Earlier this summer, the Washington DC City Council engaged in a boneheaded effort to shake-down the retailer Walmart by passing 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.
The scheme backfired spectacularly when Walmart announced that it was cancelling the construction of three new stores in economically depressed DC neighborhoods and was considering cancelling three others. The Washington Post urged DC Mayor Vincent Gray to veto the Act before any more damage was done. Hizzoner has finally gotten around to it. In a letter to the City Council today announcing his veto Mayor Gray notes:
The bill is a job-killer, because nearly every large retailer now considering opening a store in the District has indicated that they will not come here or expand if this bill becomes law. The Deputy Mayor for Planning and Economic Development has estimated that, should the bill take effect, it will cause the loss of more than 4,000 jobs District jobs in just the first few years alone. ( all emphases in original)…
Even if the bill did somehow end up creating a small number of higher-paying jobs, it does nothing to ensure that those jobs would be filled by District residents. Instead of creating higher-paying entry level jobs for District residents, at best the bill will create a very small number of higher-paying jobs, many of which will go to higher-skilled Maryland and Virginia residents who will commute to the District. Meanwhile I am convinced that more retailers will open stores just outside the District's borders, where labor costs would be 40 percent cheaper for large non-union retailers. …
The bill will deal a huge blow to economic development. The bill will not modestly delay economic development in underserved District neighborhoods long deprived of jobs and retail amenities; it will kill economic development in these communities for a generation.
The mayor's veto is good news, but the damage is already done. Retailers are now on notice that the City Council is ready to shake them down at some time in the future.