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Friday, July 12, 2013

If Walmart doesn’t open DC store, so what?

ThinkProgress’ Bryce Covert tackles the story about a Washington DC living wage bill and Walmart’s threat to halt construction of a new store if it goes through. First off, there’s no question that Walmart can and should pay a living wage. Many Walmart employees rely on food stamps to make ends meet, meaning Walmart’s getting a free ride on the backs of the taxpayers. In addition, Walmart claims to be a “job creator," but according to Covert, "[T]he evidence from past cases paints a different picture: Walmart destroys as many jobs as it creates and doesn’t stimulate local businesses."

The showdown between DC and the largest private employer in the country closely mirrors one that took place between it and the city of Chicago in 2006. That city had also proposed a living wage law, but after Walmart threatened to abandon plans to open up stores the mayor vetoed it.

The lessons from the fallout of that battle have implications for DC. After the Walmart opened up on the west side of Chicago, economist Joseph Persky of the University of Illinois Chicago and his colleagues conducted a rigorous study of the impact on employment by going door to door for three annual surveys. They talked to businesses in the area that had overlapping product lines with the giant retailer before and after the opening. The study found that businesses in the immediate proximity of Walmart had about a 40 percent chance of closing in the two years following the opening. The chance of closing decreased the further away a business was from Walmart. These figures are likely conservative, the authors write, as they weren’t able to look into how many new businesses failed to open thanks to Walmart. But a different study of Florida found that the company’s entrance suppressed new business openings.

This didn’t just mean losing area businesses, but also losing jobs. The researchers estimated that nearly 300 jobs were lost after Walmart opened. The company asserts that it employed 426 workers at its store, 310 of whom were “sales associates,” many of which were probably full-time positions. Therefore, the researchers gave a generous estimate that just 320 full-time jobs were created – just about equal to the number of jobs destroyed by the store opening up.
Bottom line: Walmart’s predatory business model guarantees that no new jobs are created. And their poor treatment of their workers guarantees that the jobs that shift to Walmart actually pay worse. The result is a paycut for workers and a hit to the local economy. The idea that Walmart — or any retailer for that matter — “creates" jobs is BS. Demand ceates jobs, retailers merely respond to demand. And low wages reduce demand.

So, if Walmart tells DC they’ll pull out if the city passes a living wage ordinance, the city should say, “Good riddance." They’re better off without them anyway.

[photo via Wikimedia Commons]

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