Thursday, September 12, 2013

DC Mayor Gray understands the problems with higher minimum wages...almost

In vetoing the Large Retailer Accountability Act, which would hike the minimum wage for workers at "big box" stores to $12.50 per hour, Mayor Gray of Washington DC gave a number of sensible  reasons for his decision including the loss of 4,000 jobs, the belief that retailers will open stores just outside the District’s borders, where labor costs would be 40 percent cheaper, and a concern that the increase would have a chilling effect on economic development in general.

He also shot down the idea that if he approved the bill, and thus dissuaded Walmart from opening any stores in DC, he would preserve existing jobs with local retailers because "very few retail jobs of any sort presently exist" in the neighborhoods where Walmart plans to open.

Interestingly he also argued that even if the bill did end up creating a small number of higher-paying jobs many of them would go to Maryland and Virginia residents who are "higher-skilled" than potential DC employees.  A remarkably candid analysis of the economic "worth" of  the unskilled labor pool in Washington (and I am not talking about politicians) that more minimum wage advocates should pay attention to (for more see here).

Overall, Mayor Gray provided a well reasoned defense of his position providing solid reasons why he felt an increase in the minimum wage directed at Walmart would have a negative impact on the DC economy. However, just as I was getting euphoric about a politician making a sensible choice in the face of intense pressure from various interest groups (aka unions) he ruined it by saying that the number one reason he opposed the bill was that he would pass a living-wage bill if it applied to all District residents.

So let me get this straight.  Increasing the minimum wage for large retailers alone would have a chilling effect on economic development, but increasing it for every business in DC would not? 

Got it.

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