Unsustainable employment

So the DC City Council passed a bill which would require big box retailers (specifically, WalMart) to pay employees a minimum of $12.50 per hour.  Maybe that sounds like a lot for unskilled labor in your part of the country (it certainly does in Backboro), but DC is an expensive place to live.  Twelve-fifty is hardly enough to support a family of one in DC.  If you're frugal on twelve-fifty and you get 40 hours a week (uncommon at WalMart), you might (might) be able to get by without following WalMart's financial counseling (get a second job, go to food banks, forget health insurance).  But you're not going to eat a lot of meals in our nation's capital's finest restaurants.  Twelve-fifty doesn't go beyond what Karl Marx predicted: employers will pay only enough to allow laborers barely to subsist.  What WalMart is willing to pay doesn't even go that far.

Still, DC Mayor Vincent Gray vetoed the measure, on the basis that it was a job-killer.  Presumably, any job is better than no job, and any retailer (especially one which sells food, DC having a number of urban food deserts within its territory) is better than no retailer.  That sort of presumption makes sense to mid-grade bureaucrats who count beans and bodies; it makes far less sense in the real world.

What Gray apparently fails to grasp is that WalMart is never a net jobs creator.  Neither is it an economic survival plan, even in a city with as many problems as DC has.  WalMart is adept at positioning its stores and "SuperCenters" at locations and times that will allow it to preempt any viable competition.  In (all too common) cases of suburban sprawl, WalMart is famous for grabbing up what will be the prime retail location before the homes which will send shoppers there even exist.  WalMart's very willingness to open multiple locations in DC is testimony to the fact that disposable income in that city is increasing, and that the city's retail market is (or soon will be) significantly underserved.  

Thus, if WalMart were not to step in, soon other retailers would.  The flip side of which reads: if WalMart establishes a major presence, most other retailers will stay away.

Why should it make a difference to DC (or any other city) whether WalMart (or another big box retailer) decides to address an underserved urban area?  What's wrong with celebrating the jobs that WalMart offers to bring?  Very simply, the fact is that big box retailers achieve their retail price advantages, in large part, by economizing on labor costs.  Per dollar of retail sales, they incur less in labor hours.  And per labor hour, they incur less in labor costs (both wages and benefits).  When a big box retailer moves into an established community, the number and financial health of retail workers both decline.  Flipping that, if big box retailers decline to move into a promising retail market, that market will eventually be served by less arithmetically efficient stores.  The number of retail jobs will end up being greater than it would in the big-box scenario.  In addition, the average earnings of each of those retail workers will be greater than it would have been.  More workers, better paid workers, a healthier local economy, a healthier local society.

Which is not to say that efficiency is necessarily a bad thing.  Much of what I do on Greenback's campus focuses on increasing the energy efficiency (decreasing the energy consumption) of our buildings, our transportation systems, our infrastructure in general.  But while energy efficiency is generally a good thing (I can posit scenarios in which it might not be, if not many), labor efficiency is more often a false god.  Taken to its ultimate conclusion, energy efficiency will allow us to operate our whole campus on a single battery which never runs out of power.  Taken to its ultimate conclusion, labor efficiency means that nobody in Backboro ever has any work to do, or any income from doing that work.  One's a utopian vision.  The other, not so much.

I suspect (I may be wrong), that Mayor Gray's decision was influenced as much by the power of large campaign donors (Walmart among them?) as by any real concern for and understanding of the needs of common DC residents (by "common", I mean those who don't work on Capitol Hill or within four blocks of 17th and K) for gainful employment and accessible retail services.  Regardless, the story offers useful practical lessons about the real meaning of socio-economic sustainability.