It is not in our nature to say “I told you so,” but these are predictable consequences of a misguided policy. In fact, we predicted them twice last week. See below for details. Wal-Mart has announced that they will back out completely from the three stores in the District that are not already being built. They have also indicated that they may not open the stores already under construction. So, we now have a scenario whereby the 1,800 jobs paying between $8.25 and $11.00 an hour could all disappear. It is also highly unlikely that any other big box retailers will open in a jurisdiction that requires a wage that is 72% higher than the federal minimum. Anyone who thinks any retailer of any size is capable of paying that wage and remaining profitable at the same time doesn’t understand the retail business model.
My first job was working the drive through window at Dairy Queen in 1985. I was paid $2.75 an hour. The minimum wage at the time was $3.35. I worked there for several months and then moved on to delivering pizza for Pizza Hut. Including tips, I made about five times what I made at Dairy Queen. Next I joined the Army, where the money wasn’t much better than Dairy Queen. Then I went to college and started a business career. I mention this to point out that the key to this whole scenario is making sure minimum wage workers don’t become trapped in those jobs indefinitely, and understanding that my job at Dairy Queen was a stepping stone and a learning process. It taught me what it took to work for someone else, to show up on time, to clock in and perform my tasks. It wasn’t meant to be permanent. Even at a higher minimum wage, these jobs will never provide a decent standard of living, and they’re not supposed to. The key is a formal job training program that allows workers to upgrade their skills to the point where they qualify for higher skill work, which carries a true living wage.
As has been demonstrated here, a super minimum wage for some workers hasn’t helped anyone, it’s just destroyed at least 900 jobs. Economic Growth DC has begun a process of determining where it can be helpful in building on the success the Gray administration has had with our job training system. I attended the quarterly public meeting of the Workforce Investment Council just yesterday. I was extremely impressed with Allison Gerber, her staff, and the members of the Council who all asked good questions. They have a lot of time, energy and money invested in the District’s various job training programs. Economic Growth DC intends to do what it can to strengthen the system so that more minimum wage workers are able to graduate to higher skill work.
Assuming this bill is defeated and Wal-Mart stays, we think it would be helpful for them to underwrite a retail management training course at the community college. This would help prepare their line employees for promotion at Wal-Mart or other retailers.