11.19.13 7:35 PM ET
Getting a Job at Walmart Is Harder than Getting into Harvard
Walmart is constantly in the news as a metaphor for what’s ailing America. On Monday, it was the news that employees had set up bins to collect food for needy employees at a store in Ohio. On Tuesday morning, we were presented with a Walmart-related news item that explains why the company can get away with paying so many so poorly.
Seeking growth in the low-end of the retail market that it has largely saturated, Walmart has been trying to push into cities. Urban areas, with their unions, liberal politicians, and generally high costs for real estate, insurance, and lack of parking, were not a natural fit for the company that started in rural Arkansas and grew by planting giant boxes in rural areas and exurbs. But Walmart in recent years has made tentative inroads into close-in suburbs and the city limits of Chicago, Los Angeles, and other large population centers.
Zoning boards and city councils often throw up obstacles to expansion. Walmart has no stores in the five boroughs of Manhattan. Earlier this year, in Washington, D.C., the City Council passed a law explicitly aimed at keeping Walmart out. City Council passed a law saying certain big box retailers would have to start pay at $12.50 an hour, 50 percent higher than the District’s $8.25 minimum wage. But in September, Washington, D.C. Mayor Vincent Gray vetoed the bill.
The veto paved the way for the opening of two stores, one on H Street just north of Union Station and the other on Georgia Avenue in northern D.C. early next month. And potential employees are enthused. As NBC’s Washington, D.C. affiliate reported “the stores will hire a combined 600 associates after combing through the more than 23,000 applications it received from potential employees.” That’s stunning. Walmart received 38 applications for every opening, making the odds of an applicant getting a job at Walmart far greater than getting into Harvard. And all this competition for positions that we know do not pay all that well.
What gives? This isn’t taking place in a low-wage broken-down mill town where unemployment is high and there are few options. The Washington, D.C., metro area has been a boom town for the last 12 years, fueled by a higher level of government spending, contracting, outsourcing, and a real estate boom. The city grows ever more upscale and yuppified by the day. Richard Florida, the prescient analyst of urban revival, has called the area “a boom town of the new economy.” The D.C. metroplex has six of the richest counties in America. The unemployment rate of the Washington-Alexandria-Arlington metro area in August was 5.4 percent, significantly below the national rate. The unemployment rate in the areas of Maryland adjacent to D.C. was 5.2 percent. In the past year, the D.C. metroplex has added 33,000 jobs, or 1.1 percent of the total.
But that hides a reality in this economy. The labor market is actually several labor markets in one. And some of those markets are doing quite poorly, even in booming areas with comparatively tight labor markets. We know, for example, that in October the unemployment rate for people with bachelor’s degrees (or more) was 3.8 percent, while the unemployment rate for those whose highest level of education was completing high school was 7.3 percent, and the rate for those who hadn’t completed high school was 10.9 percent. Put another way, people who haven’t completed high school are nearly three times more likely to be out of work than those who have completed college. And people who haven’t attended college are twice as likely to be out of work as those who have completed college. Among African-Americans, the unemployment rate is 13.2 percent, while the unemployment rate for whites is 6.2 percent.
Slack in the labor market—and the continuing weakness of unions—makes it very difficult for all but the most skilled workers to negotiate higher wages. And the intense competition for positions at the lower rungs of the labor market mean companies can have their pick of candidates while offering comparatively low wages. It’s good for Walmart that the company is finally making inroads into Washington. Perhaps the new stores will help boost the chain’s stagnant domestic sales. It’s good for the 600 new hires to have jobs at a stable company. And there’s more where that came from. Walmart said it hopes to open three more stores in D.C. in coming years, which will employ another 900 people. But the fact that the chances of getting a job at Walmart are far lower than the chances of getting into Georgetown Law School highlights a continuing problem.