Wal-Mart Won’t Open 3 D.C. Stores Due to Wage Law

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July 11 (Bloomberg) -- Columbia University Professor Dorian Warren discusses Wal-Mart's plans to abandon opening stores in Washington D.C. with Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)

This is "market makers." i'm sara eisen here with.

Here is a quote for you -- not whether walmart comes or stays, the question is a living wage.

That was a d.c. councilmen explaining why the city council yesterday passed a law that would require walmart to pay employees 50% more than the minimum wage.

A huge deal.

Culmination of a three-year battle between walmart, the world's largest retailer, and activist in the nations capital.

Unless the see mayor gray vetoes the bill, walmart says it will cancel plans to open three stores in washington and might stop construction all wordy -- already underway in three more.

A labor expert who has been he walmart is a professor at columbia university.

With us from chicago.

Dorian, great that you are from chicago because this battle has played there before.

It played out here first in 2006 when the chicago city council passed a similar bill.

At the time it was $10 an hour.

They got former mayor richard daley to veto the bill successfully, his first and only veto in 22 years in office.

I think we will see something similar in d.c.. i think the mayor will ultimately veto the bill because he is not going to take the risk that walmart won't continue to come in expand.

Wal-mart has threatened that and it said it will cancel plans to build three out of the six stores that had planted the area.

If you -- do you think of the bill gets passed and the mayor signs off that walmart will follow through?

If the mayor signs off, i honestly don't think walmart will stop construction.

They may do it for a few months but ultimately they have to keep expanding into the urban market -- urban market.

What walmart claims, it says the average hourly wage is 12 point $79, but the bill is 12 point $50. it is not as if walmart is not already paying that, at least what they say the were paying.

I do not think it is alternately something that will prevent walmart from coming into washington or other cities that might take similar action.

I think that is the big worry of walmart.

A worry if the see let's this bill stand other cities will try to replicated around the country where where it is seeking access to the market.

If you are right and walmart truly worried, why doesn't he take the risk and stand up to walmart and at the very least see what happens?

We will see.

It is competition between constituent voice and economic development.

Often those things collide in cities like dc.

At this point, it is in the mayor's hands.

He has to either call walmart's bluff or he has to and sure without any problems that walmart economic development expansion continues.

It is really not just targeting walmart but other major retailers.

Have we heard from any of them and what the impact might be?

We haven't yet.

Although in the chicago case in 2006, we heard a lot from target and home depot.

I would imagine that similar to the way they engaged in the fight in chicago, they will jump into the fray and washington, d.c. as well to shore up wal- mart's support.

They don't have as many plans to build as walmart does, so the stakes are a little less high for them.

But in terms of existing stores, obviously this would greatly affect them because they pay roughly the minimum wage.

Who else would fall into that camp?

What other retailers?

Lows, i would imagine, that would -- that would fit the criteria.

They generate more than a billion dollars in sales -- you just about covered it.

Between walmart, lowe's, home depot, target, it is clearly aimed at the big box retailers.

Those are the stores that would only be affected.

Also, there is another element of this bill.

There is a congressional review process and evolved here.

So, there could be congressional action taken depending on what mayor gray does.

Based on your study of this issue and a look at the case, is it fair for walmart and other retailers to have to pay more like this?

This is something that activists are starting to do in lieu of say, a rise in the national minimum wage.

I think they are targeting these big retailers because they appear so profitable.

The walmart ceo has the largest workforce ceo ratio in the fortune 500. he made $11,000 in the first hour of the debate of the bill and most until you that walmart make roughly 18, 19, $20,000. there is a sense that walmart can afford it.

It is a very profitable company.

It may not be fair, frankly, to the entire industry, but there is a sense on the activist part that they have leverage because walmart wants to expand in these areas and they know walmart wants to expand, so they are trying to use their leverage by saying, walmart, you need to pay at least what we consider a living wage if we, to the community.

Looking up wal-mart that would distort the picture olympic.

Sure, it makes a lot of money on nominal net income bases but on a margins than point, retailing at walmart just like any other company is a skinny large and low profitability business.

That is very true.

And if anybody can afford a wage increase, it will be walmart because of the scale of their operations.

It would cost roughly one percent more to consumers where they could pass on the cost and not actually lose any series revenue.

Maybe not at the beginning, but to the point you made earlier, it municipalities around the country follow washington's lead and do what chicago wanted to do, it might have a considerably bigger impact on the bottom line.

That is true.

Now remember also, a year before the chicago fight, walmart did actively engage in a campaign to increase minimum wage.

So, there have been moments when it has been in alliance with some of these groups and with cosco, for instance, embarq -- around it increased in weight standards.

We don't know where walmart stands now in the minimum wage but there were times walmart agrees with the wage increases.

Dorian, you would know better than anybody.

You studied walmart closely as an academic.

Professor at columbia university.

Coming up, a retailer where executives have bagged the ceo for scraps.

Kind of like the corporate version of "the hunger games turco -- "the hunger games turco eddie lambert and sears, coming up.


This text has been automatically generated. It may not be 100% accurate.


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