Policy: Labor

How D.C.'s effort to raise the minimum wage helps Walmart

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DC,Columnists,Sean Higgins,Labor unions,Vincent Gray,Labor,Analysis,Walmart,SEIU,Minimum Wage

The D.C. Council began the year by trying to pass a minimum wage hike intended to bring to Walmart to heel. It is ending the year by pushing a minimum wage increase that would likely benefit Walmart. Such are the tangled politics and economics of the minimum wage issue.

What changed is that the council, frustrated in its effort to pass a hike that singled out the retail giant and left most other businesses untouched, decided to instead push an across-the-board increase. That will likely happen.

At this point the real question is how much higher D.C.'s minimum will go. The council voted unanimously Dec. 3 to make it $11.50 an hour by 2016, up from its current $8.25. Mayor Vincent Gray has counter-proposed $10. The council must vote a second time before sending it to Gray, but the initial vote suggests it will be able to override any mayoral veto.

Either version would have the unintended effect of helping to insulate D.C.’s six new Walmarts from economic competition. The chain will be able to pay the new higher wage — in many cases, it already does — but local mom-and-pop stores may not.

That probably wasn’t the council’s intention when it introduced the Large Retailer Accountability Act in January. That would have required large retail businesses to pay at least $12.50 an hour.

Only a handful of businesses other than Walmart, like Macy's and Home Depot, qualified. All others would have been free to pay just $8.25, giving them a serious economic edge because their labor costs would be lower.

The bill was a response to Big labor-backed activist groups and other liberal organizations upset over nonunion Walmart's arrival in D.C. The main one was OUR DC, which is affiliated with the Service Employees International Union.

Walmart threatened in September to stop construction on six planned stores if the bill passed. Alex Barron, Walmart’s D.C. regional general manager, called it “discriminatory” and said it “would create an uneven playing field and challenge the fiscal health of our planned D.C. stores.”

Mayor Gray agreed and vetoed the bill on Sept. 12. It wasn't an easy decision. His predecessor, Adrian Fenty, was defeated in large part because he had crossed the city's unions. To deflect criticism, Gray offered to back “a reasonable increase to the district's minimum wage for all workers,” opening the door to the current bill.

OUR DC spokesman Corey Taylor said, “$11.50 is a start, but we would like to see it go even higher.”

For Big Labor, higher minimum wages are good thing because they price cheaper nonunion labor out of the market.

“Anything that makes entry-level workers more expensive to hire makes employing union members relatively more affordable,” said Heritage Foundation expert James Sherk.

The council’s new bill may be ok with Walmart too, which does not appear to have opposed it. (A Walmart spokesman could not be reached for comment.)

It has, in fact, supported such efforts in the past. In 2006, Walmart’s then-CEO Lee Scott said: “There are a number of proposals before Congress. Though we do not intend to take a position on any single piece of legislation, we believe Congress should increase the minimum wage.”

In the case of the D.C. bill, Walmart often already does pay a $10 or $11.50 wage. According to Payscale.com, Walmart’s cashiers on average make between $7.50 and $10.77 and sales associates make between $7.63 and $11.83. Overall, its wages are just five percent below the retail industry average.

It is a different story for D.C.’s small neighborhood stores — which already face the daunting prospect of competing with Walmart. “Small businesses are the least able to absorb ... a dramatic increase in their labor costs,” notes the National Federation of Independent Business.

These are the very businesses the anti-Walmart crowd usually says it is trying to protect. Do they have a voice on the D.C. Council?

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