• U.S.

Laboring Over Pay

2 minute read
Jacob Davidson

Walmart and Washington have become the newest combatants in the war over wages. On July 10, the D.C. council passed a “living wage” bill requiring nonunion retailers with more than 75,000 sq. ft. of space and parent-company revenue of $1 billion or more to pay workers a minimum of $12.50 an hour. Guess which company fits the bill. In response, Walmart has vowed to cancel three planned Washington-area stores and halt construction on three others if the bill becomes law, leaving 1,800 jobs in the lurch.

Since Baltimore pioneered the idea in 1994, living-wage laws have spread to more than 140 jurisdictions. Washington Mayor Vincent Gray, who is mulling a veto, finds himself at the center of a long-running economic debate. Is a wage floor on labor a working-class savior or an albatross that prices unskilled workers out of the job market? The debate is now set within an economy that desperately needs both real-wage growth–there’s been none in a decade–and job growth.

Economists are split. In a recent survey of economists by the University of Chicago, a small majority said raising the federal minimum wage would make it harder for low-skilled workers to find a job. Yet a substantial majority thought it was worth raising the figure.

Richard Burkhauser, professor of policy analysis at Cornell University, warns that a higher minimum wage puts low-skilled workers in competition with more-qualified ones. But Paul Sonn of the National Employment Law Project says Burkhauser is in the minority with his position. “The weight of economic research over the past decade has found no appreciable evidence of either job losses or hour reductions after minimum-wage increases,” Sonn says.

Walmart says its store openings are always met with a flood of job applicants–evidence that labor is priced correctly. It has complained that the proposed law will put it at a competitive disadvantage. Steven Restivo, senior director of community affairs for Walmart, says the council caved to pressure from Giant and Safeway, unionized stores that typically offer higher wages and benefits than Walmart. Yet if Walmart prevails, it will instantly gain the advantage of lower operating costs. No wonder Gray is stalling. Washington is a big market, but probably not big enough for three large grocery chains.

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