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Tuesday, September 29, 2015

Will layoffs at Whole Foods affect the Detroit location?

Posted By on Tue, Sep 29, 2015 at 3:01 PM

After reading an article describing how Whole Foods is slashing 1,500 jobs across the board, we wondered: Would the Detroit location lose any positions? We asked the high-end grocery chain's Midwest and Ontario support office, where Allison Phelps told us that "At this time, the only information we are releasing is this statement. It does apply to all markets in the company."

The grocery chain has sold the cuts pretty well. They say they'll try to relocate some employees, retire others, or offer other work opportunities within the company. But the fact remains, these cuts are going to leave some people wholly unemployed.

Judging by the way the company has said they will cut staff at its nearly 450 locations, it seems fair to guess that the Detroit store could lose one or two employees in this round of layoffs.

But there's another bit of math worth doing. According to our old pal Tracie McMillan, the store has generated 180 jobs as of last year. McMillan also reports that the location received $5.8 million in public subsidies and private grants. Divide the subsidy by the number of jobs created and you get more than $32,000 per job created. In other words, public and private donors spent $32,000 so that Whole Foods could create one job in Detroit. With a few positions lost, that cost rises to $32,500 per job created.

It's a figure that's pretty consistent with our city leaders other efforts to fill the role of "job creator." When Detroit obliterated its Poletown neighborhood to make way for General Motors' Detroit-Hamtramck Assembly Plant, Detroit City Councilman Mel Ravitz estimated the total the city spent acquiring land, settling lawsuits, and more to be about $200 million. The plant was to create 6,500 jobs. So that breaks down to about $30,750 per job created. It's just about the same.

But also consider that the plant wound up employing less than half that many people, which brings to cost per job up to $62,000 per job created. And also consider that $200 million in 1981 is worth about $500 million today: That brings it to $156,250 per job created in today's dollars. 

So, by Detroit standards, the money spent on Whole Foods is still a relatively good deal. In order to bring the money spent up to the gold standard set by the Poletown boondoggle, Whole Foods would have to cut its Detroit workforce to 37 people. That's pretty unlikely.

But, hey, this is Detroit. We can do anything we set our minds to, right?

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