Should cities mandate how much companies pay their employees? That’s the debate transpiring right now in Washington, D.C. as city council is mulling over legislation that would require big-box retailers to pay higher wages to its workers.
Walmart made headlines after it threatened to exit the town if the “living wage” bill is passed and signed by Mayor Vincent Gray in council. It said it would cancel its plans to build three stores in the city’s poorest neighborhoods, which are in desperate need of economic development and growth – D.C. has one of the highest unemployment rates in the country.
Although it would only apply to larger retailers, opponents of the initiative say it will deter corporations from setting foot in a city. The move would force bigger companies to provide an hourly wage of $12.50 per hour from the present city minimum wage of $8.50 – some economists are applauding the measure because they argue it’s an effective way to raise pay.
Unions, poverty groups and worker advocates have also come out in favor of the initiative. They have also long complained about Walmart’s working conditions, wage rates and how it has hurt smaller companies in areas of the city.
Business organizations, who make the case that retailers make less profits than otherwise believed, say the law is unfair, discriminatory and outrageous.
“By any analysis this is a really flawed proposal that’s also very discriminatory,” said David French, senior vice president of the National Retail Federation, in an interview with the Associated Press. “The assumption is that retailers make a lot of money, therefore they can pay higher wages and therefore you can impose higher costs by fiat. That doesn’t necessarily reflect reality.”
He added that if the mayor goes through with the minimum wage hike then it could cause a terrible precedent and see other cities impose similar measures on other big-box retailers. “The political forces that have brought the D.C. Council to the brink of economic suicide are the same political forces at work in other cities,” noted French.
A new report came out recently that highlighted how the district government is being hypocritical on its own policy. According to the D.C. Department of Human Resources, full-time school maintenance and custodians earn $11.75 per hour, while a clerk at the University of the District of Columbia makes $10.40 per hour.
This comes as billionaire Charles Koch suggested that governments should eliminate the minimum wage to help the poor. Speaking in an interview with Wichita Eagle, economic freedom is the primary driver to personal success – he cited regulations, government subsidies, permits and licenses as hindrances to growth and is a reflection of a “culture of dependency.”
“We want to do a better job of raising up the disadvantaged and the poorest in this country, rather than saying ‘Oh, we’re just fine now.’ … Anything that people with limited capital can do to raise themselves up, they keep throwing obstacles in their way. And so we’ve got to clear those out. Or the minimum wage. Or anything that reduces the mobility of labor,” he explained to the news outlet.
As Economic Collapse News has reported, there are only a small group of people who benefit from minimum wage laws: unions, corporations and governments. Unions are able to price unskilled workers out of the labor market, corporations can hurt their smaller competitors by hiking minimum wage laws and governments can be viewed as the crusaders of justice.