Fox News disregarded economic evidence to claim that legislation providing a living wage in Washington, D.C. would deprive the city of jobs and keep workers in poverty, and defended Walmart after the company declared it would nix plans for locating new stores in Washington should the living wage bill pass.
The Washington, D.C. City Council recently proposed and passed legislation that would require retail outlets with a parent company yielding $1 billion or more in annual revenue to pay a living wage of $12.50 per hour to workers. In a July 9 op-ed in the Washington Post, regional general manager for Walmart U.S. Alex Barron claimed that the legislation would require the company to cancel plans to build three new stores in the district and potentially jeopardize the survival of three existing locations.
On the July 10 edition of Your World, Fox Business personalities Charles Payne and Elizabeth MacDonald quickly came to Walmart's defense. MacDonald claimed, "Walmart brings economic development time and again, we've seen that, they bring other stores that create jobs in the area."
Payne responded by claiming that the City Council was doing a disservice to the poor, and that implementing the living wage legislation would deprive them of job opportunities.
MacDonald's and Payne's assertions about Walmart's positive economic influence are in direct contrast to evidence.
A study conducted by economists David Neumark, Junfu Zhang, and Stephen Cicarella directly disproves MacDonald's theory that Walmart brings new jobs to areas in which stores are located. The authors found that counties with Walmart locations witness a net reduction in retail employment:
The employment results indicate that a Wal-Mart store opening reduces county-level retail employment by about 150 workers, implying that each Wal-Mart worker replaces approximately 1.4 retail workers.
Contrary to Payne's assertion that new Walmart stores would help alleviate poverty, a study by economists Stephan Goetz and Hema Swaminathan found that between 1987 and 1998, counties that had more Walmart locations experienced greater increases in poverty rates during the 1990s.
Research, however, does indicate that raising the minimum wage for large retailers has a significant positive impact on low-income workers.
Studying the impacts of the hypothetical scenario of Walmart offering its employees a $10 minimum wage, researchers at the UC Berkeley Center for Labor Research and Education found that:
Those earning between $8 and $10 an hour would receive an 11 percent wage average increase. In dollar amounts, the wage increase to $10 per hour would result in $2,310 to $4,640 average annual pay increases for workers with wages below $8 an hour, and $1,020 to $1,960 average pay increase for workers with wages between $8 and $10 an hour.
Furthermore, economists have noted that raising the minimum wage has little to no negative impact on employment rates or business activity, and it increases worker productivity.