Wal-Mart Wins the Minimum Wage Debate in Washington, D.C.

Source: http://www.flickr.com/photos/76657755@N04/

Back in June, local lawmakers in Washington, D.C., approved a bill called the Large Retailer Accountability Act. The act proposed that large retailers — those doing businesses in spaces of 75,000 square feet or more and earning more than $1 billion in annual sales — increase the minim wage paid to employees from $8.25 per hour (a local minimum already $1 above the federal) to $12.50 per hour.

“The Council of the District of Columbia declares that it is the policy of the district to promote living wage jobs to help working families make ends meet and protect the health, safety, and welfare of our community,” read the bill. “Large retailers are becoming an important source of jobs for local residents. Some large retailers pay very low wages and do not provide their workers affordable health benefits. Without safeguards, large retailers threaten to erode both living standards for working families in the District, especially given the cost of living in the District.”

All of this, to some degree, is true. Retailers are an important source of jobs, particularly in under-served communities and the so-called living wage issue has come front and center over the past few months, reinforced by persistent poverty levels and growing income inequality.

Low-wage industries such as food services, retail, administrative support, and waste management services, constituted 43 percent of net job growth during the recovery, according to the National Employment Law Project. Within these industries, 76 percent of job growth has occurred at the low-end of the scale.

The organization showed that while low-wage occupations accounted for 21 percent of recession-era job losses, they accounted for 58 percent of recovery job gains — and while mid-wage occupations accounted for 60 percent of recession losses, they accounted for just 22 percent of recovery growth.

This has created yet another divide in America, between those who believe in establishing some sort of living wage and those who support a more market-driven approach. As the largest private employer in the country, Wal-Mart (NYSE:WMT) is naturally at the center of this debate. Perhaps the most visible battlefield recently was in Washington, D.C., where the company lobbied against the Large Retailer Accountability Act.

In an op-ed in the Washington Post in July, Wal-Mart Regional Manager for the D.C. area Alex Barron had this to say about the legislation that, ”In November 2010, Wal-Mart announced a plan to bring more jobs, shopping options and fresh food choices to Washington residents. Just 12 months later, we increased our investment — from four stores to six and from 1,200 jobs to 1,800 — in an effort to expand access and opportunity to more underserved communities in the city.

“But despite the consensus among D.C. stakeholders about the economic value that our stores would bring, some members of the D.C. Council are advancing an eleventh-hour effort to try to undermine our efforts and change the way businesses like Wal-Mart must operate in the city. From day one, we have said that this legislation is arbitrary and discriminatory and that it discourages investment in Washington.”

The Act, although passed by council, was vetoed by the city’s mayor, and the measure failed to receive enough votes to overturn the veto. The conversation surrounding the issue of a living wage has been very loud recently. At the end of August, workers in the fast-food industry and their supporters held a day of protest, walking out of work or taking to the streets in all 50 states in the pursuit of higher wages and better workplace conditions. The demonstrations were just one in a series catalyzed in part by President Barack Obama’s call for a higher, inflation-indexed minimum wage in his 2013 Sate of the Union address.

In his speech, the president argued that, “In the wealthiest nation on Earth, no one who works full-time should have to live in poverty.” He advocated an increase in the federal minimum wage from $7.25 per hour to $9 per hour, a move that could “mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets. And a whole lot of folks out there would probably need less help from government.”

But, critics argue, an indiscriminate increase in the minimum wage could end up hamstringing the economy, which now more than ever should be spared unnecessary shocks. Critics of the president’s proposal — or others, like a proposal being tossed around in Congress to increase the rate to $10.50 per hour, or the headline $15 hour rate most recently sought by protesters — make a fairly broad-based and convincing case: Logistically, such increases could actually fail to bring about the desired change.