Federal cuts threaten District economy, Gray warns as veto decision looms on wage bill

Four days after receiving a D.C. Council bill that could affect the pace of retail hiring, Mayor Vincent C. Gray warned Tuesday that federal budget cutbacks have led to employment stagnation that threatens the city economy.

Sequestration is obviously resulting in a slowdown in the growth of the District’s economy we would otherwise be experiencing,” Gray said, calling on Congress to revisit its long-term spending plans in coming months.

Gray would not address questions on his looming decision on the Large Retailer Accountability Act, which would require certain large retailers to pay wages and benefits of at least $12.50.

But the John A. Wilson Building news conference, which highlighted the loss of 7,000 public-sector jobs since January and a recent uptick in the city’s unemployment rate, could soften the ground politically for a Gray veto. His top economic development adviser, Victor L. Hoskins, has previously warned that the “living wage” bill could devastate the city’s efforts to attract retailers and the jobs they offer.

At Tuesday’s event, Hoskins was among a host of city officials who lamented the employment statistics. In the most recent figures, city unemployment ticked up a tenth of a point to 8.6 percent in July — up from a nearly four-year low of 8.4 percent in December.

 

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“We have to keep the momentum going in the right direction,” he said. “We know that two-tenths of one percent is not a lot in terms of statistics, but in terms of lives, it is a lot.”

Lisa M. Mallory, Gray’s employment services director, said the recent drop in public-sector employment constituted the largest six-month loss of government jobs in the city in more than 15 years.

The loss of those mostly federal government jobs has been somewhat offset by growth in private-sector employment, but the District’s chief economist, Fitzroy Lee, said Tuesday that slowing income and sales tax collections show that a broader economic slowdown could be underway. Mayoral budget director Eric Goulet outlined $30 million in budget cuts set for the coming fiscal year, which begins next month, due to the sequestration cuts — hitting public housing, education, senior programs and health screenings.

The news conference took place on the first day of a 10-business-day window for Gray to sign or veto the retail wage bill, a measure that has become closely linked with Wal-Mart’s plans to open six stores in the city, potentially creating hundreds of construction and retail jobs. The Arkansas-based retailer, claiming the bill creates an unfair playing field, has said it will abandon plans for at least three of those stores should the measure become law.

Gray spokesman Pedro Ribeiro said Tuesday’s event was not related to the mayor’s upcoming veto decision. “This has been on the calendar for well over a month,” he said.

Also on Tuesday, labor leaders and clergy who support the “living wage” measure and have cast it as a critical effort to lift the city’s poorest workers out of poverty delivered to Gray what they said were more than 31,000 signatures of support.

Joslyn Williams, president of the Metropolitan Labor Council, AFL-CIO, recalled at a morning news conference outside the Wilson Building at least three times since 2006 that Gray has said he supports making Wal-Mart pay higher wages.

Williams said Gray should stand by his words and sign the bill.

Council member Vincent B. Orange (D-At Large) also hinted at the political implications for Gray if he vetoes it. With the signatures delivered Tuesday, supporters said 36,917 people had contacted the mayor in support of the measure.

In next year’s mayoral election, Orange said, “that could be your base.”

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
Aaron Davis covers D.C. government and politics for The Post and wants to hear your story about how D.C. works — or how it doesn’t.
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