I started working with Walmart in early 2010 as they were planning their first expansion into the broader Washington, DC market. This was one of their first tests of “urban” stores; most of their retail locations at that time were in rural, suburban, or ex-urban markets. They were experiencing challenges expanding into this urban market, which had a different workforce than they were accustomed to. Within the city, the education system was problematic and there was high unemployment. They couldn’t recruit talent from outside the city-in the suburbs, for example, because the traffic made it difficult for anyone to travel to work.
One of the things I did to help them solve the problem was to partner with the DC Department of Employment Services, the Community College of the District of Columbia, and other nonprofit and private sector organizations. These partnerships allowed Walmart to expand their recruitment pipeline in the area and gave them access to hire and train the talent they needed to staff their stores.
Part of Walmart’s strategy for their market expansion and engagement with a different workforce was to test the effect of a higher wage for their employees. Back then, Walmart had received a lot of criticism for its low wages, which were insufficient for their employees to live off on. When it was first announced that Walmart was coming to DC, there was tremendous pushback from the community. There was concern that Walmart would create a “race to the bottom” for retail worker wages.
The DC Council passed a minimum wage bill that was directly targeted at large retailers like Walmart, requiring them to pay a living wage, at the time, $12.50 an hour. This bill was vetoed by the mayor after Walmart threatened to stop construction on three additional stores, saying they couldn’t stay in businesses with this law in place. The fight left many in the community feeling bitter and wary of Walmart’s presence in the city.
After the veto, Walmart continued its expansion into the DC market, but made a commitment to pay a wage that was “at least $1 per hour higher than what is offered currently at Safeway and Giant [local area grocery stores].” In fact, this came to around $12.50 an hour at time.
After a year operating in the DC market, Walmart hired a firm to analyze their impact on the region. It reported that the two stores that had opened together employed 700 people, 65 percent of whom were DC residents, and were responsible for half of the retail job growth in DC during 2013.
The benefits to the community wasn’t only related to how Walmart invested in its people. The stores were located in areas identified by the US Department of Agriculture as “food deserts,” neighborhoods with no access to fresh foods and vegetables. The Walmart stores brought fresh food to these areas, at a low price that people could afford, creating a new revenue stream for the company and offering healthier options for people living in those neighborhoods.
Walmart also affected the community beyond its stores and employees. A separate report by a local DC group found that Walmart hurt other local businesses, whose revenues fell by 20 percent to 85 percent in some cases as they attempted to compete with the giant retailer and its low prices.
While Walmart undoubtedly increased job opportunities for those in the local community, it is important for companies to look at the overall net impact of their efforts, particularly when expanding their footprint in a community. A few questions worth reflecting on are: is your expansion negatively affecting local businesses? Or making neighborhoods less affordable due to increased property taxes? Equitable impact extends beyond what’s obvious and immediate and companies must be intentional about the ripples of change they create in communities.
Walmart has started a Center for Racial Equity that represents an acknowledgement and approach to move beyond job growth as the sole focus of their impact in their communities. This center focuses on a few issues areas, including finance, health, education and criminal justice. Through this Center, they are working to support Black businesses and other local businesses in communities around the country.
Ultimately, Walmart built six stores in the DC area that were so successful for the company that Walmart decided to expand on the lessons it learned and slowly increased wages in its stores across the country. By 2019 the average hourly wage across the whole company was $13.63.
They did this because it helped their bottom line and also helped their employees. A 2019 report found that in the five years after they began increasing wages, they reduced turnover among their retail employees by 10 percent. In September 2021, facing a labor shortage as a result of the COVID-19 pandemic, Walmart decided to increase its wages by at least $1, which raised the average wage to $16.40; the minimum starting wage went from $11 to $12. In some stores the starting wage was as high as $17 an hour. This increase amounts to millions more dollars in the pockets of their employees across the country.
Walmart is not a perfect company, and, like all companies, there are certainly things they could be doing differently. In DC, Walmart attempted to reduce its harmful effects on the small business community by working with local nonprofits and donating to community partnerships that supported job training. But its work to increase its compensation and better support its workforce shows how a company can help improve the lives of its employees while also improving its bottom line.
Walmart’s increasing its compensation had a massive impact because of its scale; how could your company have the same impact on its employees, regardless of its size?
Read more stories of equitable impact in my book, The Social Impact Advantage!