Moral Low Ground


Walmart Threatens to Leave Washington DC over City’s LRAA ‘Living Wage’ Mandate

Walmart employees protest for better working conditions. (Photo: OURWalmart)

Walmart employees protest for better working conditions. (Photo: OURWalmart)

Walmart has threatened to scrap plans to build three stores in Washington DC and halt construction on three others already being built over the city’s so-called ‘living wage’ bill.

Raw Story reports Walmart, the world’s largest retailer, is staunchly opposed to the Large Retailer Accountability Act (LRAA), which the city council passed by an 8-5 vote on Wednesday. The measure, if signed into law by Mayor Vince Gray, will require retailers making more than $1 billion per year and occupy at least 75,000 square feet to pay their workers at least $12.50 an hour, minus benefits. Unionized retailers would be exempt from the mandate. The current minimum wage in the nation’s capital stands at $8.25/hour.

“From day one we have said that this legislation is arbitrary and discriminatory and that it discourages investment in Washington,” Walmart regional manager Alex Baron wrote in an editorial in the Washington Post. “We have gone to great lengths to have thoughtful conversations with council members about why the LRAA would result in fewer jobs, higher prices and fewer total retail options. Most shopping dollars would stay in the suburbs, unemployment would remain in the double digits in some neighborhoods, and underserved communities would continue to have disproportionate access to affordable groceries.”

If the ‘living wage’ bill becomes law, “Walmart will not pursue stores at Skyland, Capitol Gateway or New York Avenue,” Baron said. “What’s more, passage would also jeopardize the three stores already under construction, as we would thoroughly review the financial and legal implications of the bill on those projects.”

Indeed, Walmart may bring hundreds, even thousands, of jobs and the company’s famous ‘everyday low prices’ to communities that desperately need both. But, as Lydia dePillis writes in the Washington Post, “[Walmart] has a pretty bad history paying low wages and vacuuming streets of their local businesses.”

According to a 2005 study, “The Effects of Walmart on Local Labor Markets,” by a trio of researchers at the National Bureau of Economic Research, the largest economics research organization in the United States, for every two jobs Walmart ‘creates,’ three local jobs are destroyed.

It’s not just ruining small businesses and small towns across America. The Corporate Research Project has prepared a ‘corporate rap sheet’ listing Walmart’s alleged and proven misdeeds. Among these:

Intimidating and firing employees who seek to strike or unionize.

-Sourcing from foreign suppliers who use illegal child labor.

Violations of child labor laws in three US states.

-Knowingly hiring undocumented immigrants, who were forced to work seven days a week for less than minimum wage.

-Sourcing from foreign suppliers who pay thugs to brutally attack workers who attempt to unionize or even speak out against abysmal working conditions.

-Sourcing from foreign suppliers which lock workers in unsafe factories, which sometimes are involved in deadly disasters such as last year’s Bangladesh factory fire which killed 112 people; and accepting clothing from factories it claimed it had banned due to safety or labor violations.

-Illegally denying overtime pay to US workers.

-Forcing US workers to put in unpaid overtime hours.

-Failing to provide meal breaks to US employees as required by law.

Wage violations in 63 federal and state cases in 42 states, resulting in a record $352 million settlement.

Denying 230,000 employees pay for unused vacation or personal leave time.

-Allegedly discriminating against hundreds of thousands of female US workers, although the Supreme Court unanimously sided with Walmart when the case was brought before it.

Discriminating against black Americans in the recruitment and hiring of truck drivers.

-Taking out life insurance policies on employees and naming Walmart as the sole beneficiary, so-called ‘dead peasants insurance.’

Toxic dumping.

Violations of the Clean Water Act.

-Unauthorized sale of ozone-depleting chemicals, a violation of the Clean Air Act.

Tax-dodging to the tune of at least $2.3 billion.

-Sales tax ‘skimming.’

Bribery in numerous foreign countries.

-Failure to provide adequate safety on store property, primarily in parking lots, resulting in serious crimes including armed robbery and rape.

This is but a partial list of Walmart’s alleged and acknowledged misdeeds.

As for the argument that paying workers a living wage (or something approaching it) stifles economic growth, San Francisco, where the minimum wage is currently $10.55/hour– and increases each year to keep pace with inflation– ranks among the nation’s most prosperous local economies. There are no Walmarts in San Francisco, but there is a Costco. The average Costco worker earns $20.89/hour, compared to $12.67 at Walmart, not including overtime. Costco employees also enjoy much better medical and other benefits. Walmart argues that it cannot pay its associates more because of razor-thin profit margins and the company’s mission to deliver the lowest possible prices to consumers. But according to Bloomberg Businessweek, Costco’s sales soared 39 percent and its stock price has doubled since 2009. Costco CEO and President Craig Jelinek has also publicly advocated raising the federal minimum wage to over $10 an hour, anathema to Walmart as evidenced by the company’s threat to leave Washington DC if the LRAA becomes law.

“At Costco, we know that paying employees good wages makes good sense for business,” Jelinek said earlier this year. “We pay a starting hourly wage of $11.50 in all states where we do business, and we are still able to keep our overhead costs low. An important reason for the success of Costco’s business model is the attraction and retention of great employees. Instead of minimizing wages, we know it’s a lot more profitable in the long term to minimize employee turnover and maximize employee productivity, commitment and loyalty. We support efforts to increase the federal minimum wage.”

Jelinek told Bloomberg Business Week that “people need to make a living wage with health benefits. It… puts more money back into the economy and creates a healthier country. It’s really that simple.”

In contrast, Walmart founder Sam Walton wrote in his autobiography that “we really didn’t do much for the clerks except pay them an hourly wage, and I guess that wage was as little as we could get by with.”

That philosophy has resulted in a situation where countless Walmart associates do not earn enough to meet their basic needs. The company encourages its associates to apply for welfare to bridge the gap, effectively shifting private labor costs to the American taxpaying public. The cost of this corporate welfare has been estimated at a staggering $2.66 billion each year, or about $420,000 per store, according to Thom Hartmann. Rep. Alan Grayson (D-FL) claimed that 80 percent of Walmart workers use food stamps and that “in state after state, the largest group of Medicaid recipients is Walmart workers,” an assertion verified as ‘mostly true’ by the nonpartisan fact check site PolitiFact.

Meanwhile, Walmart, which ranks first on the Fortune 500 list, saw profits that topped $15 billion last year. According to the Daily Kos, Walmart CEO Mike Duke makes more money in one hour than his average employee earns in an entire year. And according to Forbes, four Walmart heirs rank among the top 10 richest people in the United States. Their combined estimated net worth of $107 billion is equivalent to the gross domestic product of Bangladesh, a nation of 150 million people. In fact, the six Walmart heirs are worth as much as the 45 million lowest-earning US workers combined.

Walmart: The High Cost of Low Price— 2005 film directed by Robert Greenwald:

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One Comment

  1. JoeJuly 11, 2013 at 2:37 pmReply

    I would tell Wal-Mart to take their stores and move them to China. They can come to my neck of the woods and take the stores here with them too. Wal-Mart just plain stinks. Lousy service, garbage merchandise, low wages and they deliberately force their prices so low as to put all small competition out of business

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