By Dave Oberting
Council Chairman Phil Mendelson has transmitted the Living Wage bill to Mayor Gray for his signature or veto. We strongly urge a veto, not because it’s bad for business, which it is, but because the living wage is bad for low skill workers. In case you’ve been living under a rock for the past three months, the living wage bill would force retailers with stores that are more than 75,000 square feet and whose parent companies generate more than $1 billion in annual revenues to pay their employees a minimum wage of $12.50 per hour. Every other employer would remain at the standard $8.25 minimum wage. Cynically, any retailer that operates under a collective bargaining agreement is exempt from this law, so they can go on paying their employees less than $12.50 per hour.
Mayor Gray should veto this bill because it will result in slightly higher wages for a much smaller group of workers. It denies economic opportunity to more people than it helps. For instance, Wal-Mart was contractually obligated to bring 6 new stores and 1,800 jobs to the District. Those jobs will pay close to, if not more than, the average retail wage in the District, which is $11 per hour. Since this bill passed the council, Wal-Mart has announced that it will cancel the development of the three stores that are not already under construction here in the District. That alone will cost the District 900 entry level jobs. It has also said it could abandon the three stores already under construction, costing another 900 jobs. Several other major retailers have announced they have cancelled or put on hold their plans to open in the District. That costs the District an untold number of entry-level jobs.
The largest barrier to employment in the District is not race or criminal history, but unemployed status. Employers are more likely to discriminate against someone who is unemployed than they are on the basis or race or criminal records. The living wage bill denies potentially thousands of District residents with a chance at gainful employment, and the training that comes with it. Being employed when you go it to apply for a better job after working successfully at Wal-Mart for six months will greatly increase your chance of moving on to higher skill work. Many employers will look at a job application and look favorably on someone who is currently employed at Wal-Mart. They will take that as a signal that this person is okay to hire. These opportunities are too important to sacrifice for a $1.50 per hour raise for a much smaller group of people.
Let’s also not kid ourselves, $12.50 per hour is not a living wage in the District. The cost of living, and especially the cost of housing is just too high. Were this bill to become law it would make a group of advocates feel better about themselves, but would have no material impact on the standard of living of these residents.
All of the time, effort and emotional energy expended on this effort by living wage advocates has been misplaced. The real key here is making sure that residents are not trapped in these low skill, low wage jobs. There are two things we can do to ensure residents are not trapped in these jobs: a) get the DC economy growing faster so that it creates more jobs at all skill levels more quickly; and b) strengthen our workforce development system so that we are training our residents for the mid-to-higher skill jobs that a faster growing economy produces and which pay a true living wage, with benefits.
Dave Oberting is the Executive Director of Economic Growth DC. Follow him on Twitter @GrowthDC.