D.C. vs. Wal-Mart: Can Any City Council Beat This One? – July 19, 2013 Newsletter

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D.C. vs. Wal-Mart: Can Any City Council Beat This One? – July 19, 2013 Newsletter

July 25, 2013 Newsletter 0

I don’t know if you’ve seen this story, but it provides a great lesson in basic economics.

Here is the story…

Wal-Mart had decided to put six stores in the city proper of Washington, DC, which would create hundreds and hundreds of entry level jobs in an area that desperately needs employers. You would think that community leaders would be both excited and appreciative of such an event.

But not so fast. Wait till you hear the law the D.C. city council passed last week.

City council took quick, decisive action upon the news that Wal-Mart is coming to town. They’ve decided to pass a law that increases the minimum wage in DC from $8.25 per hour up to $12.50 per hour.

But that isn’t for everyone. It is only for stores that have over 75,000 square feet. In other words, it is for Wal-Mart only.
Wal-Mart has told the powers that be in Washington, DC that thanks to their quick thinking, Wal-Mart will now be forced to pull out of the city of DC altogether as the wage increase makes the new stores instantly unprofitable. The result – those hundreds and hundreds of desperately needed jobs go up in a puff of smoke.

You can imagine the outrage from the community leaders in DC as Wal-Mart (in their opinion) is just doing its best to pad the bottom line at the expense of “hard-working American people”.

Of course, these elected representatives are ignoring basic economics which tells us that it is the job of corporations to maximize profits for its stockholders. Of COURSE Wal-Mart wants to pad their bottom line. That is their job.

Wal-Mart is definitely NOT going to add stores that take away from their bottom line. It is both not part of what any company would do, and it’s particularly stupid. Who would open a store that they know will lose money?

The result?

Those who desperately would LOVE a job, any job, in DC will have to continue their search because their elected representatives do not understand remedial economics. Shame on them.

P.S. The story is not yet fully over, as the Mayor can overturn the actions of his moronic city council. We will see if Mr. Mayor has a bit more sense than his underlings.

Keep cool and have a great weekend,
Peter
Your Retirement Quarterback

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