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Wal-Mart, D.C. in battle of wills over wages

Thursday, August 1, 2013
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In case you missed it this summer, an interesting game of economic chicken is playing out in Washington.

No, it’s not over sequestration or Obamacare but whether big-box retailers ought to pay city workers a “living wage.”

On one side is Wal-Mart Stores Inc., which three years ago set its sights on opening six stores in the nation’s capital. On the other side are activists and D.C. clergy who say the company can and should pay a higher minimum wage.

The question before each is whether the city needs Wal-Mart more than Wal-Mart needs the city.

The discount giant, with worldwide sales of $466 billion last year, has been focusing on major U.S. cities of late, after spending decades building out a rural and suburban base. Cities, chock-full of consumers, are the last unconquered space.

In Washington, Wal-Mart’s store plans were greeted warmly. Some locations were seen as breathing new life into commercial projects that had languished for years for lack of a top-shelf anchor. The sites also were touted as giving consumers in poorer parts of the city a needed retail option.

But the D.C. Council put those plans in jeopardy in July by passing the Large Retailer Accountability Act of 2013, which requires that big-box employers grossing at least $1 billion a year and operating stores of at least 75,000 square feet in the district pay their workers at least $12.50 an hour in wages and benefits.

The minimum wage in D.C. currently stands at $8.25 an hour, $1 above the federal minimum wage but far shy of the “living wage” mandated in the legislation.

Wal-Mart warned on the eve of the vote that three of its planned stores would be scratched as a result of the legislation, according to the Washington Post. The three others, already under construction, would be put under review.

Home Depot, Macy’s, Target and Lowe’s also reacted swiftly to the vote, sending a letter to D.C. Mayor Vincent Gray urging him to veto the legislation.

The retailers called the proposed statute “unfairly discriminatory” because it affected only certain companies. They said in the letter that if the legislation became law, their own plans for future expansion in D.C. “must be revisited.” That threat isn’t an empty one and brings us back to the central question of who needs whom more.

Washington isn’t just trendy Georgetown or up-and-coming U Street. Along the Anacostia River in Southeast are hardscrabble neighborhoods that could benefit from the jobs and lower-priced goods that Wal-Mart would bring.

A report from the D.C. Council’s Committee on Business, Consumer and Regulatory Affairs defended the goal of the legislation by pointing to Costco, a big-box warehouse club (like Wal-Mart’s Sam’s Club) that pays a starting wage of close to $12 an hour.

The company operates with a philosophy that paying better wages attracts better workers. And its balance sheet backs that strategy: 2012 sales were up 12 percent from a year earlier and same-store sales — a sign of a retailer’s health — were up 7 percent for the year.

For now, the D.C. Council can be confident in staring down Wal-Mart. Its ace, according to the committee report, is this: “[F]inancial and labor market studies provide evidence that large retailers have saturated suburban and rural markets and now see sizable growth in large urban centers such as Washington, D.C.”

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at marlenejkennedy@gmail.com.

 
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