The argument that if a company doesn’t get its way, X number of jobs will disappear is an old canard seen time and again in retail development fights. It’s usually swallowed uncritically by the press.
And it is in this column by Fortune’s Nina Easton.
Walmart is trying to open six stores in Washington, DC, and has been spreading millions around, awfully successfully, to grease its entry into the District. But the DC city council now has passed a law aimed at Walmart that would force big-box retailers to pay workers a living wage, which it puts at $12.50 an hour.
Walmart says it won’t build the stores if the mayor’s veto is overridden and is threatening to stop development in the District.
Here’s Easton’s headline, framed like Walmart’s PR shop likes it:
Will unions succeed in driving Wal-Mart (and 1,800 jobs) from DC?
The problem here is that retail jobs are a zero-sum game. If Walmart opens six stores, new shoppers aren’t going to magically appear from nowhere to buy from them. Those new stores will suck customers from other retailers in a several-mile radius, causing job losses at those shops, as a 2009 study from Loyola University found in Chicago:
Retail employment levels in Wal-Mart’s own zip code show no significant change, presumably because of the addition of Wal-Mart’s own employees. But retail employment trends in neighboring zip codes show a negative effect after Wal- Mart’s opening…
Overall, the weight of evidence suggests that the Wal-Mart opening on the West Side led to the displacement of a range of businesses. There is no evidence that Wal-Mart sparked any significant net growth in economic activity or employment in the area.
In other words, Walmart’s 1,800 new jobs will likely result in about 1,800 jobs lost elsewhere.
Walmart reality bumps up against Walmart PR in other ways too. The company had been flacking the idea that it pays its full-time employees $12.40 an hour.
Say, what’s an extra ten cents an hour in exchange for six new high sales-per-square-foot locations in an urban area? The truth is, the average hourly pay for the average Walmart worker (including part-timers) is much less than $12.40 an hour. One analyst estimate puts it at $8.81.
Then there’s Easton’s lede:
Tug on the stem of any anti-corporate protest these days and you’re likely to find the same root—unions more attuned to their own self-interest than the futures of low-income workers.
The jujitsu there is something to behold: Low-income workers’ interests are more aligned with megacorporations like Walmart that pay them as little as they can get by with and assign them loopy hours than they are with the unions whose reason for being is to raise workers’ pay and improve their working conditions?
Come on.
Contra Easton, it’s the few wobbly remnants of the unions that are trying to prop up wages sent into the ground by the likes of Walmart, which she euphemizes as a simple “nonunion shop” when it’s one of the most aggressive union-busters in history.
But her faulty premise suggests a logical compromise: Let Walmart workers form a union and serve their own self-interest.
I know this might be tough for CJR to envision, but there are these places called suburbs where the Walmarts exist. What you are doing is forcing folks to drive out of the city to shop. The city loses the tax base. You waste gasoline, a cardinal sin on the left. And you keep jobs away from people who live in D.C., which is sort of important to politicians representing that area.
#1 Posted by Dan Gainor, CJR on Fri 12 Jul 2013 at 06:46 PM
How about adding some "reality" and math to your contradictory assertions? You claim that Walmart should be paying 50% more, at least. Let's assume that they would also get 50% more output per employee as a result, unless you think the employees at those current stores are slackers who get paid more while not producing any more. That means that Walmart'd need 50% more workers if they put out of business the existing stores which pay their employees more, as Walmart is paying the workers less. That's a net gain in employment with Walmart, 900 new jobs. :)
As for the unions, I'd think they'd be for more jobs for "low-income workers," rather than raising the pay for a handful and leaving the rest jobless. I'd think they'd be for lower prices for all the low-income workers who shop at Walmart.
Who do you think it is that frequents these stores, high-paid govt bureaucrats? It's low-income workers from all over the area.
As usual, the leftie "logic" breaks down, once you actually do the math.
#2 Posted by Ajay, CJR on Fri 12 Jul 2013 at 10:27 PM
The study Ryan cites admits in its executive summary that it was unable to compare Walmart employment with that of its competitors, in other words, to compare apples to apples. The study was done in 2008, and inroads made by online retailing were starting to matter by then, hitting brick/mortar operations hard. Chicago itself is not exactly a job-creation machine.
An academic study that seeks to criticize Walmart - gee, what a surprise. Next they will be attacking McDonald's. In the real world, as these academics probably are aware, it is middle-and-low income people who benefit from Walmart's cost-containment, freeing up monetary resources for other purposes, not all of them expended at retail outlets. The intelligentsia seems to hate McDonald's for similar reasons - too 'mass', too 'lowest common denominator. Let them eat Chez Panisse!
#3 Posted by Mark Richard, CJR on Tue 16 Jul 2013 at 04:57 PM