It’s high drama and riveting politics these days as Wal-Mart Stores Inc., the nation’s most thoroughly red-state retailer, charges deep into blue-state territory in its efforts to expand beyond its comfortably established realm in rural America and suburbia by moving into the often hostile territory of inner cities.
Wal-Mart is causing a suspenseful split and high tensions between Democratic leaders in its latest battleground of the District of Columbia, pursuing a polarizing battle plan that succeeded before. The company is forcing the city to “take it or leave it” by threatening to pull up stakes and not build as many as six stores in the most hard-strapped areas of the city if it is required to pay a special elevated minimum wage under a bill passed by the city council. D.C. Mayor Vincent C. Gray is considering defying a solid majority of the city council with a veto of the bill.
It’s a playbook that served the Arkansas-based behemoth well in Chicago, where the pioneering retailer — still the world’s largest and by far the biggest employer in the United States — won a standoff in 2006 with powerful labor unions and their allies and succeeded in building nine stores unencumbered by such wage legislation. Richard Daley, Chicago’s mayor at the time, vetoed a “living wage” bill passed by the council similar to the one in the District, enabling the retailer to start wages a little more than $8 an hour rather than the $12 mandated by the legislation.
“It’s true Wal-Mart offers some entry-level jobs, but we’re proud of that,” Wal-Mart spokesman Steve Restivo said in a typically feisty response to liberal criticism of the company’s jobs starting near minimum wage. He said the jobs are particularly valuable in inner-cities where unemployment is often at double-digit levels and many young people have never held jobs.
Wal-Mart jobs “are a foothold into the workforce and open doors of possibility” for such people, he said.
As the battleground moves from city to city, Wal-Mart’s urban push also has highlighted a rift between the Democratic Party’s labor union supporters and their allies on the city council, and the often more pragmatic chief executives who put a greater priority on bringing much-needed jobs and retail development to the cities’ hard-hit inner cores.
The District’s battle could be a bellwether for the country, as it coincides with a renewed push by President Obama and congressional Democrats to raise the federal minimum wage to $10 an hour from the current $7.25. Democrats at all levels are seeking to tap into widespread public discontent over the severely depressed state of American wages since the recession. With jobs still scarce, average hourly earnings have been growing at less than 2 percent since 2009, the worst performance during any economic recovery.
Pressure for higher wages
The outcome of the D.C. battle will provide insight into whether mega-retailers such as Wal-Mart can continue to stand up to the growing pressures for higher wages, especially as they seek to penetrate further into the nation’s overwhelmingly Democratic urban core. Wal-Mart has received backing from the U.S. Chamber of Commerce, the National Retail Federation and other major business groups, and even some rivals such as Target Corp.
The pragmatists in Mr. Gray’s administration and elsewhere, who argue that the need for jobs and development in the District’s depressed wards is more pressing than winning a symbolic victory over Wal-Mart, appear to have the upper hand. They also appear to have the backing of at least some businesses watching the battle of wills.
“In this area, Wal-Mart will bring a lot more traffic and public visibility that it has never had before” said Robert Cabeca, the owner of Chocolate Crust, a new bakery across the street from a Wal-Mart store under construction on Georgia Avenue Northwest. Low-priced “dollar stores” might feel the heat of competition, he said, but “for us it should increase customers. Having more people in the neighborhood cannot be a bad thing for us.”
Donald Blue, a manager at a nearby Rite Aid Pharmacy, said Wal-Mart would be “good for the District” and create a lot of jobs.
“I don’t like the fact that they don’t want to pay a lot of money to employees” and “it’s going to hurt a lot of mom-and-pop stores,” he said. But for larger chains such as Rite Aid, “we are going to be all right.”
The overall welcoming attitude hasn’t stopped the Democratic Party’s left wing from intensifying attacks on the big-box store. Liberals say it is because the retailer is so large and influential that the left has targeted it for numerous actions over the years, including strikes, protests, critical ad campaigns and legislation aimed at forcing Wal-Mart to pay higher wages and benefits.
“If we can change Wal-Mart, we can change the country,” said Andrea Dehlendorf from Making Change at Wal-Mart, a labor-backed group that pushed for a nationwide strike by the chain’s workers last year on Black Friday, traditionally the biggest shopping day of the year. The group claimed it was joined by about 30,000 of the company’s 1.3 million U.S. employees in the first-ever jobs action against the company.