The discount giant is closing 269 stores worldwide—and not even bothering to build stores it promised in poor neighborhoods.
The first two Walmart stores in Washington, D.C., opened their doors in late 2013 to shoppers and controversy. City leaders had spent a lot of time and political capital arguing whether to admit them at all. That debate resulted in the D.C. City Council passing a narrowly tailored “living wage” bill that targeted Walmart and then–D.C. Mayor Vincent Gray vetoing the act. Some residents have side-eyed those stores ever since. A friend of mine calls the Walmart closest to downtown the U.S. Embassy of Real America.
Two years later, leaders across D.C. are ready to suspend diplomatic relations with Walmart. The global mega-retailer went back on its word: As part of the agreement that let Walmart move into the city, the company agreed to build two stores in black, working-class neighborhoods in underserved Ward 7, east of the Anacostia River. Late last week, Walmart abruptly canceled those plans—having built the three stores it had deemed most profitable.
“The bait-and-switch that Walmart just pulled off in the District has to rank among the sleaziest ever played,” writes Courtland Milloy in The Washington Post.
“I’m blood mad,” said Mayor Muriel Bowser.
People across the country are sounding off in similar tones about Walmart’s broken promises this week. Citing a shift in strategy, Walmart announced that it is closing 269 stores worldwide, including 154 stores in the U.S. The company is discontinuing its Walmart Express class of stores entirely, closing all 102 of the small-format outlets it has opened since 2011. Walmart is closing 29 stores in Texas alone.
To be sure, the people of Godley, Texas, are right to be upset. The town’s only other grocery store closed months after a Walmart Express opened a year ago. Now these people are left with no pharmacy (the big promise of a Walmart) or grocery store. But the District knew better. Then-Mayor Gray struck a handshake deal with Walmart to spread the jobs and low prices beyond the city’s more lucrative commercial corridors to two of its poorer neighborhoods. Ostensibly, Walmart agreed to take a risk (or a loss) on two stores while the District agreed not to pass a tax or ordinance that would make it impossible for Walmart to open in D.C. In reality, there was no agreement—nothing binding, as the city has now learned.
Then-Mayor Gray is the frog who trusted the scorpion. That’s on him, and it’s on D.C. residents—people like me—who believed in the pledge of hundreds of jobs. Those who live in Ward 7 will pay the most for the promise of low, low prices: There’s nothing to replace Walmart as the anchor tenant of the Skyland Town Center, whose future is tenuous at best—even though the shops and fast-food joints that Skyland was supposed to replace have already been razed.
Yet there’s another narrative taking shape, one that puts the blame on cities, not Walmart, for the retailer’s decision to pull out of the neighborhoods it resisted from the start. D.C.’s efforts to raise the minimum wage, this thinking goes, forced Walmart out. A Forbes columnist summarizes this take: “Higher minimum wages mean fewer jobs as companies that would have expanded do not.”
Breitbart echoes the sentiment, reporting that the controversial Walmart Neighborhood Market in Los Angeles’s Chinatown closed thanks to the city’s new $15 minimum wage ordinance. “Los Angeles residents of impoverished Chinatown were shocked to learn on January 17 that the Walmart they pleaded for years to get would be shut down at 7 p.m. Sunday evening due to the city’s new $15 minimum wage ordinance, and union harassment,” writes Chriss W. Street, citing no specific evidence for the claim. Six more Walmarts across Southern California are on the chopping block, including one other L.A. location.
But the narrative that minimum wage hikes forced Walmart out doesn’t hold up. The vast majority of Walmarts spiked in the recent round of closures are suburban or rural, not urban. In Chicago, for example, Walmart opened nearly a dozen stores between 2005 and 2015; the only ones it has canceled are the Walmart Express mini-stores. This, despite the fact that Chicago, like many cities, is gradually raising its minimum wage.
It is irresponsible for the American Enterprise Institute and other organizations invested in opposing labor rights to claim that Walmart’s closures prove anything about the miminum wage. Fewer than 20 Walmarts closed in blue states where higher wages are even a passing concern. And while Seattle, New York, and San Francisco have succeeded in keeping Walmart at bay, the fact that Walmart has worked so aggressively to move into these markets is a clear indication that the Waltons are not allergic to paying higher wages.
More to the point: Walmart is voluntarily boosting wages! Minimum-wage earners will get $10 an hour starting in February, while virtually all of its hourly workers will see a 2 percent pay raise. Even if that’s just a sweetener for the bitter pill that Walmart has asked tens of thousands of workers to swallow, it runs totally counter to the argument that Walmart cannot afford to pay higher wages.
Wages aren’t the problem. Size very well may be. As Americans shift to urban areas, and as their business shifts to online sales, Walmart is struggling to keep up. Growing pains are inevitable as Walmart shifts to serve a changing demographic. But cities cannot afford to be stuck holding the ticket as Walmart tries different urban conditions on for size.
Cities cannot afford Walmart sprawl and Walmart wages, and Walmart cannot afford not to operate in cities. There’s a deal to be made here, but it sure as hell isn’t over a handshake.