On Tuesday, Walmart shocked the citizens of Washington, D.C. by threatening to cancel plans to build three stores in the District.
Why? Walmart is pointing to a bill moving through the city council called the Large Retailer Accountability Act (LRAA), which would require big box retailers to pay a minimum wage of $12.50 an hour.
Walmart is using all its corporate might and public relations prowess to lean on members of the city council and Mayor Vincent Gray to oppose the bill. We thought it would be useful to cut through the noise and lay down some facts about this ongoing fight.
The LRAA does not “target” Walmart. Here’s what the bill says: if you are a retail store with more than 75,000 square feet, and your parent company has gross revenues of $1 billion or more, you must pay your workers at least $12.50 an hour.
That includes Walmart, yes. Many Walmart stores equal or exceed that size, and in the first quarter of 2012 Walmart made over $32 billion in profit, let alone revenue.
But it also includes many other stores, like Target, Lowes, Sears, Macy’s and Home Depot. The bill does not target Walmart, but Walmart is the only retailer threatening to cancel their involvement with the city because of it.
Walmart said they would start D.C. workers at $13 an hour… The dialogue between the city and Walmart has been going on for many years. Walmart officials met with DC electeds as well as community and faith groups before agreeing to build up to six stores. As the Washington Post reports:
More than a year ago, a senior Wal-Mart executive, Tony Waller, told a group of D.C. clergymen that the company would pay District employees a starting salary higher than the amount now proposed by the D.C. Council, according to two people who were at the meeting.
Recalls one clergyman:
“They promised they were going to start people at $13 an hour, and they said that over and over and over,” said the Rev. Graylan Hagler, senior pastor at Plymouth Congregational Church in Northeast Washington.
And Walmart confirms that they intend to pay something very close
Wal-Mart spokesman Steven Restivo confirmed that the company plans to pay D.C. workers at least what it says it now pays full-time employees in suburban Virginia — an average of $12.39 an hour. He nonetheless called the council’s initiative an unfair bait-and-switch tactic.
So the approval of the community and their elected leaders to Walmart’s entry into the city was predicated, in part, on their promise of a starting hourly wage between $12 and $13.
…so $12.50 shouldn’t be a problem, right? Those of you at home might be thinking: “If they promised $13 an hour, why are they threatening to leave over $12.50 an hour?” We have a few guesses, and none of them are good.
First guess: Walmart was never planning to pay $13 an hour. While that’s upsetting, it’s not shocking. Walmart’s Vice President of Communications David Tovar said on CNN just last year that the “average rate is about $12.40 an hour for a full time associate.” However, IBISWorld, an independent market research group, found the real number to be $8.81 an hour. If such an associate is scheduled for 34 hours a week and is lucky enough to be on 52 weeks a year, that only amounts to a little over $22,000 a year – far below the 2010 Federal Poverty Level for a family of four. This makes us wonder about Walmart’s claims
Second guess: It’s not about the wages, it’s just that Walmart doesn’t want to cede any power to people of DC. That’s also a very real possibility, as Paul Waldman writes:
For Wal-Mart, this isn’t just about these particular stores….It’s about their relationship both to the people they employ and to the communities they locate in. It’s about power, and as far as they’re concerned, power has to reside with Wal-Mart. Their employees do what they’re told and get paid what they’re told, and if they don’t like it they can go find another job. By the same token, the city council gives Wal-Mart what it wants, and if it doesn’t they can try to find somebody else to open a store there.
The third guess is that Walmart executives can’t do basic math, and haven’t realized that $12.50 is actually less than $13.
$12.50 is a living wage, not a “super wage.” The DC City Council didn’t pick $12.50 out of the air. Full time work at that rate comes out to $26,000 a year, hardly extravagant for any worker. An hourly rate of $12 could lift two-thirds of DC’s working poor families out of poverty – and while a city-wide living wage ordinance would be preferable, the notoriously low-paying retail sector is a great place to start.
As Ed Lazere of the DC Fiscal Policy Institute writes, low wages in retail alone cause problems for the entire city:
One-fifth of working DC residents earns below $13 per hour. Even with full-time year-round work, that leaves a family of three below 150 percent of the poverty line. Many of the lowest-wage occupations in the District are in retail. The median wage for cashiers in the DC area is $10 an hour and the median wage for retail sales workers is $11 an hour.
Families living on low wages are forced to live in the areas of the city with the lowest housing costs, leading to neighborhoods with high concentrations of poverty. These neighborhoods tend to have the highest crime rates and lowest-performing schools. The District is moving assertively to help families prepare for work, but the low wages of families leaving welfare — $9 an hour on average — threaten the success of these reforms.
In other words, low-wage jobs create costs that all of us pay.
Walmart can afford to pay this wage – and then some. Walmart is the nation’s largest private employer, with about 1.4 million employers. Gross profit last year was $119.95 billion, with a B. Walmart’s CEO Mike Duke earned $20.7 million in 2012, a 14.1 percent increase from his 2011 salary.
Walmart spokesman Steven Restivo told the Washington City Paper that Walmart makes $7,726 in profit per employee, which is low among its corporate peers. However, as the City Paper’s Aaron Weiner calculates:
that means the company can afford to pay each employee $7,725 more and still make a (very slim) profit.
Also, there’s that $119.95 billion in profit – way more than any of its competitors.
Finally: Spiderman supports the LRAA. With great power comes great responsibility. Both Walmart and the DC City Council ought to be reminded of that.