The elephant on the doorstep: What Wal-Mart’s arrival will mean to D.C.
After Wal-Mart announced late last year that it had decided on four sites for its first stores in the District, it was no surprise to see unions and advocates for the working class crying foul. Opponents enlisted the help of local businesses and formed grass-roots organizations to hold film screenings, rallies and marches. One group collected 1,200 petition signatures opposing the chain’s plans, and last week a protester carried a plastic bag filled with yellow ping-pong balls painted with upside down smiley faces — a mockery of the chain’s happy face logo — into the chambers of the D.C. Council to bring attention to local Wal-Mart opposition.
But for the most part the complaints have come in pockets and parcels, not by tidal wave. Many poor people and other longtime residents of the city want to have neighborhood Wal-Marts because they like shopping there. In fact, some District churches organize bus trips for members to visit Wal-Mart stores in the suburbs.
The company says that the four stores it plans would create 1,200 jobs at a time when Mayor Vincent C. Gray (D) and city officials are struggling to find work for members of the city’s unskilled population. But some studies suggest that Wal-Mart’s growth has led to a comparable or even greater loss of jobs and an overall reduction in the wages of retail workers in a given market.
The research has provoked a battle in Chicago, another target for Wal-Mart expansion. Last year, Loyola University Chicago and the University of Illinois at Chicago published a study that found a Chicago Wal-Mart that opened in 2006 created hundreds of jobs but also led to the loss of about 300.
A Chicago Sun-Times editorial, however, said the study “just doesn’t add up,” and Wal-Mart officials have moved aggressively to discredit it, commissioning their own study and video suggesting that the store led to the creation of more than 400 net new jobs.
Local researchers are paying closer attention to the chain since it announced plans to open on their doorstep.
“There’s little empirical evidence of the side of the argument that Wal-Mart, Starbucks and other big employers have the effect of a net loss of jobs” when they open new stores, said Doug Guthrie, dean of the George Washington University School of Business. Guthrie, who is providing informal advice to Gray’s administration on how to address the city’s high unemployment rate, said there may be negative ancillary effects of Wal-Mart’s assault on labor unions but that the city is in “desperate need” of jobs for its residents who are not qualified for many office positions, reflecting a national loss of blue-collar jobs.
“We just are in a situation in which we need low-skill jobs,” Guthrie said. “With the loss of manufacturing in this country you need employment across the board.”
Wages are another point of contention. Other studies suggest that the opening of Wal-Mart stores leads to an overall reduction in wages of retail workers, research that the company has strongly disputed.
A 2007 study by the Center for Labor Research and Education at the University of California at Berkeley concluded that one new Wal-Mart store lowered overall retail wages in a county by as much as 0.9 percent, said center chairman Ken Jacobs. Wages of workers in merchandise dropped by 1 percent and those in grocery stores fell 1.5 percent.
“As Wal-Mart has expanded, retail wages have gone down,” Jacobs said. Part of the reason is “that other firms reduce wages to compete.”
The median wage for retail workers in the District is $10.97, according to the Bureau of Labor Statistics.
“The jobs we will create will be mostly full-time and offer competitive wages, affordable benefits and the chance to build a career,” said Wal-Mart spokesman Steven Restivo in an e-mail about the planned D.C. stores. “We’re confident that the starting wages at our recently opened store in Alexandria already exceed those offered by unionized grocers in the city and we’re always looking for ways to help our associates grow into positions of management.”
Martha Ross, who studies the city’s workforce as deputy director of Greater Washington Research at the Brookings Institution, said Wal-Mart’s immediate effect on jobs and wages was unlikely to be dramatic. “It’s possible that over time, Wal-Mart’s presence will act to keep retail wages low, since it appears to be part of their business plan to pay low wages,” Ross wrote in an e-mail. Because Wal-Mart isn’t unionized, she explained, Wal-Mart’s level of pay could over time dilute the control of food worker unions whose members work at Safeway and Giant stores, driving down their wages. But in that regard, she pointed out, Wal-Mart would be joining the ranks of Whole Food Market and Target, whose stores are also not unionized.
Wal-Mart appears to have improved its reputation locally before making its entrance. Although Wal-Mart, in a Supreme Court case, faces accusations of widespread discrimination against its female employees, the company’s recent willingness to adopt environmentally sustainable practices, vary its urban store designs and provide millions of dollars in local charitable contributions have made it more palatable to locals.
Leigh Riddick, associate professor of finance and real estate at American University, said she appreciated the fact that the chain planned stores in areas of the city with few other shopping options.
“They’ve clearly made a decision to change their business model to enter urban areas,” she said. “Ten years ago if we were having this conversation I would have a different opinion, even five years ago. But they are really a different company in a lot of ways than they used to be.”
With its first D.C. stores, Wal-Mart plans to make groceries a hefty portion of its offerings, bringing produce and healthy foods to neighborhoods where they are for the most part not currently available, aligning with local community development efforts.
“We do know that there are places in D.C. that are not well served in terms of retail options, particularly supermarkets, so if Wal-Mart can come in and fulfill those services, then that’s important,” said Peter Tatian, a senior research associate in the Urban Institute’s Metropolitan Housing and Communities Policy Center.