Walmart has played so much hardball over the decades that it could have its own Major League Baseball franchise. So it’s little surprise that the chain announced today that it will scrap plans for three stores in Washington, D.C., after the city council passed a bill on Wednesday that would force Walmart to pay 50 percent higher starting wages than the retailer pays elsewhere in the US.
Arkansas-based Walmart, which has been touting “The Real Walmart” as it seeks to expand in US cities—was planning to build six stores in the nation’s capital and employ up to 1,800 people as part of its recent push into the very last frontier for the chain: central parts of major northern and eastern cities also including Chicago (where the retailer has been rolling out smaller stores) and New York, where it’s been facing fierce local opposition.
But a chain representative promised in an op-ed published online by the Washington Post that the retailer would abandon plans for three of those stores if a “living wage” bill gained passage by the D.C. council on Wednesday. That passage also might endanger three more stores already under construction in the city.[more]
And that’s exactly what Walmart did. “This was a difficult decision for us—and unfortunate news for most D.C. residents—but the Council has forced our hand,” Walmart spokesman Steven Restivo said, according to Fox News. He said Walmart also would start to review “the legal and financial implications” of the bill’s passage on the three outlets already under construction.
It’s still possible that D.C. Mayor Vincent Gray could veto the bill or Congress could use its sovereignty over the district to stay the council’s hand.
The bill, called the Large Retailer Accountability Act of 2013, was approved by an 8-to-5 vote despite Walmart’s warnings and the objections of the National Retail Federation. The “living wage” bill mandates that retailers with corporate sales of $1 billion or more and operating in spaces 75,000 square feet or larger into paying its employees no less than $12.50 an hour in the district, while the city’s minimum wage is $8.25.
While the bill definitely affects Walmart, the new regulations would also impact Home Depot, Costco and Macy’s, except that a grandfather period and an exception for those with unionized workforces would apply, the Post reported.
While opponents have never been able to force Walmart to recognize unions or to pay the wages they say are necessary to support a household solely from a job at Walmart, the company must play by local rules, even if its opposition to paying higher wages blocks it from entering the big cities it so desires.
The company argues that it would bring a lot of new jobs to a city where the unemployment rate remains at 8.5 percent, nearly one percentage point above the national average. There also would be the expanded availability of reasonably priced goods for urban shoppers at the half-dozen Walmarts, which surely is something Washington politicians want for their constituents.
Alex Barron, a regional general manager for Walmart US, wrote in the Post op-ed piece before the bill passed that the proposed wage requirement “would clearly inject unforeseen costs into the equation that will create an uneven playing field and challenge the fiscal health of our planned D.C. stores.”
Walmart has rarely backed down from a fight, whether it’s defending its reputation in the early days as a small-business killer; or going all the way to the US Supreme Court over alleged discrimation against female employees, in a case it won; or spearheading an alternative response by the US garment industry to Bangladesh factory worker safety, as was revealed this week.
Walmart’s critics have always been just as determined, however, making this stand-off a significant stumbling block to the brand’s expansion in the US.