Supermarkets exercise a degree of monopoly power over consumers since it’s difficult and expensive to build a new supermarket. This creates profits for incumbent supermarket owners. And in markets like DC where the workforce of supermarkets is unionized, the union is able to force the owners to share some of that monopoly surplus with the workforce. This gives both owners of supermarkets and labor unions that represent supermarkets very good reason to fear the entry of new competitors like WalMart into the marketplace. The more competition there is, the lower the surplus there will be, and that will make both owners and employees of incumbent firms worse off. That’s the background you need to have to understand the dynamic Lydia DePillis is describing around WalMart opening some stores in DC:
What can Walmart do for D.C.? A lot, according to the labor-backed Respect DC coalition, which has taken the stance of demanding concessions from the giant retailer rather than opposing its entry altogether. The Post outlined a few yesterday. Below is the executive summary from the Coalition. But you’re going to have to wait until Thursday for the full, 11-page schedule of benefits that they’d like Walmart to sign. Tidbits from that not included in the summary: Requests that Walmart include free wireless in all of its stores, commit to green roofs for all stores and parking structures, provide employees with $50 per month in Metro smart benefits, and not operate before 6:00 a.m. or after 10:59 p.m. (Walmart is considering keeping some stores open 24 hours). The agreement would cover all future stores, and riders would be added to tailor benefits for each location.
I’m all for green buildings, but of course you have to ask yourself why should an environmental policy regulation be targeted at one specific firm rather than citywide? Doesn’t it make more sense to establish firm-neutral environmental targets? Similarly, for all the rhetoric about concern for Wal-Mart’s hypothetical employees these hypothetical employees would clearly benefit from 24-hour store operation. Longer opening hours equals more jobs. The basic aim here seems to be to make entry into the marketplace more costly and in the case of the hours restriction to just directly limit competition. If I owned a Safeway or a Giant or ran a union representing the people who work at a Safeway or a Giant, that’s what I’d be doing too. At the same time, groceries and clothing are a much larger share of income for low-income people than for higher-income ones, so increased competition would have a disproportionately beneficial impact on their lives.