poor Walmart. Its plans for big stores in the Washington, D.C., area
have been changed and it will not build two of the supercenters it
planned for the nation’s capital because of the higher minimum
wage that could become law next November.
minimum wage in the city is now $11.50 an hour and there is a
proposition on this year’s ballot that would raise it to $15 an
hour. The $15 an hour wage is a very popular issue around the
country and it is likely to pass. So, what’s one of the
richest companies in the world to complain about? Well, the
company’s business model is at stake. The model is simple: pay
the lowest wages and get the retail products from the companies that
have the cheapest prices, thus returning the highest profit margins.
of the Walton family and their army of lawyers, accountants, and
economists must be scrambling to maintain their cash flow, arguably
the greatest among retailers in the world. This is the family
business that started small in Bentonville, Arkansas, and grew at a
phenomenal rate, until it dominated the “retail industry”
in the U.S. In its early years, it touted its “U.S.A.-made”
products. About three decades ago, it discovered China and its
command economy. Now, there was a country that kept its workers in
line, kept the wages low enough to truly be starvation wages, and it
could deliver the goods on time.
workers were paid a small fraction of what American workers doing the
same work would be earning, even when the minimum wage in the U.S.
was very low. That’s when Walmart started being one of the
best customers of China. It was strange: An icon of capitalism and
one of the last communist-directed economies sharing a fiscal bed.
Even at that, Walmart’s model cannot make it, if wage laws are
raised toward a living wage, as they are beginning to do in
individual cities and several states.
model is to squeeze the last penny out of any local economy and they
have done it by finishing off the small businesses, wherever they
decide to put one of their stores or supercenters. But a new day
seems to be dawning for the biggest retailer on earth.
was something that even Sam Walton might not have envisioned, as he
spread his business philosophy across the U.S. It was a movement by
low-wage workers from coast to coast to improve their sweated lives,
by doing one simple thing (to start): Raise the minimum wage that
has stagnated for at least three decades, just as middle income wages
have stagnated. This movement is raising the minimum over the next
few years, to the point that those workers in retail, fast food, and
service jobs will be able to pay some of their bills and support
their families without the constant fear of eviction or a skipped
meal every day, especially for their children.
only has Walmart announced that it would not open the two big stores
in the D.C. area, because of the higher minimum wage, but it has just
announced that it is closing a few hundred stores worldwide, with
about 160 of the closings in the U.S. It happens, though, that the
stores that are being closed in the U.S. are the smaller version of
its model, the Walmart Express. These are stores that just a few
short years ago were opened to fill in the gap where a larger Walmart
was not close to a community or neighborhood. As recently as four
years ago, company officials said that they were quite satisfied with
the way the Express stores were doing.
2016, however, and the giant chain has announced the closing of
stores, most of them of the Express variety. And, while a Forbes
magazine blogger, Tim Worstall, took the opportunity of the D.C.
announcement to say that the stores would not be opening just because
of the increased minimum wage. On Jan. 16, Worstall wrote: “Those
higher wages thus leading to a consumer loss and also no appearance
of the new jobs which the stores would have brought. Which is as some
of us have been saying all along: higher minimum wages lead to fewer
solution? Worstall claims that the minimum wage should be $0.00 per
hour and let the “free market” be the judge of what the
wages should be. He of course is totally ignorant of the history of
his country and the times when private armies were summoned by the
“captains of industry” to put down demonstrations by
workers and stop any effort by workers to form unions, traditionally
the only way that the business and economic playing field is rendered
more or less level. He’s also totally ignorant of the time in
America when the minimum wage actually was $0.00 per hour. It was
called chattel slavery and the nation is still trying to get out from
under the devastating aftermath of slavery and Jim Crow and the New
Jim Crow. He apparently doesn’t realize that such a condition
did not work out too well for the country or, especially, the people.
is very interesting is to look at a map of the U.S. and the places
where Walmart is closing its Express stores. The closures are
concentrated in the South and lower Midwest, just the places where
the wages are lowest and the hostility toward workers’
unionization is the highest in the nation. In fact, those regions
seem to be the locus of the overwhelming majority of the stores that
will be closed. The idea of smaller Walmarts was one of the shortest
and most expensive experiments that the company has had.
Forbes blogger, however, celebrated low wages and said of the D.C.
announcement, “It is, obviously, always nice to see the biter
bit, someone hoist on their own petard. But the people who will lose
out from this are the consumers of those poorer areas of the capital.
And the reason they’ll lose out is because the politicians have
been loading costs onto Walmart by insisting upon higher wages in
several different ways.” Again, poor Walmart. The retailer
that has eliminated untold numbers of small businesses everywhere has
been “loaded” with costs put on them by politicians.
hard to feel sorry for the Waltons, though, since their money has
been largely made by catering to those with small incomes and
employing many of those same workers at starvation wages. When it
reached the peak of its power, it could, and did, dictate to its
suppliers what they would be willing to pay for any given product and
it is known that they routinely forced suppliers and contractors to
produce goods at such low prices that it required the suppliers and
contractors to keep their labor costs down to the poverty level or
has not been good for either the workers in a given community or the
consumers, who have been forced to buy goods (often shoddy) made in
China under the worst conditions, and that, too, has been the subject
of scrutiny of American and international organizations supporting
workers’ rights and human rights, in general.
in Washington, D.C., who negotiated and stumped for the Walmart
stores in or near that city, also arranged an expenditure of $90
million to make the area around one of the stores “viable,”
according to Worstall. What is astounding is that a city would plan
urban development and decent living conditions around a Walmart
store, but that is apparently what it did. Now, that money will
presumably disappear into the urban sinkhole, but imagine what $90
million would do if it were distributed in small loans for any number
of small businesses, professional offices, and housing in the same
corporations in the U.S. are seen as the saviors of local economies
and local politicians and other officials see them as the answer to
so many economic and social problems. Just lure a big company to an
area with tax incentives, grants, and reconstruction of the
neighborhood (at public expense), so the story goes, and they will
take care of everything. If it ever works, it works for a short time
and then, they’re gone, without ever fulfilling the promise of
jobs and returning stability to the community. The people who live
in the community always provide the stability. Corporations do not.
we mentioned that Walmart is closing its stores in some of the most
depressed regions of the country? They are called, in the political
vernacular, “red states,” that is, conservative or
Republican. They are places where the annual income is lowest, the
schools are wanting of everything, health care is hard to come by,
and jobs are even harder to find. They are the most anti-union areas
and the minimum wages are lowest. These are the very people from
whom Walmart makes its billions every quarter. That the company
cannot make it in those places gives the lie to Worstall, Forbes
magazine, and Walmart, itself, that they are good for workers,
consumers, and communities.
are good for none of these. However, the closures by Walmart are a
sign that the days of grinding exploitation of workers, consumers,
and communities everywhere are coming to an end. Their store
closings in the very regions where they made their first billions
tell us clearly that there is a limit to growth of an economic
monster that has taken pretty much the last few cents of its
customers and they are scrambling to find a way to keep doing what
they do best. They would do well to remember the old saw in populist
economics: “Everybody does well, when everybody does well.”