EDITORIAL: WAGE WARS
IN TOUGH ECONOMIC times, such as we’re in now, the never-ending fight between businesses and employees over what represents a fair wage becomes more intense. At a feast, everyone eats. When the pantry’s empty, the fight for that last pork chop can get ugly.
In Washington, D.C., District officials and Wal–Mart are in a battle over portion sizes. D.C., along with 18 states, has moved beyond the national minimum of $7.25, which was last adjusted four years ago. But now the District has gone a giant step further: The D.C. Council has approved the “Large Retailer Accountability Act” that requires some big-box stores (unionized Safeway, for example, was given an exception) to pay $12.50 an hour, almost 50 percent over the district’s minimum of $8.25. That’s far beyond what Wal–Mart pays its average sales associate—$8.81, according to IBISWorld, an independent market research group.
In response, Wal–Mart has canceled plans for three of six stores it hoped to build in some of D.C.’s poorer neighborhoods, and is considering pulling the plug on the three currently under construction. Some economists say because big retailers can afford to increase wages more than a neighborhood market can, they should pay more. Wal–Mart obviously does not agree.
The Chicago City Council passed a similar plan seven years ago, but then-mayor Richard M. Daley vetoed it. He saw what the council did not: That by requiring much higher pay, “Chicago had just made itself uncompetitive and nudged a big retailer to ring the city with suburban stores,” says the Chicago Tribune in a recent editorial urging D.C. not to make the same mistake. Thanks to Mr. Daley’s veto, Wal–Mart built nine stores in Chicago employing 2,000 workers, stores that are offering city shoppers a choice they would not otherwise have.
As President Obama’s proposed hike of the national minimum wage (to $10.10 by 2015) struggles to make it through Congress, it’s instructive to note that the $1.60 minimum of 1968 would be worth $10.56 today. And the portrait of the minimum-wage worker as a middle-class teenager living with Mom and Dad isn’t so accurate anymore. According to the Center for Economic and Policy Research, in 1979 26 percent of workers earning $10 or less an hour were teenagers. By 2011, that figure had fallen to 12 percent. While a “living wage” may seem fair, lower wage scales may actually benefit workers who need job experience or those with sub-par educations, giving them a start they might not otherwise get.
Many will call D.C.’s effort to force a living wage a naked shakedown. But the bottom line is still the bottom line. If Wal–Mart can make money paying everyone in its Washington stores at least $12.50 an hour, it likely will do so. If not, it will sustain the decision to exit the city. Then, D.C. will have to back off or accept a Pyrrhic victory.