -- its "doctor partners." Wal-Mart noted that any eyewear orders previously sent to the Columbus lab will now be redirected to one of its three other lab locations. "It's a shock," one 7-year Wal-Mart optical lab worker told the AP. Wal-Mart apparently informed workers at the lab that rumors about closure and layoffs were just rumors. "They just hired people six weeks ago, and we got raises last month," the employee complained. One lab worker said she had been making $16.50 at the lab, which is significantly higher than the regular, full-time hourly Wal-Mart workers in Ohio, who the company claims make $11.28 per hour. "I'm very angry because they dogged us out," another lab worker told the media. "They shut us down with no warning, no nothing. They didn't have to do this." To soften the focus on job reductions, Wal-Mart has promised to give these workers pay and benefits for 60 days, and help them relocate to positions at other Wal-Mart's or Sam's clubs. But such positions would likely entail a significant reduction in take-home pay. Readers are urged to email the Ohio Department of Development Interim Director Mark Barbash at: http://development.ohio.gov/contactus/ContactInfo.aspx?id=2 with the following message: "Dear Director Barbash, You call Ohio 'the state of perfect balance,' but how balanced was it to throw nearly $2 million in tax breaks to Wal-Mart -- which made nearly $13 billion in profits last year? Ohio did not have to offer welfare to the largest retailer in the world. Now we 'see' the results of subsidizing their optical lab. 650 Ohioans have had their family budgets thrown out of balance. I urge you to see your way through to recoup that money from Wal-Mart, and use it to help provide financial support to the 650 workers who are now unemployed. That would come to $2,769 per worker, or roughly 4 weeks of extended pay per employee. If Wal-Mart will not invest in the future of these workers, at least Ohio can use the misdirected taxpayer's funds to help these families survive the recession."










 
 
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