We hope the District’s policymakers are paying attention to what Living Social has done with its workforce. It should be a major alarm bell. Even with the large (many say too large) package of economic incentives the District granted Living Social, they are eliminating jobs in the District and shifting them to Arizona, where they’ve hired over 200 employees recently. These are mainly entry level call center jobs. The District has many, many residents capable of filling those positions. Why were they willing to take the political heat from moving these jobs to Arizona despite their incentive package?
Living Social has been open about it: it costs significantly less to operate in Arizona than the District. But the main problem is not salaries. Our guess is that hourly wages in Arizona are not that much different from here. The difference lies in the regulatory and business climate there versus here. Arizona is broadly pro-business and they have established a regulatory regime designed to foster growth and job creation. Can we truly say that about the District? Intentionally or not, we make it difficult for businesses to operate in the District. Most businesses are here because of proximity to the federal government, not because of our business climate.
Mayor Gray is taking some important steps. He has empowered the tax commission to take a broad look at the District’s tax system with an eye on making it more competitive. He’s also formed a regulatory task force charged with an overhaul of the District’s regulatory regime. We would like for them to act aggressively on this and focus on making DC an easier and better place to do business.