Dumb and dumber
July 29, 2013
by Brian Wolf

An economic lesson from Walmart

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

Here is the story

Walmart decided to put six stores in Washington, DC, which would create 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. Remember, we are talking about “entitlement central,” Washington, DC.

Community leaders have taken quick and decisive action upon the news that Walmart 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.

If signed by the mayor, the bill would require retailers with more than $1 billion in US annual sales and stores 75,000 square feet or larger to pay a higher minimum wage than that of the city. In other words, it is for Walmart only.

Walmart has told the powers that be in Washington, DC that thanks to their quick thinking, Walmart will now be forced to pull out of the DC area altogether as the wage increase makes the new stores instantly unprofitable. The result – those hundreds of desperately-needed jobs go up in a puff of smoke.

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

Of course, they are ignoring basic economics. Basic economics tells us that it is the job of corporation to maximize profits for its stockholders. Of course Walmart wants to pad their bottom line. That is their job. Walmart is definitely not going to add stores that take away from their bottom line.

Let’s not forget that this country was formed under capitalism. I’m not saying that every town in America needs a Walmart, but to have a law that increase the wage for only Walmart employees is so stupid it just makes me laugh. Why would we expect for Walmart to open a store that they know will not make 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.

Although the story is not yet over, because the mayor can overturn the actions of his dumb city council. We will see if the mayor has a bit more sense than his underlings. Otherwise, we can cast them for the sequel of the movie “Dumb and Dumber"

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