Every Day, Low Wages

On Wednesday, the Washington, DC, City Council passed the Large Retail Accountability Act (LRAA), a bill that will require large retail corporations—specifically businesses with more than $1 billion in sales and retail locations of at least 75,000 square feet—to pay their workers a minimum wage of $12.50 per hour. The bill’s passage may only be a temporary victory for proponents, however, as there is speculation that DC Mayor Vincent Gray may veto the bill now that Walmart, the primary target of the bill, has said that they will cancel construction of three planned stores in the District if the legislation becomes law.

It’s hard to view Walmart’s threat to scuttle the three stores, made literally the day before the Council vote, as anything but outright bullying by the largest and one of the most profitable corporations in the world. Walmart has alleged that the bill unfairly singles them out, although a few other retailers—Macy’s, Costco and Home Depot—would also be affected by the bill. But Walmart does deserve special scrutiny because of their unique track record in driving out smaller retail businesses, depressing wages (pdf), and siphoning off public tax dollars.

To be clear, Walmart is not the only big-box retailer that has shut down smaller competitors, but Walmart’s market dominance in many regions, and their role as the largest private employer in the United States, gives them a unique ability to affect living standards for significant segments of the population. Unfortunately, their typical wages are abysmally low. The minimum wage of $12.50 required under the LRAA is just below the average wage of Walmart employees nationwide: $12.67 per hour. And when companies like Walmart don’t pay sufficient wages for workers to make ends meet, the American taxpayer picks up the tab. In nearly every state where it operates, Walmart has more employees on Medicaid than any other company. In some states, its employees are also the largest groups of food stamp and other cash assistance recipients.

The $12.50 per hour wage that Walmart is refusing to pay its workers would equal $26,000 per year before taxes for a full-time worker. Even that isn’t a particularly forgiving income level in a high-cost area like Washington, DC. EPI’s updated Family Budget calculator shows that for a family of one parent and one child, it takes over $70,000 a year to achieve a modest, yet adequate, standard of living in the Washington, DC area—nearly three times the proposed minimum Walmart salary.

For Walmart to claim that paying such wages would be too burdensome is a bit hard to swallow. Until now, the company’s business model of taking over local retail markets then squeezing suppliers, employees, and local and state governments (pdf), has allowed the Walton family to acquire a combined wealth greater than the bottom 48.8 million American families combined—41.5 percent of all U.S. families. Yet the company can’t afford paying a wage that’s not even 60 percent of the average wage of its closest competitor? (Costco’s average wage is $20.89 per hour.)

The truth is that Walmart is simply going to pay the lowest possible wages that it can get away with. Researchers at U.C. Berkeley calculated in 2011 that if every Walmart nationwide had a minimum wage of $12 per hour and passed the entire additional cost on to consumers—i.e., without taking anything out of Walmart’s profit margins—it would increase prices by a mere 1.1 percent, or $0.46 per shopping trip for the average Walmart shopper. But when local officials can be won over with promises to anchor new development projects and “create jobs”—even if that development kills existing businesses with higher paying jobs—why bother to cut into profits or endanger your ability to undercut your competitors’ pricing?

The DC Council should be commended for standing up to Walmart, standing up for workers, and refusing to be bullied. Mayor Gray, it’s your turn to do the same.