THE BLOG
04/29/2009 05:12 am ET | Updated May 25, 2011

Wal-Mart's Optical Lab Shut-Down Strikes Nerve

"They shut us down with no warning," says Wal-Mart worker

Ohio development officials were blind-sided this week when a job subsidy deal involving a Wal-Mart-owned optical lab went dark.

Regulators in the Buckeye state revealed that they had their eye on one of Wal-Mart's 4 optical labs in the country, and were looking to see if the retailer had violated the terms of its subsidy agreement with the state.

Wal-Mart has a high visibility optical empire, which includes not just 2,500 Vision Centers inside its stores, but a myriad of lens and eyewear products---even a network of its own house optometrists, which it calls "doctor partners."

Wal-Mart lures new eye doctors into a partnership deal in which the retailer covers a large part of a fledgling optometrist's business expenses. "When you partner with us," the retailer explains, "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."

To supply these optometrist partners with company products, Wal-Mart 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 doctors, "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.

But this week, Wal-Mart 'lasiked' roughly one-third of its optical workers---which prompted economic development staffers in Ohio to see if the retailer violated the terms of a 2001 tax agreement with the state. On March 27th, Wal-Mart shut down its Columbus lab and tossed 650 'associates' out of work. The Columbus 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. The lab, which makes the eyewear sold through Wal-Mart vision centers, was closed by the company in an apparent cost-cutting move.

A state official told the Associated Press that the Ohio Department of Development is examining 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 subsidy agreement, but said it would work with officials to resolve the situation---which means to get the story out of the headlines.

In 2004, the group Good Jobs First released a study, 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, profiling more than 240 cases in which the building of a Wal-Mart store was aided with corporate welfare.

For years, states and municipalities have pushed corporate welfare on 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 both the manufacturer and the retailer. It even controls the medical personnel that recommend the products---its "doctor partners." Wal-Mart says 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 Associated Press. Wal-Mart apparently informed workers at the lab just days earlier that rumors about closure and layoffs were only 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 make $11.28 per hour, according to the company. "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-Marts or Sam's clubs. But such positions would likely entail a significant reduction in take-home pay.

Ohio Department of Development Interim Director Mark Barbash has made no determination about recouping taxpayer's money. Ohio freely offered this welfare to the largest retailer in the world. Ohio should seek to redirect this 'investment' and use it instead to provide financial support to the 650 workers who are now unemployed. That would pencil out to $2,769 per worker, or roughly 4 weeks of extended pay per employee.

Net sales at Wal-Mart for the fiscal year were approximately $401.2 billion, an increase of 7.2% over fiscal year 2008. They don't need welfare or a bailout. States or cities that use tax dollars to subsidize Wal-Mart are adding no value to their local economy, and, as the optical lab results from Ohio demonstrate, these investments don't create lasting jobs. Despite its recession-fed success, Wal-Mart has laid off hundreds of workers in Arkansas, Georgia and Ohio in recent weeks.

Wal-Mart workers who want to 'live better' and avoid being 'shut down with no warning,' are going to have to assert more control over their workplace.

Al Norman is the founder of Sprawl-Busters. His website tracks Wal-Mart and big box battles daily: http://www.sprawl-busters.com.