Walmart Won’t Open Stores due to Minimum Wage Concerns

Walmart has announced that plans to open two new stores in the Washington, D.C. area have been shuttered because of a variety of factors, including the city’s rising minimum wage according to The Washington Post.

On Friday, the Arkansas-based retailer had broke a promise it made to build stores in the poorer neighborhoods of Washington, which was said to be key in order for Walmart to operate. The city even set aside $90 million to make a viable area surrounding one of the proposed store. The retailer also cited the poor performance of three D.C. area stores that opened over the past years, as well as higher costs for new projects.

This decision has angered lawmakers like D.C.’s Mayor Muriel E. Bowser (D), who proclaimed she was “blood mad.”

“Honestly, this is a shame,” said Christine Rousselle, a writer for the website Town Hall, who believes that having a job that pays a low wage is better than not having one. “The two locations would have created hundreds of jobs in an area that desperately needs them.”

Rousselle continued, “Additionally, the presence of a supercenter (which carries grocery items) would have put a low-cost grocery store smack in the middle of a food desert.”

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The initial deal would have allowed Walmart to build stores anywhere they wished in Washington, as long as two stores were opened in the poorest wards of the city and areas known as “food deserts,” where residents have little to no options to buy groceries. This was described as a “symbolic victory” because the retailer believed that poor customers benefit from having low-priced goods available.

However, labor unions and the D.C. Council were less than pleased to have a Walmart in their city because of the retailer’s reputation for paying its workers low wages and not allowing them to unionize.

This is part of Walmart’s plan by the end of this month, to close 269 stores, including 154 in the U.S., according to Business Insider. Some of the closures include all of the chain’s Walmart Express concept, as well as stores in Brazil and Puerto Rico.

Tim Worstall, a contributor to Forbes, noted in a piece titled “DC’s Minimum Wage Really Does Cost Jobs At Walmart,” that government should not induce price fixing on the market and that the “correct” minimum wage is $0 per hour.

“Yep, I’m sorry, but it really is true. Higher minimum wages mean fewer jobs as companies that would have expanded do not,” said Worstall. “Note again that not only do the workers not gain those higher wages the consumers also lose out on their benefits.”

Washington, D.C. wasn’t the only city to be affected by a rash closing of a Walmart store. In Oakland, Calif., it was reported by the website San Francisco First, that a Walmart location near the Oakland Airport closed supposedly because of the city’s higher minimum wage. Oakland’s minimum wage is $12.55, compared to California’s rate of $10.

“The decision to shutter the stores does not appear to be because they are under-performing,” said Jay Barmann. “It’s telling that the company is not closing its two stores in nearby San Leandro, where there is no local minimum wage mandate that supersedes the state’s.”

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Barmann also notes that Walmart’s bottom line would be different in Oakland compared to nine states including Georgia and Arkansas that the use the federal minimum wage of $7.25 or do not mandate a minimum of their own.

“Our focus is on supporting the company’s Oakland employees as Walmart works to relocate them to one of their four remaining stores within 15 miles of the Edgewater site, or provides severance,” said Libby Schaaf, the mayor of Oakland.

As talks about raising the minimum wage have been discussed from New York to Oregon, one has to wonder if other chain stores will follow Walmart’s lead in closing stores due to increasing minimum wages.

(Photo by Joe Raedle/Getty Images)