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Walmart's Low Wages: Not Just for Walmart Employees Anymore

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It might not surprise you that Walmart is fighting a 'living wage' bill in DC, but, if they win, you might be surprised at how it affects the future of your town. The massive retailer's recent threat to cancel plans for additional stores in Washington, D.C., is part of a strategy to stifle wages for their own benefit that in turn stifles wages for the entire workforce in an area.

First, some background: the Walmart empire originally spread from Arkansas throughout the rural areas and suburbs of the U.S. These comparably low-wage markets are now tapped out. So, Walmart executives' next targets are urban areas, where strong union membership and liberal populations help to drive up wages significantly in comparison to rural and suburban areas. For example, the Bureau of Labor Statistics reports that in 2011 urban households received an average of $15,779 more in yearly income than rural households. Walmart's low, low wages aren't greeted kindly amongst city populations accustomed to their comparably higher pay. After seeing Walmart's devastating effects on rural and suburban America, where Walmart has driven already-low wages even lower by crushing the competition and leaving nowhere else to work or shop, cities like Chicago, New York, and Washington, DC decided that Walmart's business model wasn't right for them. So Walmart went about breaking down that political barrier in any way that they could.

Years before Walmart had a solid plan for a store in DC, the company quietly moved in, joining the DC Chamber of Commerce, making donations to local charities, and hiring lobbyists to help them cozy up to politicians. Construction began on three Walmart stores in the District, with plans for three more in the works. With public construction under way, DC residents began to notice and speak out against Walmart. The DC City Council passed a measure this week that would force Walmart and other giant retailers (any store larger than 75,000 square feet and whose parent company has at least $1 billion a year in revenue) to pay employees a starting hourly wage of $12.50.

In response, Walmart has sought to leverage its political power to strong-arm DC Mayor Vincent Gray into vetoing the bill and enabling Walmart to pay its standard low wages to workers in the District while depressing wages in the surrounding communities as small businesses fail and people have nowhere else to work or shop. Sadly, this is not the first time that Walmart has used these tactics to worm its way into unwelcome markets.

In 2006, the Chicago City Council passed a similar "living wage" measure to establish a $10 an hour minimum wage for mega-retailers plus an additional $3 in fringe benefits. Walmart threatened that the bill would make it scale back or cancel plans for several new stores in the city, and then-Mayor Richard M. Daley buckled under Walmart's pressure and vetoed the bill. The city council failed to override the veto, and today there are eight stores in the city with more on the way. Today the minimum wage in Illinois is $8.25 an hour, a full $4.75 lower than it would have been without Walmart's bullying tactics. A full-time worker at a Chicago Walmart can expect to lose around $10,000 in wages per year as a result.

Mayor Vincent Gray should not allow himself to be bullied out of doing what is right for the workers of Washington, DC. After all, retailers can thrive while still paying a living wage. Costco, which pays its employees an average of $45,000 per year, has reported profit increases in recent quarters while Walmart's sales have suffered. One reason for Walmart's decline is that many of Walmart's customers are also employees who, with more and more hours being cut, can't afford to buy as much as they used to.

Bringing jobs to Washington, D.C. doesn't need to come at the expense of a living wage, and nor should it. After all, the more you pay your workers, the more money they have to spend buying your products, and the higher your revenues become. Take it from Costco: the living wage works.