Opponents Falsely Blame Minimum Wage For Walmart's Decision To Abandon Planned Stores In Low-Income D.C. Neighborhoods
Blog ››› ››› CRAIG HARRINGTON & ALEX MORASH
The Washington Post gave voice to a pair of discredited researchers who falsely blamed Washington, D.C.'s incremental minimum wage increase as the core reason Walmart went back on its deal to build stores in low-income neighborhoods, a claim belied by The Post's own reporting on the retailer's decision to scale back operations at stores across the country and around the globe.
On January 15, The Washington Post reported that Walmart plans to close 269 stores this year, including 115 overseas and 154 in the United States, as it shifts its focus toward online shopping and profitable, established supercenters and grocery stores. As part of this companywide contraction, Walmart will abandon numerous planned stores, including two in low-income neighborhoods in Washington, D.C. According to a separate January 15 Washington Post report, "behind closed doors" Walmart officials are placing some blame for the company's decision to abandon expansion plans on the city's increased minimum wage, but the heart of the problem is high construction costs and a general lack of profitability at "large urban Walmarts." The Post reported that Walmart executive vice president Mike Moore is already concerned about underperformance at the company's three stores in Washington, D.C., and company officials are worried that future stores would fail to generate enough sales.
Despite the complexity of the issue, on January 27, The Washington Post published an op-ed in its local opinion section by right-wing researchers Mark Perry of the American Enterprise Institute (AEI) and Michael Saltsman of the Employment Policies Institute on Walmart's decision to drop two of the five stores it had planned to build in the nation's capital. The writers blamed Walmart's actions almost entirely on the city's decision to enforce an $11.50 per hour minimum wage effective July 1. The authors claimed that it would be "irresponsible" to increase municipal wages to $11.50 per hour and "downright foolish" to consider raising wages to $15 per hour in the future, concluding that "the District should ensure that it leads the region in opportunities created, not opportunities destroyed."
The misleading op-ed came after years of research by economists debunking the claim that raising the minimum wage kills jobs, and The Post gave a platform to biased researchers who had been discredited on this specific issue. Perry has attacked minimum wage increases in Seattle by cherry-picking data to falsely suggest that Seattle lost jobs after it raised its minimum wage. Meanwhile, Saltsman and the Employment Policies Institute are tied to low-wage industries that actively lobby against raising the minimum wage.
The assertion that Walmart is abandoning expansion plans in the nation's capital as a result of minimum wage increases falls apart once you consider that the company has already committed to raising nationwide wages for most of its associates to at least $10 per hour in 2016, and once you account for the fact that it is closing stores in cities and states around the country that have lower minimum wages and costs of living than the District does. According to The Washington Post's own reporting on January 31, Walmart is closing stores as part of a national consolidation plan and D.C.'s deputy mayor of economic development told The Post that Walmart's cancellation of planned stores in the city is not "a cost issue" but instead reflects the company's decision to begin "paring down urban markets" where stores are less profitable.
In addition to Walmart's global store contraction, and its concerns about slagging sales at existing D.C. supercenters, there is also some question as to whether the company was ever truly committed to bringing the low-income neighborhood stores online.
Initially, Walmart had approached city officials about building stores in the District, and the city agreed to let Walmart build three stores almost anywhere it wanted as long as the retailer also built two stores east of the Anacostia River, in one of the poorest areas of the city where job opportunities and affordable retail products are in short supply. After Walmart built the stores it wanted in gentrifying neighborhoods, the retailer announced it would not build the two stores the city government wanted in low-income communities. On January 19, Washington Post columnist Courtland Milloy wrote that the "bait-and-switch that Walmart just pulled off in the District has to rank among the sleaziest ever played," and noted that it is poor residents of color who got "burned."