Wal-Mart Says Living Wage Law May Be Deal-Breaker For D.C. Stores

Washington, D.C.'s city council is considering a living-wage law that would require large employers to pay workers at least $12.50 per hour.
By @MMichaelsMPN |
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    President and CEO, Walmart International Doug McMillan addresses the crowd on Wal-Mart 's 2012 worldwide sales during the Walmart shareholders meeting in Fayetteville, Ark., Friday, June 7, 2013. (AP Photo/Gareth Patterson)

    President and CEO, Walmart International Doug McMillan addresses the crowd on Wal-Mart ‘s 2012 worldwide sales during the Walmart shareholders meeting in Fayetteville, Ark., Friday, June 7, 2013. (AP/Gareth Patterson)

    Wal-Mart, a retailer with 1.3 million employees across the U.S., has announced that it will cancel plans to open three new stores in Washington, D.C., if the city council approves a living-wage law that would require large employers to pay workers at least $12.50 per hour.

    With a vote due this week, Wal-Mart has tried to put the last-minute squeeze on D.C. officials in an effort to convince them to vote against the Large Retailer Accountability Act.

    Mayor Vincent Gray responded to the Wal-Mart announcement with dismay in an official statement Tuesday.

    “Wal-Mart’s announcement today is immensely discouraging,” Gray said. “We’ve worked diligently to expand entry-level job opportunities for District residents and end retail leakage to neighboring jurisdictions. The cancellation of three planned stores will surely set us back. I strongly urge the Council to consider whether this legislation will actually promote strong economic development in the District and expand job opportunities for District residents.”

    The Washington Post reported in May that the Large Retailer Accountability Act would require large retailers — those with annual sales of $1 billion or more and operating in spaces of 75,000 square feet or larger — to pay a “living wage” of at least $12.50 an hour, considerably higher than the current $8.25 minimum wage for Washington, D.C.

    Something doesn’t add up, though. Wal-Mart claims it pays associates an average of $12.78, a full 28 cents higher than the D.C. proposal. But advocacy groups paint a very different picture of the world’s largest retailer. Using industry statistics, Making Change at Walmart claims that the average associate actually makes just $8.81 per hour.

    Some Wal-Mart workers have complained that they are unable to get by on these wages, taking their message to the Wal-Mart annual shareholders meeting in Arkansas last month.

    The Guardian reports that Dulce Garcia has worked in a Wal-Mart warehouse in Southern California since February 2012, making just $8 per hour with no benefits. She is raising a 2-year-old son and dreams of going to college but has struggled to make ends meet.

    “Gas is so expensive. Sometimes I feel that I am only earning enough to pay for the gas that allows me to drive my car to my job,” Garcia said to The Guardian. “I do not earn enough. I cannot survive like this.”

    Garcia’s plight is indicative of a broader trend rooted in the philosophy of Wal-Mart founder Sam Walton, who once said, “I pay low wages. I can take advantage of that. We’re going to be successful, but the basis is a very low-wage, low-benefit model of employment.”

    Wal-Mart originally announced that it would open six stores, employing up to 1,800 people. It sounds like a welcome announcement for the D.C. metro area, which suffers from 8.5 percent unemployment, according to the U.S. Bureau of Labor Statistics.

    But if Wal-Mart follows through on its threat and cancels three of the planned stores, it may be a blessing in disguise for the Washington, D.C., area, given the company’s poor track record of job creation in other areas.

    A study published in 2008 in the Journal of Urban Economics examined roughly 3,000 Wal-Mart store openings nationally and found that each store caused a net decline of about 150 jobs. These jobs were eliminated as competing retailers were forced to downsize or close altogether.

    Another study, published in Social Science Quarterly in 2006, found that neighborhoods where Wal-Mart opens have higher poverty rates and more food-stamp usage compared with areas where the retailer does not expand.

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