The future of government policy-making and the danger of giant global capital mobility

Walmart threatened to leave DC if their mayor signs the council's living wage bill. 

http://www.rawstory.com/rs/2013/07/09/living-wage-mandate-in-d-c-sends-walmart-running/

Chain store influencing public policy -- when does a chain store become too big to displease? It's the neoliberal dreamstate -- government of, by and for the corporate person. In the piece, Marion Barry called it "a stick-up." 

Walmart argues that raising the minimum wage will drive employers away, causing unemployment. But raising wages also boosts demand, creating more employment. Card and Kreuger's classic survey showed that minimum wage raises actually increased employment. Even more interesting, Neumark and Wascher showed disemployment effects only in large fast food stores, with a rise in employment among small restaurants.  

You can see what's going on. The large corporations disinvest because they are more mobile. They can leave a state with higher wages for a state with lower wages. Small owners are not as mobile, so they are stuck with the higher wages, but eventually reap the benefits of greater demand! 

And you can see where this is going. Walmart has already stated that it will disinvest, regardless of greater demand. After all, Walmart depends on low-wage bargain hunters. If wages rise significantly, the higher demand might not be good for their bottom-end offerings. Walmart has an interest not only in low wages to keep their pricing down, but also to maintain its low-income market demand. They promote themselves as offering low prices, but actually they are in the business of creating low incomes to feed their own market. And its model doesn't move upward as it grows. It grows by spreading the bottom. It's an impoverishment model. Their corporate goal is to vastly increase the bottom.

The DC living wage might have been a test case to see the efffects of demand vs employment cost-cutting, but by stating its intention to leave, Walmart shows up front that it will bias the results. So if employment declines, everyone can blame it on Walmart's political ploy.

Capital mobility is another reason to be wary of the neoliberal giant global corporation. Small businesses have to take the pain. Ironically, they also reap the benefit. 

But what's more shocking than the impoverishment model that Walmart is admitting to here, is Walmart's threat to public policy-making. When will corporations become so big that we can't say 'no' to them ever again? Think of the consequences for food (Monsanto), the environment, fracking -- it's not just about wages. It's the entire fabric of life. 

A sad task

This post is just to correct some stats that have been floated on another blog about 7-Eleven wages. [To avoid embarrassing him in public, I emailed the blogger indicating where his errors lay, but he's intransigent. Since I don't want misleading information floating out there, I'm posting now.] 

The blogger claims the average weekly wage of a 7-Eleven clerk is $472.64 compared with a local independent restaurant's average weekly wage is $250. 

He gives the hourly 7-Eleven wage as $8.44. But instead of figuring a 40-hour week full time week, he divides the total hours of labor in the store by the number of personnel based on 7-Eleven's "7-10 employees per store."

As a result, his figure is for 56 hours per worker, not a 40 hour full time position (full time as defined by law).

But 56 hours would require overtime, which he didn't include. Correct sum should be:

(40hrs x $8.44) + (16hrs x $12.66) = $337.60 + $202.56 = $540.16

for 56 hours with overtime.

Obviously the franchisee isn't going to pay all that overtime. It's a 60% increase in his payroll! In fact, he doesn't have to pay any overtime. He can hire part-timers instead to take him through the week.

How many part-timers at a 7-Eleven? My guess: all the employees are part-time. If the franchisee uses only full timers, and a shift has to be covered for, say, an illness, the franchisee might have to pay expensive overtime to an employee. If all the employees are part-time, it's unlikely that any overtime will ever be necessary.

When 7-Eleven says it has 7-10 personnel per store, clearly they mean full time equivalences, not 7-10 individual bodies. To compare FTE's:

$337.60 full time at 7-Eleven (7-10 FTE's)
$400.00 full time at the restaurant (20 FTE's)

Perhaps more important, the total payroll of the independent is $8,000 per week if the $10/hr is correct; a 7-Eleven, $4,726.40 (unless the franchisee is an imbecile or a crook). A 7-Eleven occupies about twice the space of this particular independent restaurant, so the indie funnels $8,000 into its labor for a single storefront store, 7-Eleven only about $2,363.20 per single storefront store size. 7-Eleven provides less than a third (29%) of the wages of the independent. 

$16,000.00   per 25 ft wide storefront (independent restaurant)
  $4,726.40   per 25 ft wide storefront (7-Eleven)

At this point the blogger asks whether the independent, providing more than 3 times as much labor value, is sustainable. That question feeds directly to the justification for the NO711 program, since it's the chain stores like 7-Eleven that are raising commercial rents, closing down the indies. His question justifies NO711's program.

