Fortune’s Nina Easton plumps for Walmart in DC

Retail employment is a zero-sum game

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.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,