A couple lessons, here. First, businesses are not obligated to open in your city or your neighborhood, particularly when you incentivize them to locate elsewhere. Washington, D.C. is particularly susceptible to losing potential jobs (particularly in entry-level and working class retail positions, as opposed to lobbyist slots) to nearby jurisdictions because it doesn’t take much to simply cross the bridge to friendlier climes in, say, Virginia.
Second, as Sonny Bunch reminds us of a lesson from Econ 101, hiking the minimum wage kills jobs.
Here’s the haps. In Washington, Wal-Mart, the city council, the grocery store unions, and a thousand Wal-Mart hating community groups have been engaged in a delicate, dumb dance for years over whether the giant retailer should be allowed within the hallowed precincts of the District of Columbia. Other big box stores are allowed— Best Buy, Target, and Home Depot for example—but the mother of all box stores has been picketed and pushed and generally trashed throughout its attempts to set down some retail roots. The parties seemed to be coming to an agreement on three stores inside the District, predicted to bring 900 full and part-time jobs and some fresh grocery options to those so-called “food deserts” you hear about.
But the agreement might fall apart over a “living wage” bill, which requires a segment of retailers that sounds suspiciously like “retailers that are Wal-Mart” to pay far and above D.C.’s $8.25 minimum wage:
Representatives from Wal-Mart say the company will no longer build its planned stores at Skyland Town Center and Capitol Gateway, retail sites in Ward 7. “They’re not bluffing me,” Councilmember Yvette Alexander (D-Ward 7) says, having just left a meeting with the world’s largest retailer. “We worked for many years to get this commitment. I really didn’t think it would get to this point.”
The Large Retailer Accountability Act requires companies that take in at least $1 billion in revenue annually to pay their employees at least $12.50 an hour, well above the District’s minimum wage of $8.25. The bill also only applies to stores that are at least 75,000 square feet, thus exempting companies like Apple and Starbucks.
Isn’t the carve-out for liberal-approved billion-dollar retailers precious? Wal-Mart’s announcement is enough to make some reconsider and see the big picture:
In addition to the two Ward 7 stores, Alexander’s chief of staff, Ed Fisher, also says Wal-Mart’s move imperils a store planned for New York Avenue and Bladensburg Road NE. Councilmember Kenyan McDuffie (D-Ward 5), who represents that area, was one of eight “yes” votes on the bill’s first reading.
“That was without knowing Wal-Mart was going to pull out,” says Jeannette Mobley, McDuffie’s chief of staff. Mobley says her boss is “going to give this some thought” before tomorrow’s Council session.
Fisher says each planned Walmart was going to have at least 300 full- and part-time employees, as well as enhance food shopping options in Ward 7, where there are only four full-service supermarkets. “We’re going to have fewer options for groceries and commercial retail,” Fisher says. “At least 900 people won’t have an opportuntiy whether it’s full-time or part-time. Whether it’s a student in high school or a senior or a job someone can use as a stepping stone.”
As Bunch puts it: “So instead of decreasing the unemployment rate in blighted Washington, D.C., neighborhoods, there will be no jobs. Good job, guys! You really nailed this whole ‘governance’ thing.”
— Lachlan Markay (@lachlan) July 9, 2013
The argument from the left is a petulant cry of, “Hey, the Waltons are real rich and they can’t afford to pay $12.50 an hour?!” Again, they’re not obligated to bring their stores to your city when you’re actively trying to make it harder for them to do business there, especially when they have other options nearby. In the same way, gun accessory manufacturers are not obligated to stay in your state when you’re banning their products. In the same way, smart, talented people are not obligated to be doctors when the cost of becoming a doctor and maintaining malpractice insurance isn’t worth the financial rewards of being a doctor. Incentives matter, and free people respond to them.
Oh, and if the D.C. Council does end up blocking Wal-Mart in the city, it’ll be great fun to watch them all later endorse former Wal-Mart board of directors member Hillary Clinton.
(For the record, though I’m defending Wal-Mart here, I’m not always down with the ways the company colludes with government to get into certain communities, via eminent domain, for instance.)