(NB -- The restaurant is busy. The 7-Eleven on Bowery looks deserted. The restaurant is staffed with twenty/thirty-somethings -- actors? film workers? students? -- 7-Elevens are staffed with 18-year-olds (?) in orange uniforms. Where are we headed if global capital wins? Everyone working in uniforms eating bad food? The one thing that I like about 7-Eleven is that they do employ a lot of non white employees. It's a shame they have to wear uniforms and work at such low wages with so little advancement.)

Now, I want to be very clear about the following. The blogger's very first comments about NO711 were derisive and smug, describing NO711 as full of "ridiculous claims." He's called us a variety of names that are false and derogatory. Now he has posted an animation that tells us "numbers are not your strong point." He brought a lot of derisive, ugly rhetoric into the space. I really don't want to be in that space, but here I am stuck in it. 

$4,726.40 published as the weekly average for a 7-Eleven clerk?

56 hrs/wk with no overtime?

At this point, NO711 deserves an honest apology. 

Here are the mistaken calculations on his blog:

Sustainability

Even if restaurants do provide many more jobs than a 7-Eleven, are restaurants as sustainable as 7-Elevens? That's exactly the question that leads right to the heart, goal and purpose of NO711.

Because they can get higher rents from chain stores, banks and bars, landlords raise their commercial rents on small businesses as soon as their leases come due and drive out those small local-serving businesses in order to open up space for higher-renting bars, banks and chains.

As the highest rent-payer, chains take the highest-density foot traffic locations, clustering to increase that foot traffic. Increasingly, chains are invading less dense neighborhoods. As long as there's no regulatory restriction on chain stores, there's no reason to believe this trend will not continue. Landords in less dense neighborhoods speculate on that trend by raising rents even leaving stores vacant until a chain takes it, as the Pratt Center has observed.

Small storefronts increased rents by as much as 600% in 2006 to make way for bars and chain stores in the EV. Commercial rent increases and upscaling are not static levels. They respond to speculations on itself -- a recursive function that spirals upwards to the highest bidder creating a context in which only the highest bidder can survive. CBGB's was lost to Varvatos, a chain store. Veselka, an independent restaurant, opened on the Bowery after Varvatos opened and has already failed. This is no coincidence.

(As it happens, the restaurant I mentioned a couple of posts back has been around for decades. It has a full liquor license as most successful restaurants have. It is also nowhere near any chain stores.)

Down for the count: 7-Eeven and jobs again

I ran into a local resident who owns a restaurant in the LES. It's a small space, single storefront (12.5 ft across). I asked him how many people he employs there. 20, he said. I asked how many are being paid at minimum wage. He replied with pride, none, not one. He went on about how important this is to him. It's an upscale place, so the waiters' tips are significant as well.

Since the restaurant is less than half the size of a 7-Eleven, he provides 4 to 6 times as many jobs as a 7-Eleven would in an equivalent space. 

Maybe 7-Eleven is ahead of the curve. Maybe the future will have no store attendants at all, just machines and engineered fare. 

Community Board 3's questions for NO711

Community Board 3's Economic Development Committee raised four problems for NO711. Here's one: 7-Eleven's conversion program will help bodega owners whose profit margin is slim.

It's true that some bodega owners would benefit from conversion to a 7-Eleven, but many bodegas occupy too small a space for conversion. My guess is that 7-Eleven's conversion program is designed to undermine the business community's opposition as much as spread 7-Elevens everywhere. I don't see any business associations opposing 7-Eleven. The Bodega Association seems to be silent. 

Although business is supposed to about the bottom line, some bodega owners are willing to forgo a bit of profit for the sake of what they have, their autonomy and their relation to the locals. (I know at least one person who will say those owners don't want to forgo exploiting undocumented immigrants, but if 7-Eleven conversion increases profit for the owner, then this can't be a reason to reject conversion. It may be that some owners want to continue employing undocumented immigrants for family reasons or through a tie to some underground human market. That's a deep issue that can only be resolved by immigration reform or amnesty.)

7-Eleven and jobs

NO711 has pointed out that 7-Eleven, with its self-service model, minimizes employment. Here are the figures to compare.

[I've deleted a paragraph here. The information was not authorized. Please see instead this post.]

I ran into a local resident who owns a restaurant in the LES. It's a small space, single storefront (12.5 ft across). I asked him how many people he employs there. 20, he said. I asked how many are being paid at minimum wage. He replied with pride, none, not one. He went on about how important this is to him. It's an upscale place, so the waiters' tips are significant as well.

Since the restaurant is less than half the size of a 7-Eleven, he provides 4 to 6 times as many jobs as a 7-Eleven would in an equivalent space. 

I also looked at Fresh&Co, which is about the size of a 711: 20 people per shift, 2 shifts, including weekends, all behind-the-counter (no waiter/tips) and well over minimum wage (except the delivery guys -- they get tips so the law exempts them from the minimum wage, like waiters). Total: 56 full time equivalent positions, not counting delivery staff. It employs 5-8 times (!!) as a 7-Eleven. 7-Eleven is actually one of the worst franchises from a labor/employment point of view.

