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News-Sentinel.com Your Town. Your Voice.
Opening Arguments

Up against the Wal

Hey, Wal-Mart, get outta here; we don't need your stinkin' jobs:

The world’s largest retailer delivered an ultimatum to District lawmakers Tuesday, telling them less than 24 hours before a decisive vote that at least three planned Wal-Marts will not open in the city if a super-minimum-wage proposal becomes law.

[. . .]

The D.C. Council bill would require retailers with corporate sales of $1 billion or more and operating in spaces 75,000 square feet or larger to pay their employees no less than $12.50 an hour. The city’s minimum wage is $8.25.

While the bill would apply to some other retailers — such as Home Depot, Costco and Macy’s — a grandfather period and an exception for those with unionized workforces made it clear that the bill targets Wal-Mart, which has said it would open six stores, employing up to 1,800 people.

I've noticed that even people who favor the free market and usually disapprove of government overreach have at least one "big" they have a visceral hatred of. For some, it's Big Pharma, for others Big Oil or the Big, Rich, Mean old insurrance industry. And Wal-Mart gets more than its fair share of the Hate Big Retail That's Destroying America As We Know It crowd. Why, that company provides a nearly infinite variety of quality goods at rock-bottom prices. The bastards! And, dammit, they don't pay their unskilled workers as much as brain surgeons get!

The linked story is from The Washington Post, and I'm not exactly surprised that a little anti-business bias seeps into the writing. The story talks about the company's "hardball tactics" that "come out of a well-worn playbook" to describes what seems to me a very reasonable response. Hey, if you single us out for punitive, profit-killing requirements, we just won't come to your city.

Here's a more common-sense view of the situation:

A couple lessons, here. First, businesses are not obligated to open in your city or your neighborhood, particularly when you incentivize them to locate elsewhere. Washington, D.C. is particularly susceptible to losing potential jobs (particularly in entry-level and working class retail positions, as opposed to lobbyist slots) to nearby jurisdictions because it doesn’t take much to simply cross the bridge to friendlier climes in, say, Virginia.

Second, as Sonny Bunch reminds us of a lesson from Econ 101, hiking the minimum wage kills jobs.


Sat, 07/13/2013 - 4:46pm

Just a few thoughts about Walmart and a few questions to ponder.

-- If the 1968 minimum wage kept pace with inflation, it would be $10.70 today. If it kept pace with worker productivity, it would be $22 today. If it kept pace with the wealth of the top 1 percent of earners, it would be $33 dollars today. In an April 4, 2013 letter, Walmart U.S. CEO Bill Simon wrote that "in the U.S., Walmart's full-time, average hourly wage is $12.67 per hour." Given these facts, shouldn't Walmart be willing to pay workers in D.C. $12.50 an hour minus benefits, which is how the bill is written?

-- Walmart's top executives each make thousands of dollars an hour. Walmart CEO Mike Duke makes $11,000 an hour plus great benefits and perks. During the length of a city council session, Mike Duke will make more than many Walmart employees working a full year! Clearly, he could afford a pay cut. Is it fair for Walmart to say it cannot afford to pay workers in D.C. $12.50 an hour minus benefits?

-- Costco starts their workers at $11.50 an hour plus benefits and is a profitable company. Walmart itself is profitable in Ontario, Canada, where it starts its workers at $10.25 as well as providing them with two weeks paid vacation. What is stopping Walmart from treating Walmart workers in the District of Columbia with the same level of respect?

-- Walmart recently announced a new $15 billion stock buyback. They have already used $36 billion to buy back stock throughout the past four years, which averages out to $9 billion a year. Since the billionaire Walton family owns over 50 percent of company stock, it is likely that they will be a beneficiary of most of these billions, this a family that already has more wealth than the bottom 40% of Americans.  If instead of transferring billions of dollars to the Walton family, Walmart had chosen to use the money to a pay a more respectable wage, they could have given each of their 1.3 million workers a $3.30 per hour raise. Why does Walmart have another $15 billion lying around to buy stock but empty pockets when it comes to paying $12.50 an hour minus benefits to D.C. Workers?

-- A study from UC Berkeley's Center for Labor Research and Education has shown that raising a Walmart wage floor to $12 per hour would add -- if all of the wage increase was absorbed by price increases -- just $0.46 per trip for the average Walmart customer. Again, this is the highest estimate, as portions of the raise could be absorbed through other mechanisms, including increased productivity or portions of the stock buyback being rolled back. How can Walmart claim a $12.50 minimum wage minus benefits is untenable?

Back in 1968, Sam Walton -- the founder of Walmart -- had to pay his workers wages that were worth much more than wages today because the law required it of him. In that light, isn't it hypocritical that Walmart's official stance now, as articulated by Mr. Barron, is that providing workers a more livable wage in the District of Columbia in 2013 is "arbitrary and discriminatory" and "discourages investment"?

Rebecca Mallory
Mon, 07/15/2013 - 8:44am

Joe's error in the wage discussion is a failure to understand Mises' Maxim.  Companies do not determine wages; governments do not determine wages ; consumers determine wages.

Mises writes, "In the long run the worker can never get more than the consumer allows."  Added cost with  no addional production is not a formula for  success in attracting consumers. If the wage us unsatisfactory to workers, they need to move on.

Mises continues, "The height of wage rates is determined by the consumers' appraisal of the value the workers' labor adds..."

In this discussion, all of Joe's pomp is irrelevant because the ultimate determinant of wages lies with the consumer.  The denial of this principle is a surrender to Stage One Thinking.

Andrew Jarosh
Mon, 07/15/2013 - 3:54pm

Tell that to Henry Ford, Rebecca, who realized higher paid workers also are wealthier consumers, in your version of economic reality. They fit the bill for the argument both u letter writers r making.

Rebecca Mallory
Tue, 07/16/2013 - 9:02am

To explode the Ford myth, click on the link: http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/.

Sorry, Andrew, but it's not what you think.

Leo Morris
Tue, 07/16/2013 - 10:16am

Can I get a "Heh" for this update?

People who live in glass houses shouldn't throw stones.”

Someone needs to carve those words onto a wall in the D.C. Council legislative chamber.

Last week, the Council approved a measure that would require Walmart and other large retailers doing business in the District to pay a “living wage” of $12.50 per hour.

But… uh oh. Hypocrisy alert.

District government pays less than $12.50 per hour.

According to the D.C. Department of Human Resources, some full-time school maintenance workers and custodians make $11.75 per hour. The rate for a clerk at the University of the District of Columbia is $10.40.

Link: http://www.nbcwashington.com/blogs/first-read-dmv/DC-Government-Doesnt-P...

Andrew J.
Tue, 07/16/2013 - 12:00pm

Tackling high turnover rate was one benefit of the $5 a day wage. Giving workers enough money to buy Fords was another.