Commentary: D.C.’s living wage proposal is anti-competitive and plain bad policy

June 16, 2013

Members of the D.C. Council recently proposed the Large Retailer Accountability Act of 2013, and the act will now be considered by the full council in the coming days. As currently written, this piece of legislation requires businesses with revenue greater than $1 billion to establish a living wage of $12.50 per hour. This requirement would be waived for franchisees and organizations which already partake in collective bargaining.

There are so many reasons to oppose the Large Retailer Accountability Act, I just don’t know where to begin. This legislation is anti-competitive, counterproductive, arbitrary and just plain bad policy.

The act would require “billion dollar” companies to pay 50 percent more for minimum wage. Basic economics shows that such a large increase in entry-level wages will lead to a surplus of job seekers, but a shortage of actual jobs. This may result in good opportunities for those lucky few who get the positions, but those who do not will suffer due to the overall decrease in job supply.

Who do you think will obtain these coveted jobs? Those employees who work for the same companies in Arlington or Prince George’s sure would be happy to come into the city and receive $4 more than they currently get. And if companies have to pay that much more for their employees, they might as well offer experienced staff first crack at the positions.

Apparently the plan to create jobs in the District is to employ fewer people and get them from outside the city.

Not such a good plan.

Artificially raising wages like this will lead to increased prices and infuriated businesses. The city’s welcome mats will be rolled up and there will be an uneasy dread among businesses with revenue less than a billion waiting to see when the bar is lowered, when another barrier to normal rules is dreamt up.

The District’s current minimum wage of $8.25 is already $1 more per hour than Maryland and Virginia. Making the minimum wage $12.50 is among the most counterproductive things the District could do to grow business here.

We want the Costcos and the Wal-Marts coming to emerging areas of the city. We want them to hire entry-level workers and help them grow earnings as they move up the ranks. We want businesses to succeed here and continue to attract even more companies.

This legislation should not happen. It is misguided, wrong, unfair, probably subject to legal challenge and not the way to grow business in the District.

This is basic economic development. You don’t need to be president of the Board of Trade to tell you so. It’s not that complicated.

James C. Dinegar is president and chief executive of the Greater Washington Board of Trade.

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