Fixated on Wal-Mart

Low wages harm America’s economy
By Heide B. Malhotra, Epoch Times
October 21, 2013 Updated: October 21, 2013

Washington, D.C., Mayor, Vincent C. Gray vetoed legislation demanding that large retailers pay a higher minimum wage, Sept.15. The announcement came on the heels of Wal-Mart threatening to cancel plans for new stores in the District of Columbia if the minimum wage was increased.

Mayor Gray denied that he vetoed the minimum wage because of Wal-Mart’s threat in his weekly radio address.

The debate in the District of Columbia is indicative of a more pressing national issue: Paying workers a decent salary instead of a wage that essentially forces them to apply for welfare benefits from the U.S. federal and local governments.

Mayor Gray said he agreed with the supporters of the minimum wage increase because his constituents should have good jobs and earn decent wages. He objected to the bill, however, because it would only benefit the workers of a few large retailers whose employees did not have union representation.

“Why, I ask supporters of this bill, do workers at large, non-unionized retailers deserve higher wages – but workers at unionized stores or smaller retailers do not.” said Mayor Gray in the radio address.

Other large retailers suggested that they too would not be interested in opening stores in Washington D.C if the minimum wage increased. Besides Wal-Mart, Costco, Target, Home Depot, Wegmans, Lowe’s, Walgreens, Harris Teeter, AutoZone and Macy’s were also reconsidering expansion plans in the District according to Mayor Grey.

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This would result in the loss of about 4,000 jobs over the next few years.

Most importantly, no one can predict if the higher paying jobs would go to people residing in other places in the Metropolitan area and not in the District, stated a news release from the mayor’s office.

Planning Store Locations

According to Wal-Mart’s website, it will open stores in Washington, D.C., and “Provide a competitive wage equal to or better than those offered by most competitors.” 

Wal-Mart’s plans to build six stores, measuring between 80,000 and 120,000 square feet and create 1,800 retail jobs and 600 construction jobs in Washington, D.C., according to the website.

Wal-Mart appears to be the only company that has announced its expansion plans in the Washington, D.C., area on its website. 

Other company websites don’t report on expansion plans, however, Lowe’s is planning its first 130,000 square feet store in Washington, D.C., to be opened in 2014, according to the National Retailer & Restaurant Expansion Guide.

Low-Wage Effect on America’s Workforce

According to a report by the Democratic staff of the U.S. House Committee on Education and the Workforce, depressed wages, such as those paid by Wal-Mart, not only keep the workforce at or below the poverty line, but also result in substantial cost to the taxpayer.

“As the largest private-sector employer in the U.S., Wal-Mart’s business model exerts considerable downward pressure on wages throughout the retail sector and the broader economy,” the report stated. The updated version of 2004 report was published in 2013. 

Data regarding Wal-Mart’s wage and employment practices are not readily available to the public.

However, according to the report, “a single 300-person Wal-Mart Supercenter store in Wisconsin likely costs taxpayers at least $904,542 per year and could cost taxpayers up to $1,744,590 per year – about $5,815 per employee.” 

The report accuses Wal-Mart of holding down earnings not just for Wal-Mart, but for the entire retail industry. As the largest of America’s retailers, the company could be a role model for the rest of the industry. 

Furthermore, a 2012 report by Demos, a public policy organization, said that if more people were hired full time and received an annual wage of around $25,000, the U.S. Gross Domestic Product (GDP) would increase by $11.6 billion to $15.2 billion.

The report found that this would also create over 100,000 jobs.

Lining the Pockets of a Few

Wal-Mart substantially increases their profit margin by paying employees below poverty line salaries and the Walton family is getting richer every year.

Wal-Mart’s profits were $17 billion for fiscal year 2013 and $15.8 billion for the prior fiscal year according to a filing by Wal-Mart with the Securities and Exchange Commission.

Wal-Mart ranked number one in the Fortune 500 in 2013. Just a year earlier, it ranked in second place, after the Exxon Mobil Corp. 

According to the Forbes 400 list, the six members from the Walton family are among the richest people in America, having a combined net worth of $144.7 billion. Four of the Walton’s, Christy Walton and family, Jim Walton, Alice Walton and S. Robson Walton are among the ten richest Americans, ranking 6th, 7th, 8th and 9th respectively.

By withholding decent wages from America’s work force, a small percentage of the country’s population gets rich, while more than 40 percent of all American’s live below or just above the poverty line. 

Labor relation experts state that the Washington, D.C., increase in the minimum wage was an ill-conceived effort. Any increase should be country wide and apply to all American workers.

“Large retailers can embrace this opportunity to make a positive change in the economy by paying a wage that supports families, improves productivity, increases sales, and generates new economic activity and jobs,” the Demos report stated.