Five years ago, Mayor Adrian M. Fenty tried to convince Wal-Mart that the District was a vastly underserved retail desert, a bonanza of pent-up spending just waiting to be tapped. Wal-Mart executives sniffed around and demurred.
Finally, Mayor Vincent C. Gray took on the recruiting portfolio just as Wal-Mart’s growth at its traditional suburban and exurban outlets was flattening and the company was trying out a new, smaller model of stores in inner cities. In 2011, the numbers and timing finally clicked for Washington: Wal-Mart committed to building its first stores in the city.
Now, as the D.C. Council moves toward a final vote Wednesday on a measure that would force Wal-Mart to pay workers at least $12.50 an hour — a substantial premium over the city’s $8.25 minimum wage — the retailer is crying foul, protesting that it made the six-store deal based on current business conditions with no expectation that those conditions might change dramatically before the first store opens.
But a review of the District’s decade-long quest to attract Wal-Mart shows that wages were rarely, if ever, the prime issue in its negotiations with politicians, developers, community activists and neighborhood residents.
Wal-Mart executives and lobbyists have repeatedly assured D.C. leaders that the company intends to pay its workers in the city at least as much as the council’s “living wage” legislation would force them to — and possibly more.
More than a year ago, a senior Wal-Mart executive, Tony Waller, told a group of D.C. clergymen that the company would pay District employees a starting salary higher than the amount now proposed by the D.C. Council, according to two people who were at the meeting.
Promise of $13 an hour
“They promised they were going to start people at $13 an hour, and they said that over and over and over,” said the Rev. Graylan Hagler, senior pastor at Plymouth Congregational Church in Northeast Washington.
Wal-Mart spokesman Steven Restivo confirmed that the company plans to pay D.C. workers at least what it says it now pays full-time employees in suburban Virginia — an average of $12.39 an hour. He nonetheless called the council’s initiative an unfair bait-and-switch tactic.
“We were just operating under the assumption that the city’s minimum wage would remain in place,” he said. “It seems like some members of the council are interested in moving the goal posts at the eleventh hour.”
Restivo said the retailer’s decision to open in the District was based on “current market conditions, wage rates, the cost of doing business and the price of real estate, and we had no reason to believe that any of those business conditions were going to be changed.”
But if the salary the District wants to set as a floor for Wal-Mart and other large nonunion retailers is the same as what the company proposes to pay, does that constitute a change in business conditions?
Wal-Mart says it does. In recent meetings with council members and business leaders, Wal-Mart lobbyists have been specific: They say the legislation is an effort by politicians sympathetic to labor unions to protect unionized businesses by making life harder on nonunion retailers, including Wal-Mart.
The author of the living-wage bill, Chairman Phil Mendelson (D), says no bait-and-switch was intended. “That’s good rhetoric, but it’s unfounded,” he said. “That suggests that we can never change any regulation.”
Like any large, controversial institution, Wal-Mart reflects the beliefs of its beholders: Its detractors view it as a community-killing behemoth that pushes out local retailers, homogenizes American life and keeps workers on the edge of poverty. Its supporters view it as a convenient purveyor of low-cost goods that brings much-needed jobs to communities, stretches tight family food budgets and reduces the need to travel great distances to find bargains.
Half a century into its rise to merchandising dominance, it has no store within nine miles of downtown Washington. That’s partly because until recently, the company focused on large suburban sites surrounded by vast parking lots.
But even after Wal-Mart started moving into urban areas, it remained leery of the District.
More than a decade ago, Wal-Mart executives expressed interest in downtown’s City Center development, the former convention center site, now nearing completion as an office and retail complex. But District officials told Wal-Mart that the site was intended for more-upscale development.
“When we talked about specific sites, they were concerned about the demographics. They were concerned about the crime statistics in the neighborhood,” said Michael Stevens, who headed the D.C. Economic Partnership in the Williams administration.
Wages were not among the major concerns the company raised.
Restivo pointed to a 2011 corporate statement in which Wal-Mart agreed to build stores in the city, hire D.C. residents for the majority of its positions and give about a third of its construction business to local minority-owned firms — all “subject and contingent upon business conditions that will continue.”
Restivo would not comment on whether Wal-Mart would cancel any stores if the wage bill becomes law.
‘Every reason to be here’
Critics of the company said any such talk is bluster. Wal-Mart “just doesn’t like being told what to do,” said Mike Wilson, organizer of Respect DC, a coalition of local groups that has rallied residents to press for more concessions from Wal-Mart. “They have every reason to be here, and they’re not going to go away over something like this.”
Mendelson said the legislative move is aimed at the city’s largest businesses — seven companies have stores big enough to be affected, including Best Buy, Costco, Target and Neiman Marcus — because “this was meant to get at economic power: A company as large as Costco or Home Depot or Whole Foods has the ability to drive down wages in a market because they are so large.”
The bill excludes union shops because, “presumably, those companies have negotiated compensation with the workers, and it’s part of a package that’s agreed to,” Mendelson said.
But council member Muriel Bowser (D-Ward 4), who voted against the measure, says changing the rules now would send an unfriendly message.
“It will affect our ability to attract retail to the areas that most need it,” said Bowser, who is running for mayor. “I don’t want us to legislate because of our feelings about one particular company.”
Hagler, however, countered that the city has leverage it can use to protect working-class residents from the retailers’ low-wage business model. “We need to stop acting like a battered spouse, where our self-esteem as a city is so low that we think we have to give everything away to get anyone to come here,” the pastor said.
Wal-Mart has fought development battles across the country, especially as academic studies and critics from the left and right have contended that a new Wal-Mart store sucks life out of small local retailers.
But that argument never won much traction in the District, largely because most neighborhoods where Wal-Mart plans to open have struggled for years to attract retailers.
“We have now spent more than two years attending hundreds of community meetings,” Restivo said. “The more people heard about us, the more they liked us. We are bringing more jobs and lower prices.”
Wal-Mart lobbyists said they are still working on council members, hoping to get enough to change their minds to kill the living-wage bill. But Hagler said he and other proponents of the measure have been lobbying hard in the other direction and think the bill may pass by a stronger margin than the 8 to 5 preliminary vote.
Both sides also say they think Gray may help them out by vetoing the measure or letting it become law. Gray has said only that he is working to improve the bill.
Asked whether he thought Gray would exercise his veto, Mendelson said, “No.” Asked whether he had gotten that directly from the mayor, Mendelson said, “I think I’ll just stick with my answer.”