On July 11, 2013, the Washington D.C. City Council approved the Large Retailer Accountability Act. This legislation would require all employers with more than $1 billion in sales, or 750,000 square feet, to pay employees a minimum of $12.50 an hour (PBS 7/17/2013). This directly impacts Wal-Mart’s plans to open six stores in Washington D.C.. The bill still awaits the signature of Mayor Vincent Gray.
The arguments are running hot and heavy with Wal-Mart threatening to pull out (as it has with other cities pushing for living wage, or even closing stores where workers attempt to unionize). Living wages and decent benefits are not part of Wal-Mart’s business plan.
Wal-Mart argues that “the legislation is is arbitrary and discriminatory and that it discourages investment in Washington.” (PBS).
You have some citizens (and Wal-Mart representatives) arguing that these low wage jobs are important “entry level” jobs, and necessary for a lot of folks. Some citizens of D.C. argue:
”Those big people in government, they don’t understand my situation,” said Fred Reaves, 45, who is unemployed and said he would gladly take a job at the current city minimum, $8.25.” (CNBC).
“Opposite the Skyland site, on Good Hope Road, Carl Williams, 49, a barber at the Like That salon, whose dozen barbers were bustling on Thursday afternoon, had mixed feelings. He thought $12.50 was a fair starting wage. But he said he would not hesitate to encourage his two daughters to take a job at Walmart for $8.25.” (CNBC).
Unfortunately, the average wage of a Wal-Mart Associate is $8.81 an hour . So getting past “entry level” is a hard slog.
An under-informed assistant manager of Shoe City, a store near one of the proposed Wal-Marts, felt that while her prices might be undercut, that increased foot traffic in the neighborhood could benefit the store (CNBC). That is just not the way things work with Wal-Mart. When Wal-Mart, it depresses wages and displaces existing jobs in stores like Shoe City, and drug stores, hardware, clothing, etc (2005 report).
Also, while arguing that Wal-Mart provides needed entry level jobs, the opposite is true.
Walmart’s entry into a market depressed wages, displacing better-paying retail jobs. A 2005 study (PDF)found that Walmart’s entry into a metropolitan area eliminates similar jobs that pay about 18% more than Walmart. In those areas, the total average earnings of retail workers fell by 0.5 to 0.8% . – See more at: Making Change at Wal-Mart
Wal-Mart is ticked off at the D.C. Council. They followed their usual approach to entering the community – greasing the wheels – as reported by the Washington Post:
Well before it had any solid plans to open stores in the District, Wal-Mart joined the D.C. Chamber of Commerce and began making inroads with politicians, community groups and local charities that work on anti-hunger initiatives.
The campaign was matched with cash. Through its charitable foundation, Wal-Mart made $3.8 million in donations last year to city organizations including D.C. Central Kitchen and the Capitol Area Food Bank, according to a company spokesman. Meanwhile, it has kept a prominent local lobbyist, David W. Wilmot, on a $10,000-a-month retainer to smooth relations with elected officials.
They paid to play and now D.C. is changing the rules. One might wonder whose palms were greased. Or if the concerns of the people were actually heard.
Wal-Mart is huge. It is not like other retailers in its market (Target, K-Mart, etc.) WalMart accounts for one percent of employment in the U.S., and a huge share of retail sales. In 2010, WalMart (and Sam’s Club) ate up 11.5% of total retail sales.
It destroys competitors, and eliminates jobs. It runs on monopolizing areas and markets. Yes, it provides low wage jobs, and the tax payer (including the tax paying Wal-Mart workers) end up picking up the tab as many qualify for food stamps and medicaid even while working full time. PBS’ “Store Wars: When Wal-Mart Comes to Town” states the business plan succintly:
“Wal-Mart employs more people than any other company in the United States outside of the Federal government, yet the majority of its employees with children live below the poverty line. “Buy American” banners are prominently placed throughout its stores; however, the majority of its goods are made outside the U.S. and often in sweatshops. Critics believe that Wal-Mart opens stores to saturate the marketplace and clear out the competition, then closes the stores and leaves them sitting empty. Freedom of speech issues also come into play. Musicians are at the mercy of Wal-Mart’s stringent content rules, forcing many to create “sanitized” versions of their albums specifically for the discount chain.”And for employees?
“… the employees on average take home pay of under $250 a week. The salary for full-time employees (called “associates”) is $6 to $7.50 an hour for 28-40 hours a week, which is typical in the discount retail industry. This pay scale places employees with families below the poverty line, with the majority of employees’ children qualifying for free lunch at school. When closely examined, this amounts to a form of corporate welfare, as the taxpayer subsidizes the low salaries. One-third are part-time employees – limited to less than 28 hours of work per week – and are not eligible for benefits.”
So D.C., stand your ground. If you want jobs, then come up with ways to encourage and support small businesses. You will get much more for your investment, and strengthen the community at the same time.