Burden of DC’s Wal-Mart Minimum Wage would be Borne by City’s Poor

Plans to bring six Wal-Marts to the District of Columbia may fall through over city requirements for the big box store to pay an hourly wage of $12.50, more than a 50-percent increase over the District’s $8.25 minimum wage. Yesterday, the DC City Council voted 8-5 to approve this higher minimum wage, creating a higher wage requirement for stores with over 75,000 square-feet and retailers that make over $1 billion annually.

The council passed Large Retailer Accountability Act under the rhetoric that raising the minimum wage would benefit the District’s workers and that Wal-Mart can afford to pay higher wages:

Vincent Orange was one of the most vocal supporters of the bill. “We don’t need Wal-Mart, Wal-Mart needs us,” he said. “The citizens of the District of Columbia demand that we stand up for them.”

While supporters of higher minimum wages say that they are helping their least well-off constituents, in fact raising the minimum wage for Wal-Mart will hurt the very members of the city’s labor force that  council members say they are trying to help. That raising a minimum wage raises unemployment is uncontroversial among most economists. When the employment rate falls with a higher minimum wage, those left without a job will be lowest-skilled workers with the fewest job choices. While a higher minimum wage will benefit a group of employees who keep their jobs and otherwise would have made the lower minimum wage, policymakers must acknowledge the tradeoffs involved in a minimum wage law and that by supporting a minimum wage, they are hurting society’s least well-off members.

Furthermore, by discouraging Wal-Mart from opening stores, DC’s council is doing another disservice to residents by reducing availability of low-cost goods. Again, the burden of this policy decision falls hardest on the city’s lowest-income residents. Because those with lower incomes tend to spend a higher percentage of their income on food and other basic goods sold at Walmart, discouraging the company from opening DC locations is a regressive policy. Even for those who don’t choose to shop at Wal-Mart, the retailer’s low prices create pressure for other city stores to reduce their own prices to compete, benefiting an even wider net of consumers.

Mayor Vincent Gray has the option to veto the bill, which would require a ninth vote from the Council to overturn. If the DC City Council actually wants to benefit the city’s low-income residents, allowing Wal-Mart to provide jobs and affordable goods would create broader, lasting benefits to the community than a restrictive minimum wage. Requiring large stores to pay a higher minimum wage than other retailers would limit consumer choice, especially for consumers who have few choices, and it would eliminate job opportunities for the least-skilled workers.

3 thoughts on “Burden of DC’s Wal-Mart Minimum Wage would be Borne by City’s Poor

  1. Dylan Petrohilos

    This article is bogus. High minimum wage just means more money in the neighborhoods that rely on minimum wage laws. Sorry, that wal-mart is unwilling to pay workers a half decent wage.

    “Minimum wage just means if I could pay you less I could”

  2. Bill Hostetter

    “When the employment rate falls with a higher minimum wage, those left
    without a job will be lowest-skilled workers with the fewest job choices.”

    This is an agreed-to-assumption, but statistically this is not the case.
    Besides, unemployment has more to do with demand of goods and services, rather than wages. If this were not the case, we wouldn’t see wages rise with booming economies.

    “While a higher minimum wage will benefit a group of employees who keep their jobs and otherwise would have made the lower minimum wage, policymakers must acknowledge the tradeoffs involved in a minimum wage law and that by supporting a minimum wage, they are hurting society’s least well-off members.”

    If you were correct, all earnings benchmarks would be bogus. If at any point one person made more than another, we would have to agree that such incongruity hurts anyone who makes less. Basically, anyone who makes more than the lowest paid person is harming the lowest paid. That means, Wal-Mart and all retailers would have to pay their employees a number closer to the highest paid person’s salary. In which case, you have no argument, except in the case of competition.

    With the proposed wage increase, Wal-Mart would have to find innovative ways to compete, and they could. They just aren’t interested in competition. They’re interesting in majority market-share. Historically, after periods of competition, and they have majority market-share, Wal-Mart will raise their prices, obviously, because people will pay them. Any trade-off on lowered prices from their competitors would be short lived, and those businesses would shut down, because they are “inefficient.” Coincidentally, Wal-Mart would hold the privatized regulatory standards of efficiency. As for employment and the big blue store, Wal-Mart’s not exactly known for it’s impressive employment record. Wal-Mart has a history of underemployment

  3. hamilt0n

    I wonder if commenters Dylan and Bill can explain why they don’t support a $10,000 minimum wage.

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