The economic ignorance of the city mothers and fathers of Washington, DC never ceases to flabbergast me. Years ago, the city's solons decided that not enough people were choosing to work at house-cleaning and other domestic chores, so they sought to solve this "shortage" by voting to boost the minimum wage for such work. Surely, increasing the price of an activity will increase the demand for it.
In another boneheaded move, the city council voted earlier this year for legislation, the Large Retailer Accountabliity Act, that would hike the minimum wage for workers at "big box" stores to $12.50 per hour. This is a big increase over the city's $8.25 minimum wage. Evidently the city council believes that this is the way to entice retailers like Walmart, Target, and Wegmans to open businesses in the city.
Even the editorial page of the Washington Post recognized how stupid this proposal is:
"We don't have to beg people to come to the District anymore," [city council member Vincent] Orange pronounced confidently. In fact, the measure backed by Mr. Orange will prompt companies to think twice about coming to the District, particularly to struggling neighborhoods that most need jobs and services. Existing businesses will worry they will be next in line for prejudicial treatment from lawmakers catering to special interests.
The bill, tentatively approved by the council, would require big retailers to pay employees $12.50 an hour. That's $4.25 more than the District's minimum wage, which already is a dollar higher than those of Virginia and Maryland. The measure could lead Wal-Mart, the bull's-eye being targeted by the bill, to scale back its plans for development in the District, including a store slated for Skyland Town Center in underserved Ward 7. Wegmans, the grocery chain the city is trying to lure to the former Walter Reed Army Medical Center campus, has also reportedly expressed concerns about the extra cost of doing business and the competitive disadvantage (i.e., higher prices) that would result from the bill.
The hubris of the Large Retailer Accountability Act is matched by its hypocrisy. Council members who backed the measure, first sponsored by Chairman Phil Mendelson (D), claimed only to be looking out for D.C. workers struggling to keep pace with the cost of living in the District. Apparently they aren't worried about people who work in fast-food restaurants, the unionized grocery stores carefully exempted or countless other businesses or, for that matter, about some of their own government employees who make less than $12.50 an hour.
The Post notes that DC Mayor Vincent Gray can veto this "bad bill." For a nice roundup of the evidence that setting minimum wages kills jobs, see my Reason colleague Brian Doherty's long post, "The Minimum Wage: A Little Light Empiricism on a Heavy Subject," and see also Reason contributor Sheldon Richman's column, "The Minimum Wage Harms the Most Vulnerable."
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