Pointing out ideological hypocrisies in Washington, D.C., is like shooting fish in a barrel. Oftentimes, this sport is counterproductive, seeking to dumb down complex policy issues and construct straw men to demolish on talk radio. The currency of both the national immigration debate and the D.C. Council’s push to require big box stores to pay a living wage, however, illuminates a more destructive oxymoronic approach that the GOP currently embraces. The connection isn’t apparent right away—but lend me your reading eyes for but a few minutes, and I promise I’ll show how the concepts are tied together in important ways.
Republican leaders are on record questioning immigration reform because it could potentially allow immigrants to claim public benefits. Their concerns led to a compromise that prevents newly documented Americans from accessing most benefits for ten years. The downright punitive nature of benefit withholding in the Senate bill is one of many aspects that make the bill tough to swallow for progressive Democrats.
One might presume that, in tackling a big issue such as immigration reform, lawmakers would bother to track down some figures. For example, are immigrants actually a drain on our public benefit system? The question might not be as important to people who believe in a solution that simply gets rid of public benefits for everyone, but still . . . facts . . . numbers . . . they are useful. What’s out there on the net cost to public services from the average migrant worker?
The evidence, as with so many big policy questions, is ambiguous. In their fresh International Migration Outlook report, the OECD reports that the impact of immigration is “around zero on average across the OECD countries considered.” (Hey! Zero is a number!) The size and scope of the impact depends on the methods used, and for those interested, the OECD report is a fascinating read. Consider defense spending, for example. Presumably, we won’t be buying anymore laser cannons simply because we have a slightly larger population; however, the laser cannons we do buy will cost each of us slightly less, because we will have more people who joined the ranks of taxpayers.
On the other hand, the question of how much a Walmart costs taxpayers is a little easier for us to wrap our heads around. In 2004, some Berkeley professors tried to do just that, and found that Walmart cost the state $86 million dollars in new public benefits. A Democratic House committee report finds a Walmart to be similarly expensive. In other words, as Harold Meyerson pointed out in the Washington Post, if Republicans want fewer people getting food stamps, they should support efforts for higher wages.
Walmarts aren’t costly just because of their tendency to provide jobs that keep their employees among the working poor. An article published in the Journal of Urban Economics found that every Walmart employee replaces 1.4 employees in local economies. The entry of Walmart into the grocery business may have a particularly deleterious effect on job opportunities for all grocery clerks at other locations.
Many people are probably unaware that United Food and Commercial Workers (UFCW)—one of the nation’s largest and most effective unions—has changed their contract negotiations process over the past decade entirely due to Walmart’s aggressive pursuit of food dollars. (Full disclosure: I would probably be unaware myself if my wife weren’t formerly in the employ of the largest private sector in union-unfriendly Arizona, UFCW Local 99.) Meanwhile, Walmart is notorious for its anti-union activities.
Quite simply, in terms of the workforce, the entrance of Walmart into a geographic location is transformative. It drives out the competition, and in the process it turns medium-wage earners into lower-wage workers eligible for public benefits.
Of course, Walmart has some economic opinions of its own. They make an understandable argument that they will bring many jobs into communities that need them. Their claims should be greeted with skepticism. In 2010, they promised “10,000 associate positions and 2,000 unionized construction jobs” over five years in Chicago, where similar legislation while similar legislation fell to a Daley veto. Three years in, they’re trumpeting the creation of 1,500 jobs—but hey, maybe the next two years will see miracle growth for the chain. Don’t worry, though, Walmart allegedly pledged to pay its workers fifty cents above the minimum wage in exchange for access to new, probably profitable markets.
Don’t get me wrong—1,500 jobs, even minimum wage jobs, would be welcomed in many communities. Underinvestment in poor neighborhoods is a serious issue. But it is a fallacy to think that those jobs need to be minimum (or substandard) wage. One analyst put the cost of a living wage in Walmart at 46 cents per trip for their consumers. Their shoppers are budget conscious, surely, but probably not budget conscious enough to notice that.
Megan McArdle offered a more modest calculation on Black Friday—if Wal Mart cut one percentage point out of their 3 percent margins and gave it directly to workers, their associates would take home about $2,850 more each year. To folks like McArdle, that may not matter much; to someone earning the Washington, D.C., minimum wage of $8.25, it would take 345 hours to earn (before taxes). Even if Walmart did pay the promised $12.39 wage, the return would be significant for workers; $2,850 would be nearly a six-week bonus check in a fantasy world where each employee was scheduled for 30 hours a week.
How, then, does it make sense to deny millions of hard-working families access to the safety net based on listless evidence, while denying that Washington, D.C., has a right to try to stem the rising tide of post-recovery poverty jobs? Especially when Walmart has publicly stated that it would pay employees at its store at least $12.39, only slightly less than the $12.50 proposed by the D.C. bill? As a grad student frequently buried in statistics homework, it makes me think that the store doth protest too much—note that Walmart cites a $12.39 average pay at their nearby stores, not a $12.39 starting or attainable for the average worker pay. Indeed, reports indicate that the figure excludes part-time workers while including some departmental managers.
The D.C. legislation presents a potential new experiment in protecting communities from big companies that refuse to share their profits. In addition to Chicago, an attempt in Maryland to get more money for Medicaid from large retailers failed. Let’s hope that evidence that each Walmart costs taxpayers—and, hey, maybe the fact that a higher minimum wage hasn’t hurt employment in San Francisco or Santa Fe—will carry the day over poorly grounded ideology.