The city council of the nation's capital is engaged in a game of chicken with the nation's biggest private employer, Walmart. Legislation custom-designed to force the Arkansas retailer to employ unionized workers in its planned new stores in the District has been passed, and in response the company has threatened to stop construction on 3 stores underway, and cancel plans for 3 more. Mike DeBonis of the Washington Post reports:

D.C. lawmakers gave final approval Wednesday to a bill requiring some large retailers to pay their employees a 50 percent premium over the city's minimum wage, a day after Wal-Mart warned that the law would jeopardize its plans in the city.

The retail giant had linked the future of at least three planned stores in the District to the proposal. But its ultimatum did not change any legislators' minds. The 8 to 5 roll call matched the outcome of an earlier vote on the matter, taken before Wal-Mart's warning.

Walmart has a well-earned reputation for delivering low prices to its customers. Inner city consumers often payhigher prices than suburbanites, where Walmarts and other big box retailers keep prices low due to efficiency and economies of scale. Charles Fishman, author of a book on the company, says (via NPR):

Wal-Mart really truly does successfully lower prices. Groceries are a great example. When Wal-Mart comes into a grocery market where they hadn't previously done business, they lower grocery prices fifteen percent. If you're living on a modest income, if you're living on $500 or $600 a week, you're a single mom, Wal-Mart just bought you seven weeks of free groceries a year. That's what a fifteen percent savings means.

This was the reason why the DC mayor Vincent Gray worked hard to get Walmarts built in the lower income areas of the District.  Those constituents could increase their standarad of living thanks to the savings Walmart would bring to their neighborhoods. But he did not reckon on the influence organized labor has on his city council. Walmart is the number one target of unions, who crave the dues its 1.4 million members would have to pony up. Labor unions, of course, launder these mandatory dues and pass a large portion on to politicians, overwhelmingly Democrats.

In addition, the unions hate the competitive pressure Walmart puts on unionized competitors, especially supermarkets. Workers already paying dues to unions have a hard time extracting higher wages from employers facing price pressure from hyper-efficient Walmart. The DC legislation specifically exempts unionized companies from the high wage requirement of the legislation.

This is outrageous meddling in the retail industry, specifically designed to hobble one company with higher wages than are required from its competitors. I have little doubt that Walmart will call the bluff and walk away from its three stores under construction. The company recognizes that it has a far higher stake in keeping its workforce union-free than the few million dollars it has spent getting ready for the DC stores. DeBonis of the WaPo notes:

Well before it had any solid plans to open stores in the District, Wal-Mart joined the D.C. Chamber of Commerce and began making inroads with politicians, community groups and local charities that work on anti-hunger initiatives.

The campaign was matched with cash. Through its charitable foundation, Wal-Mart made $3.8 million in donations last year to city organizations including D.C. Central Kitchen and the Capitol Area Food Bank, according to a company spokesman.

Those contributions to local charities can be expected to evaporate if the legislation goes into effect.

Walmart famously closed a store in Quebec when workers voted in a union in 2004:

In August 2004, the Saguenay region store was the first Wal-Mart to unionize in North America, but the bid by 190 employees didn't last long.

On the day a collective bargaining dispute was ordered to arbitration, the mega U.S. retailer said it would close shop, citing financial reasons.

The workers claimed the giant retailer killed their jobs after they exercised their Quebec and Charter right to organize and demanded reinstatement.

The company's move withstood legal challenge in union-friendly Canada:

The country's top court ruled Friday, 6-3, that Wal-Mart had shut its business permanently and under Quebec's labour code it was not open to the employees to benefit from a special employee-friendly provision in the law that puts the onus on Wal-Mart to show it wasn't seeking to crush the fledgling union.

Justice Ian Binnie, writing for the majority, said that the employees claimed Wal-Mart was engaged in a "larger employer strategy of hindrance, intimidation and union-busting."

But he said it was up to the employees to prove Wal-Mart was engaged in unfair labour practices under a different section of the labour code, and seek a remedy, noting workers can't apply for reinstatement "where a workplace no longer exists."

Unless the DC legislation is vetoed by Mayor and the veto sustained by the council, Walmart will walk away from DC, and the lower income constituents of the city council  will be forced to pay higher prices, in order to subsidize union dues that will be recycled to Democrat politicians. I hope that the company will conduct an advertising campaign in the DC market explaining to DC voters how the city council drove it away, and kept the prices they pay higher than they could be.