Washington, DC’s, Lesson in Unintended Consequences

Walmart recently announced plans to close 154 of its U.S. locations by the end of the month.  Among the list of closures are stores in high-minimum wage markets including Long Beach, Los Angeles, Oakland, and San Jose. But just as notable as the locations the retailer is closing are the two locations it chose not to open in Washington, DC.

Walmart officials cited the District’s poor business environment as the impetus for backing out of building two more stores in the city.

He said the company cited the District’s rising minimum wage, now at $11.50 an hour and possibly going to $15 an hour if a proposed ballot measure is successful in November. He also said a proposal for legislation requiring D.C. employers to pay into a fund for family and medical leave for employees, and another effort to require a minimum amount of hours for hourly workers were compounding costs and concerns for the retailer.

Some councilmembers and left-of-center pundits were quick to criticize the company, but the Post’s editorial board had a more thoughtful response:

It might be more fruitful for them to do some soul-searching about whether they have undermined their own efforts to attract business development. Why have the three Walmart stores underperformed? Has the District created an unstable business environment in which employee pay, benefits and work conditions are decided by popular whim, with little regard for the realities of the business world? Instead of being outraged or trying to affix blame, city officials need to look ahead to determine what steps need to be taken to get development back on track, especially for neighborhoods most in need.

Indeed. Though Walmart may be the most recent and recognizable company to react to dramatic minimum wage increases, it is not alone. From the apparel manufacturer Five Thread Factory in Los Angeles to Longway’s Diner in upstate New York, companies across the country have been forced to cut hours, cut jobs, and even relocate in an effort to offset sizable increases in labor costs while keeping prices in check. (More stories are available at Facesof15.com).

While policymakers are patting themselves on the back for raising the minimum wage, they’ve left shuttered businesses and a lost generation of out-of-work jobseekers in their wake.