Target Corporation (TGT), The Home Depot, Inc. (HD): Wal-Mart Stores, Inc. (WMT) Stares Down D.C., and Wins

The problem for living wage advocates is that depressed neighborhoods need Wal-Mart Stores, Inc. (NYSE:WMT), Target, and other big-box stores more than the big-box stores need them. First, these stores bring lots of entry-level jobs that are suitable for people who have never been in the workforce. Clearly, minimum-wage jobs are not a viable long-term employment solution — but without these entry-level jobs, young adults would have much more trouble gaining the experience necessary to qualify for better jobs.

Second, due to their vast supply chain networks and high-productivity stores, Wal-Mart, Target Corporation (NYSE:TGT), and similar retailers can offer the same merchandise as other stores at a lower cost. By reducing the cost of living, these stores can significantly improve the quality of life for many people in low-income neighborhoods.

As a result — and this was made clear in Mayor Gray’s veto announcement — D.C. needs these retailers more than they need D.C.: even if most of the jobs they create are “bad” jobs. The same is true in many other cities across the country. In fact, a similar big-box living wage bill in Chicago several years ago ended similarly with a mayoral veto.

Foolish bottom line
To many observers, it seems grossly unfair that major retailers like Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT) earn billions of dollars in annual profit while many of their workers earn less than $10 an hour. However, it is not practical to raise these entry-level wages through legislation without expecting push-back from retailers in the form of fewer stores (and fewer jobs).

While companies like Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT) are eager to grow, they still have ample room for expansion in other cities, states, and countries. They will invest where they can earn a good return on their investments. Any public policy that ignores this fact will ultimately fail, no matter how well-intentioned.

The article Wal-Mart Stares Down D.C., and Wins originally appeared on Fool.com.

Fool contributor Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool recommends Home Depot.

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