Today, DC Mayor Gray announced that he will veto a bill that would require large retailers, including such stores as Walmart, Target, and Lowe's, to pay employees a higher hourly wage than other businesses. In a letter to the DC City Council, Gray said:
I recognize that reasonable people passionately support [the Large Retailer Accountability Act of 2013]. And I strongly believe that all District residents should earn a living wage. However, after careful consideration, I have concluded that the bill, while well-intentioned, is flawed and will fail to achieve its intended goals.
He goes on to list six reasons for rejecting the bill, including that, if enacted, the bill would affect many more companies than just Walmart (the target of the bill’s proponents) and it would result in the underserved consumers of the District's low-income areas to continue to pay more for everyday items (either in traveling longer distances or shopping at stores with smaller selections and higher prices).
What does this mean for DC residents?
Jobs Jobs Jobs. According to the DC Chamber of Commerce, if Walmart builds the two or three stores, 900 jobs will be created and available for low-income and low-skilled District residents. That's more money in their pockets and gaining experience for the future. It's helping take people off of welfare and grow the local and national economy.
What does this mean for DC Government?
For those who believe that the economy creates jobs, they will see some $7 million in new government revenues. That's $7 million that you can use for road repairs (taking down some speed cameras), school reform (add some more kids to the Opportunity Scholarship Program), or (dare I say it) lower taxes for everyone. Other companies will also see DC as pro-business instead of a city picking winners and losers.
For those who think that government creates jobs, sorry. You will be disappointed in the increased revenue because you have convinced yourselves that your citizens who are getting a paycheck from a private, successful company is a bad thing. As a result, the DC Council seeks to override the Mayor in passing this bill, which would require large companies to pay employees $12 an hour instead of the city's minimum wage. They very well may succeed but, as I explored back in July, the consequences will hurt them, DC’s citizens, and DC reputation.
Why discriminatory wages are bad for DC:
- DC Council: By increasing expenses for a select group of businesses, you send a message that no one is safe and that you pursue policies based not on sound economics but special interests (entrenched interests/unions) and on emotional, short-sighted reasoning.
- DC Citizens: You want DC to get better and the best/most efficient way to do this is for businesses to sprawl throughout the District and especially where poverty is the norm. Greater economic development means more jobs for everyone and quite likely less crime. However, very little of that happens (or at least on a smaller scale) if your government is telling businesses that they are not welcome.
- DC Reputation: Most importantly, a discriminatory wage policy will have ripple effects that will be felt for decades. If Wal-Mart is told they must play by a different set of rules than the corner market, they will make the best economic decision available to them: they won't build in DC. They will build in Dayton, Denver, and Jacksonville and provide lower cost items to those citizens and leave you in the dust. Then, Lowe's and Target will also get the message that there is little point to negotiate with pick-and-choose governments. They will also invest and build elsewhere. And so on.
Here's what I'm saying and I think that Mayor Gray is saying something similar (though we disagree on the solution): If you are going to make one business pay more for something because of government policy, you should make all businesses do so because that's fair. Be it a McDonalds or a vegan bakery, the government is not the arbiter of success. Success comes from hard work, specialization, local knowledge, and innovation. All of that can be found in the free market.
We will, again, see what develops and if DC will see this wage hike again.