The District of Columbia Council members passed a "living wage" law on July 10, forcing certain large businesses to pay a minimum wage of $12.50, more than 50 percent above the current level of $8.25.
The most cynical and naive supporters of the measure say it puts more money in workers' pockets, but it's written too narrowly to do that.
The measure's sole target is Wal-Mart, which in response threatened to open just three of its six planned stores in D.C. That was the measure's real purpose, as its more forthright supporters openly admit. They want government to decide what kind of retail business the District will have.
Three Wal-Mart stores and 900 new jobs could go down the drain. That's an expensive luxury — the city lost 4,000 private sector jobs in May. In Ward Seven, where two stores may never open as a result of this law, retail is already sparse, and unemployment is 13.9 percent. The Council's vote has set a maximum wage of zero for hundreds of people who might otherwise work.
The Council exhibited economic illiteracy in letting itself be used this way, but there is also great irony here. The opponents of Wal-Mart's market entry from the day it was first announced — especially local labor unions and Wal-Mart competitors in the District — have adopted Wal-Mart's playbook. As Wal-Mart has done elsewhere, they are using government to increase or protect their own market share and to wound or destroy the competition.
The damage such behavior causes to the economy and society has long been a concern of Washington Examiner columnist Tim Carney's. Today, people have taken to calling his critique "libertarian populism."
Despite its growing relevance, some voices (such as the New York Times' Paul Krugman) simply dismiss it as a political gimmick, without even exploring its merits. They are making a big mistake.
Here's the problem: Government too often is for sale, and it's become so powerful that everyone must either bid on it or become its victim. As Carney has repeatedly shown since the publication of his 2006 book, The Big Ripoff, this is a large and growing societal problem.
Many liberal critics of special-interest politics overlook the fact that commercial interests frequently seek unfair profits not by making government smaller, but by making it bigger — enlarging and empowering the state to serve their own ends.
Wal-Mart is famous for doing this. In addition to its storied corporate welfare packages, the company has repeatedly lobbied for heavier regulation to lower its costs, increase its profits, and even to block or smash its competitors with higher costs.
In the 2010 bank reform law, Wal-Mart lobbied to include federal price controls on the fees that debit card companies can charge retailers. The company and its lobbyists raised money for Sen. Dick Durbin, D-Ill., who inserted the provision. As Carney noted at the time, Wal-Mart used big government to fatten its bottom line, and consumers got stuck with new bank fees to pay for it.
When Wal-Mart backed the last minimum federal wage hike to $7.25 per hour, it was already paying entry-level workers 10 percent more than that. But not all of its smaller competitors could afford to do so.
Wal-Mart also raised its competitors' costs by backing Obamacare with its employer mandate to provide health insurance. Meanwhile, as Reuters has reported, Wal-Mart is avoiding those costs by shifting its own workforce toward temporary and part-time workers.
So in D.C., Wal-Mart's enemies have Wal-Marted Wal-Mart. It's amusing and ironic, maybe, but that doesn't make it right. And it certainly won't strengthen the District's ailing local economy.