OFF-THE-CUFF

It’s September again? It seems like yesterday when last September arrived, just days after family vacation and the usual lazy summer.

I was researching another topic for this column when the Washington D.C. City Council in July predictably voted 8-5 to increase its minimum wage to $12.50 per hour. It affects only the employees of non-union retailers with sales of more than $1 billion operating in spaces larger than 75,000 sq. ft. Not surprisingly, the vote affected only Walmart. For example, two other mega-billion dollar retailers operating in the District, grocers Safeway and Giant, have union employees. The vote doesn’t apply to them.

I say “District” because that’s what most people in the District call Washington D.C., and I say “predictably” because that’s how out-of-touch D.C. government can be concerning business matters. I worked in and around the District for eight years and regularly witnessed such myopia.

After the 8-5 vote, D.C. Mayor and Walmart cheerleader Vincent Gray promised a veto, which moved the City Council opposition to physically keep the bill from him for weeks or more until they could strong arm a necessary ninth Council member to override a veto. As of this writing, the outcome was still uncertain. It’s just a vote. It’s not yet a law. Walmart had planned to open three stores right away and three more in the not too distant future.

What has been happening with Walmart there is a microcosm of what has happened with Walmart all over the U.S.—except the stakes in the District are on a grander economic and political scale.

This topic was too timely not to feature. For one, Doug and Pam DeMarce discussed their frustrations with Minnesota’s proposed increase in the minimum wage to $9.50. In time, that wage increase could raise the DeMarces’ payroll an additional $100,000. Unfortunately, their bowling and game customers would have to fork over the 100k because the DeMarces simply don’t have any spare money laying around to pay a higher wage while keeping prices low. So in effect the wage increase would really act as a tax increase on their regular Joe customers, who are not wealthy.

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Likewise, if Walmart were to proceed to build in D.C. anyway after a City Council override tagging the minimum wage at $12.50, the company would have to drastically raise prices on poorer inner-city customers on everything from groceries to lipstick to televisions. Like any other American company, Walmart isn’t in business to sell merchandise at a loss for giggles and it certainly isn’t into becoming a nonprofit organization. The minimum wage increase would be a tax on many of the District’s poorest citizens.

Walmart had been moving forward with six proposed stores in an area covering only 68.3 sq. miles—that’s the size of the District. In comparison, Blue Earth County stretches over 765 sq. miles. Three Walmarts, if strategically placed in poorer neighborhoods, could dominate the District’s lower-income retail trade. Six Walmarts literally would own it.

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Whether that ninth vote appears or not will vastly affect at least two inner-city cultures. For one, Walmart with three stores in the District probably would halve the livelihoods of hundreds of entrenched Korean retailers and wholesalers (and the occasional Jewish, Nigerian, Iranian, and Ethiopian), who for decades have dominated through ownership the District’s convenience stores, smaller groceries, general merchandise outlets, and carry-outs. These retailers went there when no one else would after the racial tensions of the late 1960s.

Six Walmarts almost assuredly would force most of those retailers out of business altogether, which would lead to the urban acne of hundreds of empty storefronts reaching from seedy Anacostia to tony MacArthur Boulevard. It also would be a knife through the heart of the Florida Avenue Market District, where those Korean wholesalers congregate.

What kind of shopper would buy her groceries and general merchandise from aging stores with 50 percent markups when bright and clean—and incredibly inexpensive—Walmart was within walking distance or near public transit?

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Which brings us to the second culture potentially affected. If the minimum wage would rise to $12.50 and Walmart abandoned its plans as expected, the District’s poorest residents would feel the sting. For one, most of them will have to continue shopping at Korean retailers almost exclusively because of the absence of shopping and transportation options. The loss of Walmart would mean these people would no longer have the opportunity to cut their food and general merchandise bills on items such as diapers, baby formula, and cough medicine. It also would hurt their chances of earning a living and perhaps starting a career. The District in May 2013 had an 8.5 percent unemployment rate.

On an aside, an increase in the minimum wage to $12.50 and a Walmart exit would also sting developers who had grand plans for urban renewal using Walmart as the anchor for tax base-enhancing future expansions.

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In early August, I telephoned my old boss, Hui Yul Han, who still owns and operates $35 million grocery, tobacco, and candy wholesaler DC Cash & Carry, which has been doing business near the Florida Avenue Market District since the 1970s. In a telephone interview, I detected a sense of urgency in his voice when he said, “We do not want Walmart to come. No Korean convenience store of any kind wants them to come in. It would really affect what we do.”

So who wins and loses? As of right now, I have no idea, but in the tradition of D.C. politics I’m betting on lots of under-the-table action. By now, you’ve probably already heard or read of the outcome.

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Finally, don’t forget to nominate a businessperson for our annual Business Person of the Year awards. Nominations are due Friday October 4 at noon. Thanks for reading our region’s only locally owned business magazine, and the only one reaching 8,800 business decision makers in nine southern Minnesota counties. Until then, anyoungi kasayo.

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Correction to the Print Edition: The editor stated that our state minimum wage definitely would be rising to $9.50 an hour effective at a future date. That was incorrect. He mistakenly mentioned the House version had been passed and signed, which, of course, it hasn’t been. The correction is reflected in the online edition above.