First, a quick primer: After several years of negotiations, Wal-Mart has broken ground on three “big box stores” in the District and has plans for three more stores. On July 10, the District of Columbia Council approved the Large Retailer Accountability Act (LRAA), which would require that Wal-Mart -- and other retailers with gross revenues in excess of $1 billion a year and stores larger than 75,000 square feet in the District -- pay employees at least $12.50 per hour. The minimum wage in the District is currently $8.25.
The D.C. council voted 8-5 to pass the LRAA, one vote short of the super-majority needed to override a mayoral veto. Mayor Gray, who must sign or veto the bill by the end of the week, has expressed concerns about the living wage measure, which is backed by a broad coalition of community, faith and labor activists.
The LRAA would not prevent Wal-Mart from making a handsome profit in the District. Other large retailers in the city already provide employees with compensation packages in excess of $12.50 per hour, and they perform well. Costco pays its workers an average wage of $20.89 per hour and 84 percent of their employees are D.C. residents. But without the living wage measure those good retail jobs could be under threat. If Wal-Mart were to offer its employees less than $12.50 and poor benefits, other retailers would be under pressure to cut back. Unrestrained by the LRAA, Wal-Mart could drag everyone else down.
If the mayor signs the bill into law, Wal-Mart might walk away from its D.C. stores, but not because the LRAA would undermine its ability to operate profitably. Large retailers want access to the D.C. market. With a growing and affluent population, the city is consistently ranked as one of the top retail locations in the country. But Wal-Mart might choose to “send a message” to other cities tempted to follow the example of the D.C. Council.
D.C residents should be concerned about the influence of Wal-Mart on the local economy. The nation’s largest private-sector employer is also the largest employer of workers dependent on food stamps, subsidized housing and childcare, government health insurance for low-income individuals, and other forms of public assistance. According to a report by the Democratic staff of the House Committee on Education and the Workforce, the poverty wages and poor benefits at a single Wal-Mart store might cost taxpayers as much $1 million per year in higher usage of public-assistance programs by workers and dependents.
The LRAA would make Wal-Mart workers less reliant on public assistance and help turn poverty-level wages into living wages. Income inequality in Washington is among the nation’s highest, and the city is one of the most expensive places in the country to live. Many low-wage workers are already being forced out by rising living costs and a lack of good jobs. The LRAA would reduce the taxpayer subsidy of the country’s largest employer, boost the local economy, and protect good retail jobs already in the city.
Mayor Gray faces a stark choice. He can capitulate to Wal-Mart’s brazen intimidation and veto the living wage measure. Or he can sign a bill that would not only help low-wage workers in the District but also serve as a model for urban areas around the nation. If other cities were to enact similar legislation, millions of retail workers would reap the benefits, as would the economy of urban America.
And no matter what happens in D.C., the nation’s largest private-sector company and world’s largest retailer will, despite its howls of protest, continue to prosper.
Logan is professor and director of Labor and Employment Studies at San Francisco State University.