CNN's Costello Laments: Why Can't Walmart 'Share the Profits' With D.C. Workers?

CNN's Carol Costello is quite cozy with striking fast food workers who want the minimum wage at $15 an hour, but she is openly hostile with restaurant and retail executives. On Friday, Costello repeatedly badgered a retail executive over why Walmart wouldn't raise wages for D.C. employees even though some other businesses wouldn't have to.

Sounding like a broken record, Costello didn't offer many reasons why Walmart should have agreed with the D.C. city council to pay its workers 150 percent the current minimum wage, other than that Walmart is profitable: "Walmart's going to make a whole bunch of money by doing this, that's why it's moving into the D.C. area. So why not share the profits with others?"

In proof of her one-sidedness on the wage argument, Costello gave a warm welcome to a striking fast food worker back in August when protesters wanted the minimum wage to be raised to $15 an hour. And she made the same argument to a restaurant executive then that she made on Friday: "if you take a look at a company like McDonald's, they have high profit margins. So why not share?"

Friday's guest David French, senior vice president of the National Retail Federation, argued that "The best medicine is more jobs." Costello responded that people are "desperate" and will take any job they can get. In a deviation from her "Walmart should pay more because they are profitable" talking point, she noted that many Walmart workers receive entitlements because of their low wages.

"Some experts say Walmart's low wages actually cost taxpayers millions of dollars. A study from February shows a quarter of Walmart workers in Massachusetts are in state health insurance plans. That costs taxpayers $14 million a year. So does that seem perfectly right to you?"

However, when French threw statistics her way, Costello wouldn't have it.

"The percentage of hourly workers in the U.S. workforce making minimum wages or below is 5.2 percent," French stated. "In 1979, the percentage of workers making minimum wage or below was more like 13 percent. So the U.S. economy has changed."

"Oh, but come on, we're talking about apples and oranges," a flustered Costello responded.

Below is a transcript of the segment, which aired on CNN Newsroom on September 13 at 9:39 a.m. EDT:

[9:39]

COSTELLO: The mayor of Washington vetoed a bill that would have forced Walmart and other big retailers to pay a minimum wage of $12.50 an hour. That's about 4 dollars more than the city's regular minimum wage. Mayor Vincent Gray, a Democrat, called the bill a job killer. That's because Walmart had threatened to drop its plan to build several more stores in the city if this bill became law. But come Tuesday the city council could change everything and possibly override the mayor's veto.

Joining me is David French, a senior vice president of the National Retail Federation. Good morning, David.

DAVID FRENCH, senior vice president, National Retail Federation: Good morning.

COSTELLO: Is this a win?

FRENCH: This is a big win. The city council, the district council gave the mayor a tough choice between jobs and special interests, and the mayor chose jobs.

COSTELLO: What it would happen if the D.C. city council were to override the veto?

FRENCH: I think several retailers would halt plans to come into the district and open up new stores in some of the neighborhoods in the district that are probably the least well served by retail.

COSTELLO: Did the workers, did the city council, have any point in all at wanting people who worked at Walmart to make a bit more money?

FRENCH: Well, the crisis that many communities around the country face is really a crisis because there aren't enough jobs, and the mayor made the right decision. There were 4,000 jobs at stake in the District of Columbia and the mayor said that he wasn't going to put those jobs at risk.

CAROL COSTELLO: Well, (sigh), you know, people argue this all the time. Last year Walmart made, what, $17 billion in profit? It ranked number one on the Fortune 500. A lot of people say don't you think Walmart and other retailers like it can afford to pay its employees a little more?

FRENCH: The best medicine is more jobs. The communities around the country have unemployment, real unemployment that's closer to 12 percent, because there's so many long-term unemployed who have just given up looking for work. And making it harder for employers, large and small, to create jobs is not going to solve that problem.

COSTELLO: But doesn't that make it easier for employers to pay employees less? I mean, people are desperate. They need jobs. So why not take a low-paying job where you might have to get food stamps to supplement your income?

FRENCH: There are a lot of myths about the minimum wage, and there's certainly, really aren't that many employees making minimum wage. Most retailers pay above the minimum wage as it is, but let's really focus on the problem that is really keeping the economy growing too slowly and that is too few jobs.

COSTELLO: The Starbucks CEO, Howard Schultz -- and I'll just give you this as an example – Howard Schultz has said, quote, "Profitability is a shallow goal if it doesn't have a real purpose, and the purpose has to be share the profits with others." So that is Howard Schultz's philosophy. That is certainly not the philosophy of other retailers. What is their philosophy, if it's not that?

FRENCH: Well, I think you're focused on the wrong question. The question is, retailers like Walmart want to open up stores and create jobs. There are 4,000 jobs in the District of Columbia that were at stake, and the mayor said he didn't want to put those jobs at risk.

COSTELLO: But back to my question, Walmart's going to make a whole bunch of money by doing this, that's why it's moving into the D.C. area. So why not share the profits with others? And if that's not your philosophy, what is? Are you just beholden to the shareholders then?

FRENCH: Well, the best solution for wage growth is to create more jobs than workers. Right now we have a situation, we have too few jobs and too many workers. As I said, there are 12 percent of the U.S. workforce is really unemployed, not the nominal level of 7.5 percent. So we need to get those workers back to work, and making it more expensive to create each additional job is not going to solve that problem.

COSTELLO: And I'll go back to this again, because this was the big argument in Washington, D.C., because the workers are making what they call a low wage. Some experts say Walmart's low wages actually cost taxpayers millions of dollars. A study from February shows a quarter of Walmart workers in Massachusetts are in state health insurance plans. That costs taxpayers $14 million a year. So does that seem perfectly right to you?

FRENCH: Again, the mayor really hit the nail on the head when he talked about this in his veto message, and he pointed out that this law would have only affected a very small sliver of the workforce in the District of Columbia and it was particularly discriminatory against just a few large employers. That's not a real living wage, that's not a solution to any problem, and again it would have put jobs and consumers, both D.C. residents and consumers –

(Crosstalk)

COSTELLO: Right, right, I mean – I hear you. I do.

FRENCH: -- would have been the losers if this had become law.

COSTELLO: I'm sure many people agree. I guess the bottom line, if only 30 percent of America has a college degree and the rest of America doesn't and it has to find jobs in big retail stores, should they just accept what they get and that's okay?

FRENCH: Carol, again, one of the myths about the minimum wage is that there are a lot of workers making the minimum wage. There aren't. The percentage --

COSTELLO: Well, they're not making much above it.

FRENCH: The percentage of hourly workers in the U.S. workforce making minimum wages or below is 5.2 percent.

(Crosstalk)

COSTELLO: Well, let me change that to a living wage, then.

FRENCH: In 1979, the percentage of workers making minimum wage or below was more like 13 percent. So the U.S. economy has changed.

COSTELLO: Oh, but come on, we're talking about apples and oranges. If you made what an average worker makes at Walmart would you be comfortable raising a family of four on that salary?

FRENCH: Again, most of the workers –  

COSTELLO: Would you, David French?

FRENCH: -- most of the workers – when I started my job in the District of Columbia 25 years ago –

COSTELLO: Right now, in your life now.

FRENCH: When I started my job in the District of Columbia 25 years ago I wasn't making much more than the minimum wage.

COSTELLO: Neither was I, but I wasn't raising a family of four then, either.

FRENCH: Right and most people are not.

COSTELLO: I'd have to argue with you there, but we'll leave it there.

Matt Hadro
Matt Hadro is a News Analyst at the Media Research Center