But this is kind of obvious, no? Huge store, self-service: minimal jobs, close to minimum wage. Isnt' that what 7-Eleven is all about? And corporate packaged junk food. What an asset to the global landscape!

7-Eleven and wages

It's important to consider what would replace a 7-Eleven on 11th and Avenue A. Since there are three liquor licenses within 500 feet of the site, it would be difficult for a bar owner to get passed the State Liquor License's constraints on license density. The next likely candidate would be a restaurant, judging by the local commerce in the EV. So how would a restaurant affect labor?

7-Eleven store associate hourly wage can be as low as $7.25/hr; $8.44 average (from Payscale and Glassdoor). 7-Eleven store associates are required to have English fluency: "Must be able to communicate clearly and effectively with customers and coworkers." They are also subjected to background checks -- no undocumented immigrants allowed.

Mean average for a cook's wage, nation-wide, $11.20/hr; median: $10.29/hr; lowest 10%: $8.14/hr (BLS). No language requirement, no background check. 

So replacing a 7-Eleven with a restaurant in NYC would improve the wage prospects generally, and specifically of immigrant workers, documented as well as undocumented. Unless it were a chain restaurant -- a McDonalds cook wage averages, according to Glassdoor, $7.41/hr. That's one reason among many, NO 7-Eleven is trying to curtail all giant chains and franchises. Minimum wage may be fine for a 16-year-old's first summer job, but not a way forward for labor in general. "The majority (66 percent) of low-wage workers are not employed by small businesses, but rather by large corporations." 

Is it easier to organize labor in a giant corporation? Maybe (but maybe not). Giant corps also have greater political clout the larger they are, so there is a danger of promoting corporatocracy. In one way it's the meeting of Stalinism and libertarianism -- "free" market corporatocracy replaces the totalitarian state, the "internal contradiction" of libertarianism, trading one form of control (government) for another (corporate giants). Reminds me of a Maoist friend who voted for Giuliani thinking that his reactionary policies would spark a revolution. Instead we have rampant gentrification.

7-Eleven Legal Defense and Education Fund (SELDEF)

Here's the corporate defense of 7-Eleven with my comments:

1. It provides cheap food for low-income people.

"Let them eat Pringles!"..........

7-Eleven has 48,000 stores worldwide
more than any other retail store

What's this, the 21st century version of "Let them eat cake"? Literally: 7-Eleven promotes every form of sugar possible. 

2. There are empty storefronts in our neighborhood. We must fill them, and 7-Eleven will!

Filling the storefronts serves only landlords. Retail storefronts are not a driver of local labor and the neighborhood isn't lacking in food options. What we'v'e lost here is service variety because nightlife, chains and franchises have upped the commercial rents so that small stores like bookstores (for new or used -- anyone remember Paul's? I loved that bookstore), thriftshops, hardware, stationers&cardshops and curiosities can't stay or get in (does anyone remember places like Celtic Twilight in the 1970's? Where else in NY could you find a copy of Y Gododdin?).

Allowing chains, frachises and bars just encourages landlords to hold out for higher rents. The only way to bring rents down is taking the Big Gulp out of the landlord's hand: no more lifeline to candy, fat and liquor; do some service for the community. Since the neighborhood is dense, so plenty of services can thrive, and service providers will come if the rents ease off. 

3. 7-Eleven prevents gentrification.

There are 7-Elevens on the Upper East Side and the Upper West Side, in the Scarano condo building the one professed "gated" community in the neighborhood.  7-Eleven didn't even arrive in the EV until after the neighborhood was thoroughly upscaled. 

4. Remove the corporate clone stores and they'll be replaced with fancy boutiques.

EV boutiques on 9th & 10th arrived decades ago when rents were cheap. New stores here are not SoHo-style boutiques. New storefronts here are usually either upscale food -- North Korean-style ice cream, artisanal water, Japanese-Canary Island fusion, 387 varieties of peanut butter served on rice cakes and no jelly -- or cheap fast food, felafel, pizza, Asian dumplings, bagels, or a cafe w/wifi, cafe w/wifi w/sandwiches, cafe w/wifi w/sandwiches w/cute singles. Which do you prefer? If you choose 7-Eleven, go back to item 1 above and see Marie. For me, I'll take a felafel w/humus, please. 

5. 7-Eleven doesn't exploit undocumented immigrant labor. 

7-Eleven doesn't employ them at all. The undocumented can die in the street for all the corporation cares. Or ex-felons desperately looking for a second chance. Giant corporate control from afar. It's taking over our streets, our lives, our work, our food, our future.  

The only defense left? You're addicted to the Big Gulp. Sarah's got your back --