Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Will Wal-Mart Stores, Inc. (WMT)’s Bite Be Sharper Than D.C.’s Bark?

Page 1 of 2

When you lie down with dogs, you get fleas. For the past decade Wal-Mart Stores, Inc. (NYSE:WMT) has been greasing the skids for its entrance into the Washington, D.C., market by lavishing local charities and politicians with cash and lobbyists. According to The Washington Post, the discount retailer donated as much as $3.8 million to local food banks while a lobbyist has been kept on a $10,000-a-month retainer to caress and massage the pols. Forbes notes that Wal-Mart held photo ops with First Lady Michelle Obama and sponsored African-American cultural tours to play to local community leaders.

Wal-Mart Stores, Inc. (NYSE:WMT)

Wal-Mart had big plans for the D.C. area, doubling the number of stores to six it planned to open, thereby increasing the number of jobs it would provide the city from 1,200 to 1,800. And the District needs it. It has an unemployment rate a full percentage point higher than the national average, more than one-fifth the population is below the poverty level, and almost 11% of its residents have income below 50% of the poverty level.

But what has Wal-Mart Stores, Inc. (NYSE:WMT) gotten in return for its largesse and having the audacity of wanting to provide jobs, food, and clothing to the district’s residents? Politicians just passed legislation to require Wal-Mart to pay a so-called “living wage” of $12.50 an hour, 50% more than the city’s current minimum wage. Although the legislation is couched in terms of applying to any employer with more than $1 billion in revenues and stores of at least 75,000 square feet, there aren’t so many such businesses rushing in to set up shop in D.C., so it’s obvious it’s targeted at the retailer.

Wal-Mart shouldn’t have been surprised. The U.S. Chamber of Commerce ranks D.C. as the worst place in the country in terms of business friendliness.

For it’s part, the retailer says that if the proposal becomes law it will abandon its plans for development in the District — it’s already reportedly scrapped plans for the three stores that aren’t yet under construction — because the costs associated with it no longer make the projects viable. It’s not alone.

Over the years, retailers from Wal-Mart to Target Corporation (NYSE:TGT) to The Home Depot, Inc. (NYSE:HD) have had to face down the threat of a living wage, or a rate higher than the federally mandated minimum, such as when Chicago passed a similar bill two years ago. At the time, Target threatened to leave the city and only Mayor Daley’s veto of the measure prevented that from happening.

Although many are critical of Wal-Mart Stores, Inc. (NYSE:WMT)’s supposed low wages, the average full-time rate is $12.78 an hour. That may be below the likes of the $17-an-hour wage media darling Costco Wholesale Corporation (NASDAQ:COST) employees make, but the two companies are very different. Wal-Mart, at 4,400 stores (including Sam’s Clubs), has 10 times as many stores as Costco, while carrying 140,000 SKUs compared to just 4,000 at its rival big-box store. Wal-Mart also employs some 1.4 million people while Costco has just 160,000. Moreover, the customers it serves are lower-income people than the average $85,000-a-year income of the upper-middle-class Costco shopper.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!